History
At the beginning of the temperance movement in the United States, many states controlled where and when alcohol could be sold. Before this time, most alcoholic beverages for off-premises consumption were often sold just like any other item of commerce in stores or in saloons/bars. Because of heavy lobbying by temperance groups in various states, most required off-premise beverages to be sold in dedicated stores (primarily called dispensaries). To further enhance oversight of beverage sales, some states such as South Carolina operated state-run dispensaries.
Following repeal of national prohibition in the U.S. in 1933, some states initially decided to continue their own prohibition against the production, distribution, and sale of alcoholic beverages within their borders. Other states decided to leave the issue to local jurisdictions, including counties and cities, a practice called local option.
States were also able to restrict the importation of "intoxicating liquors" into their territory under the provisions of the Twenty-first Amendment to the United States Constitution which, while ending the Federal role in alcohol control, exempted liquor from the Constitutional rule reserving the regulation of interstate commerce to the Federal government. Thus states which wished to continue Prohibition could do so.
Among those states which chose not to maintain complete prohibition over alcoholic beverages, approximately one third established government monopolies while the remaining two thirds established private license systems. In its simplest terms, the license system allows private enterprises to buy and sell alcohol at state discretion. In actual effect, the license operates as a device of restraint and not merely a grant of privilege or freedom. In a constitutional sense, the license confers no property right and the exercise of its privilege is continuously contingent upon the holder’s compliance with required conditions and the general discretion of the licensing authority.
The remaining states adopted the monopoly system of regulation, the more cautious of the two regulatory frameworks. As alluded to above, under the monopoly scheme the government takes over the wholesale trade and conducts the retail sale of heavier alcoholic beverages through its own stores. That is, the state itself engages in the sale and distribution of alcoholic beverages. Most of these states have an "Alcoholic Beverage Control" (ABC) board and run liquor stores called ABC stores. In all monopoly states a parallel license system is used to regulate the sale and distribution of lighter alcoholic beverages such as beer and wine.
Beginning in the 1960s onward, many control states loosened their monopoly of beverage sales. States like West Virginia sold all of their state liquor stores to private owners, while others like Vermont permit private store owners to sell alcohol on behalf of the state for a commission.
Read more about this topic: Alcoholic Beverage Control State
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