Virginia's Awful Alcohol Laws Could Finally Get Fixed, Thanks to COVID and Gov. Youngkin

Government-run booze stores in Virginia may have met their match.

Perhaps more than any other state, Virginia is the cradle of American history. Four of the first five presidents hailed from Virginia, and its countryside is dotted with famous Founding Father estates, pivotal Civil War battlefields, and Virginia Alcoholic Beverage Control (ABC) Authority liquor stores. These government-run booze stores are a direct descendant of Virginia's deep prohibition heritage.

After Prohibition, Virginia maintained a powerful temperance mindset, which let government-operated stores have complete control over the sale of distilled liquors. But what may have started as an understandable offshoot of a bygone era is now a woefully antiquated relic. Almost 90 years since the end of Prohibition, Virginia may finally upgrade its alcohol laws for the 21st century.

Virginia is one of 13 states that has government-run retail stores for liquor. Because distilled spirits can only be sold in government stores, every distillery that offers spirits on-site must become an ABC "agency store." Distilleries are forced to invite ABC into their businesses, which gives the state influence, albeit subtle. Distilleries must honor state-mandated markups on each bottle sold, which erodes the profits of the state's entrepreneurial craft distillers. The state also layers on additional excise taxes, giving Virginia the third-highest taxes on distilled spirits in America.

The ABC system, which exercises near-universal control over alcohol sales in the state, has proven notoriously resistant to change over the years. Not only does Virginia ABC employ close to 5,000 people, but it pads the state's general fund with hundreds of millions of dollars.

Few politicians can turn down the double-allure of government-backed jobs and built-in revenue streams, creating decades-long resistance to overhaul the state's booze business. Some politicians have resorted to invoking the language of the temperance movement, growling about the potential horrors of "saloons" overtaking every street corner.

Before COVID-19, Virginia ABC's idea of modernizing its system primarily consisted of trying to have a hip Twitter account—an experiment that predictably ended in disaster. But at the onset of the pandemic, Virginians started clamoring for real change. As more and more states began to green light things like to-go cocktails and home delivery from distilleries and breweries, Virginia followed suit via emergency orders.

These temporary authorizations will eventually expire. But between the recently elected Gov. Glenn Youngkin—who has repeatedly emphasized that Virginia is now "open for business"—and a new political makeup in the state legislature, Virginia has the chance to finally update incoherent alcohol laws. And numerous bills are already swirling around Richmond.

An easy win would be to extend the ability for Virginia restaurants and bars to sell to-go and delivery cocktails through 2024. Virginia declined to enshrine to-go cocktails in state law permanently—like many other states have done—because some legislators were timid about ignoring Virginia ABC's recommendation.

Virginia ABC is also attempting to join the modern-day delivery economy. A few state stores started pilot programs to ship spirits directly to customers, and some Richmond-based stores started offering same-day delivery. The state legislature may have even more good news for the distilling community this week after hearing a bill that would allow all distillers to ship their products directly to customers.

Delegate Nick Freitas filed a bill to privatize the Virginia ABC system entirely. Abolishing Virginia ABC does not have enough political support right now, but as national supply chain issues persist and cause more alcohol shortages in state stores, more groups may come to their senses. Politicians and consumers are starting to question the legitimacy of giving the government a monopoly over the sale of private goods like liquor.

COVID-19 upended alcohol markets across America and ushered in a wave of previously unobtainable changes in the regulation of alcohol. The American Prohibition experiment is not a part of history worth preserving. Nine decades later, Virginia may finally loosen its reins on the sale of alcohol.