The "ABC" of Legal Liquor in Virginia

ABC stores are commercial operations, standard self-service customer-based facilities often located in strip malls

After Prohibition ended, Virginia authorized retail stores to sell beer and wine (over 16,000 retail licenses today), but retained direct control over the sale of hard liquor. The General Assembly set up what is today the Virginia Alcoholic Beverage Control (ABC) Authority and gave it the exclusive right to sell hard liquor directly to the public.

After Prohibition the state allowed the sale of wine and beer in numerous places. Today, various forms of wine and beer are sold at the 7-11, the grocery store, and even gas stations that obtain the required ABC license for off-premise sales. Those stores compete for customers by offering different prices, hours of operation, and levels of service.

Until restaurants were authorized in 1968 to sell liquor by the drink (one glass at a time), the only legal hard liquor sales in Virginia were bottles handed by ABC clerks to customers standing on the other side of counters in state-owned stores.

By 2023, self-service stores had replaced all but three counter stores. Two were in Richmond and one was in Petersburg. A fourth store in Portsmouth was planned for conversion back into the form of a counter, due to concerns about retain theft and crime in the neighborhood.

into the 1970's, customers went to a counter to order bottles of liquor; there was no self-service
Source: Virginia Alcoholic Beverage Control Authority, Media Library

The Virginia Alcoholic Beverage Control Authority issues on-premises licenses restaurants to serve beer, wine, and since 1968 hard liquor. Restaurants have competitive business practices, but the state has limited their ability to sell alcohol at a discount.¹

At one time, the Virginia Administrative Code also limited advertising that uses the words Bar Room/Saloon/Speakeasy/Happy Hour, hoping to minimize the potential for excessive drinking. Beer and wine wholesalers were not allowed to deliver beer/wine on Sundays "except to boats sailing for a port of call outside of the Commonwealth, or to banquet licensees," and retail outlets were required to purchase their beer/wine through wholesale distributors that are regulated by the state.²

Billboard advertising of alcohol is now permitted, but billboards:³

may not depict persons consuming alcoholic beverages, may not use cartoon characters, nor use persons who have not attained the legal drinking age as models or actors. The billboards may not be placed within 500 feet of a church or synagogue; a public, private, or parochial school, college, or university; a public or private playground or similar recreational facility; or residentially zoned property.

In contrast to retail sales of wine/beer and the sale of hard liquor by the drink in restaurants, the only competition for the sale of bottles of hard liquor in Virginia comes from moonshiners selling untaxed and illegal liquor in plastic one-gallon jugs or even in the classic Mason jar container. No matter what the size of the bottle, the state has a near-monopoly on the legal sale of rum, vodka, bourbon, etc. through 350 state-owned and state-operated ABC stores. Whenever hard liquor is sold in bottles legally in Virginia, that alcohol is sold in a state-run ABC store or in a "distillery store" with an ABC license.

Counties and cities in Virginia can ban the sale of alcohol, but the General Assembly can overturn such limits. The hours of operation, the brands sold, the price of different products, and the locations of ABC stores are state rather than local decisions. Customers who want buy a bottle of bourbon for a modern mint julep (perhaps pretending it was brought by servants on silver platters to their plantation veranda near the boxwoods...) go to a state-run liquor store, or to a state-licensed distillery.

In most cases, it would be a short trip to buy a bottle. The Department of Alcoholic Beverage Control claims that an ABC store is located within a 10--minute drive of 92% of Virginians.⁴

ABC stores are scattered across Northern Virginia in all jurisdictions, but Lee County forbids sale of alcohol - so someone living at Cumberland Gap (near Middlesboro, Kentucky) would have to drive over an hour to the ABC store in Big Stone Gap (in Wise County) or in Gate City (in Scott County) to purchase a bottle of hard liquor legally in Virginia
Source: Virginia Alcoholic Beverage Control Board, ABC Store Finder

All ABC stores used to be closed on one day each year when elections were held. Store shut down on the Tuesday after the first Monday in November, in addition to the traditional holiday closings on Thanksgiving, Christmas Day, New Year's Day and Easter. Sales stopped because the state had decided that bottles of hard liquor and elections do not mix. Closing the ABC stores was expected to reduce the chance that modern voters might be swayed by liquor.

That first Tuesday after the first Monday in November is always election day in Virginia, every year. In odd-numbered years, all 100 seats for the House of Delegates are on the ballot. Every 4 years in odd-numbered years, voters also make decisions on all 40 seats for the State Senate. In even-numbered years, registered voters can choose one of the 11 different Representatives who serve in the US Congress. Every 6 years, the race for one U.S. Senate seat is on the ballot.

The now-repealed election day closure of ABC stores contrasted with the confluence of drinking and voting in colonial elections. In the 1700's, candidates in Virginia offered alcoholic punch to voters throughout election day.

The free drinks offered to all voters gave rural farmers a rare opportunity to gather, see their neighbors, and party at the expense of the candidates. Voting in Virginia was by "open outcry" (viva voce), not by secret ballot, until after the Civil War. Voters would approach the sheriff and announce their decision, and candidates and onlookers heard each vote announced. Candidates who failed to provide any alcoholic rewards for participating in the process could be punished by the voters.

James Madison lost only one election in his life, in 1777, when he failed to offer Orange County voters any refreshments on election day. George Washington was rejected by the voters of Frederick County in 1755 when he first sought election to the House of Burgesses. One reason for the rejection was his opposition to local taverns selling alcohol to the Virginia Regiment troops. Washington led the militia from his headquarters in Winchester at the start of the French and Indian War, and his major discipline challenges were exacerbated by the easy availability of booze.

In George Washington's second attempt at office in 1758, he made sure to treat the voters liberally to honor their participation in the electoral process and to obtain their support. He provided about 150 gallons of beer, hard cider, punch, and rum to entertain 391 voters. Simple math suggests that they drank heavily throughout the day, or shared with others who took advantage of Washington's hospitality.⁵

The liquor monopoly generates substantial revenues for the state. The state excise tax is 20% on distilled spirits and 4% on beer/wine, and the ABC stores also charge 5% sales tax. In 2018, the Department of Alcoholic Beverage Control was reconstituted as the Alcoholic Beverage Control Authority, giving it greater flexibility in running a for-profit operation. That year, for the first time the state generated over $1 billion in revenue from the ABC stores where hard liquor was sold.

Alcohol sales in FY2019 generated $500 million in state revenue - $198 million in profits from retail sales at ABC stores, $223 million in taxes on alcohol sold in those stores, and $80 million from taxes on wine and beer sold in other stores. That reflected a steady increase due to opening more stores, and keeping stores open for longer hours (including Sunday mornings).⁶

profit and loss projections assume a steady growth in sales exceeding 4%, in part by opening eight new stores each year
Source: Virginia Alcoholic Beverage Control Board, Virginia ABC Overview of Operations and Budget

The top products sold in ABC stores (based on total dollars, rather than total volume) have changed over time:⁷

In the fiscal year ending June 30, 2012, three of the four top-selling ABC stores were located in Virginia Beach - a key destination for tourists. Store No. 256, in the Hilltop North Shopping Center, was the "king of booze" in Virginia:⁸

No. 256, off Laskin Road, sold more than $9.2 million worth of booze. That was nearly 40 percent more than the $6.7 million brought in by the state's second-most-successful ABC store, in Vienna. Most of the store's business, manager David Warren said, comes from about 175 restaurants and bars, which must buy their liquor from the ABC agency. He said he also benefits from affluent residents of nearby neighborhoods, as well as a steady stream of tourists in search of a major shopping center.

If the state tries to make too much profit from its retail markup, customers can not go to a competitor down the street. Because the state ABC stores are the only legal places for selling hard liquor by the bottle, customers must travel across the state line to find a different price on hard liquor.

To limit that competition, Section 3VAC5-70-10 of the Virginia Administrative Code prohibits importing more than one gallon of alcoholic beverages from outside the state or from military posts with PX stores. Many Virginians working in Washington DC who plan to "stock up with cheap liquor for a party" have heard rumors of ABC agents staking out DC liquor stores, then tailing cars with Virginia plates back across the Potomac River to enforce the one-gallon import limit.

In 2010-11, Governor Robert McDonnell tried to abolish the system of state control and privatize alcohol sales, eliminating the state monopoly on the sale of hard liquor. In the original proposal, 1,000 retail licenses would have been auctioned, tripling the number of outlets in Virginia for liquor sales.

Wholesale operations would also be shifted to the private sector, and the state would sell the main ABC warehouse at 2901 Hermitage Road in Richmond (known locally as "Alcohol and Broad"). The governor claimed privatization would generate $500 million, which would be used to finance transportation projects.⁹

the central warehouse ships bottles of hard liquor to the 350 or so local ABC stores
Source: Virginia Alcoholic Beverage Control Board, Image Bank

The governor's proposed new tax on restaurants selling alcohol was unpopular among anti-tax conservatives in the General Assembly. When the governor modified his plan and dropped that tax, outside reviewers determined that privatizing the entire ABC operation would not be revenue-neutral. After the one-time initial surge of funding from selling 1,000 licenses, the state would end up receiving $47 million less annually.

In the end, the General Assembly killed the proposal in February, 2011 without a hearing. The governor found a different way to raise taxes that financed his transportation agenda in 2013. Five years later, the 2018 General Assembly authorized sale of the ABC headquarters and warehouse in Richmond. The state decided to move the facilities to Mechanicsville in Hanover County, near the intersection of pole Green Road and I-295.

The agency was cooperative. The shift in location gave Alcohol Beverage Control the opportunity to implement modern technology in a four new warehouse totaling 778,000 square feet, plus a new office building. The most important factor in relocation, however, was to free up the land occupied by the warehouse and offices at 2901 Hermitage Road.

Making it available provided greater flexibility for replacing the baseball stadium next door, built in 1985 and known as The Diamond. The Atlanta Braves moved Richmond's AAA minor league team to Georgia in 2009, after playing for 43 years in Richmond. Gwinnett County built a new ballpark after Richmond could not commit to replace The Diamond. After recruiting a AA team known as the Flying Squirrels, the city negotiated a deal for them to stay in Richmond for 30 years if a new stadium was constructed.

Virginia Commonwealth University and the Flying Squirrels developed a plan to build a new $55 million shared stadium. The university would also construct an Athletics Village, with sports medicine and other academic programs.

The General Assembly supported the plan by moving the Alcohol Beverage Control to Hanover County and giving Virginia Commonwealth University first rights to purchase the state-owned land at fair market value. The university purchased the 20-acre site of the former ABC headquarters/warehouse at 2901 Hermitage Road in 2022 for $16 million, a price that was below market value but had been established previously by the General Assembly. That purchase completed the university's assemblage of different parcels totaling 41 acres, costing $39 million total, to create the Athletics Village.¹⁰

moving the Alcohol Beverage Control headquarters on Hermitage Road made space for replacing The Diamond baseball stadium
Source: ESRI, ArcGIS Online

Virginia has permitted sale of liquor by the drink in food establishments (as opposed to whole-bottle sales in ABC stores) only since 1968. Restaurants and the entertainment industry lobbied for that change in the 1960's. Liquor by the drink eliminated the "brown bag" requirement that customers join a private club and bring their own bottle to the restaurant (typically in a brown paper bag) in order to enjoy a drink before a meal.

Not every community in Virginia allows alcohol sales. In some rural Virginia counties, there have been odd alliances of religious opponents opposed to the use of alcohol and moonshiners who wanted to protect their business from legalized competition. Since 1968, however, the lure of additional tax revenue from ABC payments and especially from restaurants selling liquor by the drink has overcome the opposition in nearly every jurisdiction.

top-selling products at ABC stores change a little every year, as customer tastes change
Source: Virginia Department of Alcoholic Beverage Control, 2015 Annual Report and Alcoholic Beverage Control Authority, 2019 Annual Report

100% of the cities are "wet," reflecting the influence of the hospitality industry in urbanized areas. Between 2001-2015, the number of "dry" counties changed from 35 to 8. In 2016, Russell County voters approved sale of alcohol in the Town of Lebanon.

In 2019, the General Assembly changed the rules. It made all counties "wet," starting in 2020, unless local voters in a referendum acted to keep it "dry."¹¹

At the time, the remaining 100% "dry" counties were Appomattox, Bland, Botetourt, Buchanan, Campbell, Carroll, Charlotte, Craig, Dickenson, Floyd, Franklin, Giles, Grayson, Green, Halifax, Henry, Highland, King William, Lee, Louisa, Lunenburg, Mecklenburg, Montgomery, Patrick, Pittsylvania, Pulaski, Russell, Scott, Smyth, Surry, Tazewell, Warren, Washington, Wise, and Wythe.¹²

officially-dry counties are concentrated in southwestern Virginia, but all counties on the I-81 corridor are "wet"
Source: US Geological Survey (USGS) National Atlas, County Map

Prior to the General Assembly changing the rules in 2019, selected portions of "dry" counties managed to get approval to serve alcohol. Some used a local referendum, while others got members of the General Assembly to sponsor special legislation that created an exemption.

The Little River District of Floyd County, one of the magisterial districts in the county, went "wet" in 1996. Voters in that district had rejected alcohol sales in a 1991 referendum, but changed their mind five years later. Only one restaurant, Ray's, sold liquor-by-the-drink consistently after the vote.

In 2013 entrepreneurs creating a legal moonshine distillery, Five Mile Mountain, discovered the limits on alcohol sales in Floyd County would prohibit serving their product to customers. The distillery owners partnered with local restaurants seeking the opportunity to sell alcoholic drinks to diners, and arranged for a referendum to authorize liquor sales in the Courthouse District (including the town of Floyd with its restaurants). In 2014, voters approved liquor sales in the Courthouse District.

That decision led to several restaurants getting ABC licenses for liquor-by-the-drink sales. It also led to the opening of the first ABC retail store in Floyd County.

Under state law, restaurants must purchase their liquor from ABC stores for resale to customers. Food and all other items used in restaurants/bars can be purchased directly from wholesalers, but in Virginia hard liquor must be bought at the ABC store.

In Floyd County, the restaurant Ray's had to drive to an ABC store in another county to purchase its liquor. When the voters in 2014 authorized alcohol sales in the Courthouse District as well as the River District of the county, the state expected a significant increase in the number of Floyd County restaurants obtaining ABC licenses to sell liquor by the drink.

The Department of Alcoholic Beverage Control chose to open an ABC store to supply hard liquor to those restaurants, and to sell directly to individuals as well. When that store opened (in the Courthouse District) in 2015, people could purchase a bottle of hard liquor in Floyd County legally for the first time since 1934.¹³

in Floyd County, only the Little River district and the Courthouse district (including the Town of Floyd) have authorized sale of liquor-by-the-drink
Source: Floyd County, iGIS

In 2017, voters in Wise County approved a referendum to allow sale of wine and beer on Sundays, and Boone's Mill in Franklin County authorized restaurants to sell alcohol. In 2018, voters in the Town of Richlands in Tazewell County also approved the sale of mixed alcoholic beverages in restaurants by a 60%-40% majority.¹⁴

When local voters stayed reluctant to authorize sale of liquor by the drink, some entrepreneurs bypassed them by going to the General Assembly to gain approval. Legislators who did not live in that jurisdiction carried the bills granting exemptions, so local voters could not retaliate at the polls. The presumption is that the local legislator who may have wanted to do a favor for a business did some horse-trading with a legislator who lived elsewhere, providing support for some other legislation in exchange.

The 2019 legislation finally deleted that section of the Code of Virginia which included the following specific authorizations for 31 places where mixed drinks could be sold within a "dry" county:¹⁵

Notwithstanding the provisions of Section 4.1-124, mixed beverage licenses may be granted to establishments located

(i) on property owned by the federal government in Jefferson National Forest, George Washington National Forest or the Blue Ridge Parkway;

(ii) at altitudes of 3,800 feet or more above sea level on property adjoining the Jefferson National Forest;

(iii) at an altitude of 2,800 feet or more above sea level on property adjoining the Blue Ridge Parkway at Mile Marker No. 189;

(iv) on property within one-quarter mile of Mile Marker No. 174 on the Blue Ridge Parkway;

(v) on property developed by a nonprofit economic development company or an industrial development authority;

(vi) on old Jonesboro Road between Routes 823 and 654, located approximately 5,500 feet from the City of Bristol;

(vii) on property developed as a motor sports road racing club, of which the track surface is 3.27 miles in length, on 1,200 acres of rural property bordering the Dan River in Halifax County, with such license applying to any area of the property deemed appropriate by the Board;

(viii) at an altitude of 2,645 feet or more above sea level on land containing at least 750 acres used for recreational purposes and located within two and one-half miles of the Blue Ridge Parkway;

(ix) on property fronting U.S. Route 11, with portions fronting Route 659, adjoining the City of Bristol and located approximately 2,700 feet north of mile marker 7.7 on Interstate 81;

(x) on property bounded on the north by U.S. Route 11 and to the south by Interstate 81, and located between mile markers 8.1 and 8.5 of Interstate 81;

(xi) on property consisting of at least 10,000 acres and operated as a resort located in any county with a population between 19,200 and 19,500;

(xii) on property located as of December 1, 2012, within the Montgomery County Route 177 Urban Development Area, which area is adjacent to Exit 109 on Interstate 81;

(xiii) on property fronting Route 603, with portions fronting on Interstate 81, located approximately 1,100 feet from the intersection of Route 603 and Interstate 81 at Exit 128;

(xiv) on property located south of and within 1,400 feet of Interstate 81 between mile markers 38.8 and 39.5;

(xv) on property bounded on the north by Interstate 81, on the west and south by State Route 691, and on the east by State Route 689;

(xvi) on property located south of and within 1,500 feet of Interstate 81 between mile markers 44 and 44.4;

(xvii) on property within 3,000 feet of Interstate 81 on either frontage road between mile markers 75 and 86 in the County of Wythe;

(xviii) on property within the boundary of any town incorporated in 1875 located adjacent to the intersection of Interstate 81 and Route 91;

(xix) on property adjacent to the intersection of U.S. Route 220 North and State Route 57, operated as a country club as of December 31, 1926, in Henry County;

(xx) on property adjacent to Lake Lanier, operated as a country club as of December 31, 1932, in Henry County;

(xxi) on property fronting Old Jonesboro Road between Routes 823 and 808, located approximately 4,500 feet south of Interstate 81, and operated as a country club;

(xxii) on property located west of Route 58 and approximately 3,000 feet north of Interstate 81;

(xxiii) on property fronting U.S. Route 11 and 1,300 feet north of Interstate 81;

(xxiv) on property located within 1,500 feet of Exit 26 on Interstate 81;

(xxv) on property within the boundary of any town incorporated in 1911 located adjacent to the intersection of Route 63 and Route 58 Alternate;

(xxvi) on property within the boundary of any town incorporated in 1894 consisting of 1.9 square miles and, prior to the town's incorporation, known as Guest Station;

(xxvii) on property fronting Kanawha Ridge Road, located within approximately 700 feet of Route 638, and operated as a resort in Carroll County as of December 31, 2007;

(xxviii) on property located 2,135 feet north of the intersection of State Routes 1223 and 661;

(xxix) on property located on State Route 685 approximately 1,128 feet west of the intersection of State Routes 652 and 685; and

(xxx) on property located adjacent to State Route 697 and operated as a country club in the Powell Valley section of Wise County.

Kanawha Valley Arena Resort - exception (xxvii) - qualified as "property fronting Kanawha Ridge Road, located within approximately 700 feet of Route 638, and operated as a resort in Carroll County as of December 31, 2007"
Source: ESRI, ArcGIS Online

The "town incorporated in 1894 consisting of 1.9 square miles and, prior to the town's incorporation, known as Guest Station" - exception (xxvi) - is Coeburn in Wise County. The former Woodberry Restaurant, which was located within one-quarter mile of Mile Marker No. 174 on the Blue Ridge Parkway - exception (iv) - advertised that customers should imagine "strolling around the beautiful grounds after a perfectly mixed cocktail at our bar "¹⁶

selling mixed drinks on the Blue Ridge Parkway in Floyd County was a marketing opportunity for the Woodbridge Restaurant
Source: Woodberry Inn, Imagine

In 2020, when Governor Northam issued Executive Order 53 closing all dining and congregation areas in restaurants, dining establishments, food courts, breweries, microbreweries, distilleries, wineries, tasting rooms, and farmers markets during the COVID-19 pandemic, he declared beer, wine, and liquor stores to be "essential retail businesses" which could stay open.

That ensured the state would continue to receive revenue, at a time when economic disruption was forcing dramatic budget reductions. However, purchases by licensees such as restaurants dropped to zero, since those facilities were closed. Such sales typically generated 20% of the revenues.

Leaving the stores open also reflected customer priorities. Had the ABC stores closed, Virginians would have driven across the state border and purchased alcohol in the District of Columbia or in other states.¹⁷

Despite the pandemic, the Virginia Alcoholic Beverage Control Authority had a record year for profits. Sales to bars and restaurants declined as those outlets closed, then recovered as the state increased flexibility and allowed customers to order mixed beverages with takeout orders. For the 2019-20 year as a whole, sales to licensees declined 19%. However, retail sales grew 18%.

Of the total increase of $117 million in sales, $18 million could be attributed to the 12 new stores. Retail sales had already increased 7% before the pandemic, in part because of more careful selection of products being stocked. A major factor was the decision during the pandemic of customers to consume more alcohol.¹⁸

The pattern of increased consumption continued. Revenue increased over 10% between July 1, 2020-June 30, 2021, reaching $1.4 billion. The General Fund of the state budget received $616.4 million in profits. Sales to licensees - restaurants and bars - were down 15% due to the continued effects of COVID-19 pandemic, but consumer purchases steadily increased.

Standard sales techniques that increased profits included opening more stores, expanded operating hours, pricing products with sales and discounts, and offering in-store tastings. The Chief Executive Officer of the Virginia Alcoholic Beverage Control Authority credited the General Assembly's decision in 2015 to allow the organization to operate more like a business:¹⁹

Leveraging our flexibility as an independent authority and the creativity of our employees, we have become nimbler and more customer-focused, enabling us to better serve Virginians at the highest level for decades to come.

After the Department of Alcoholic Beverage Control became the Virginia Alcoholic Beverage Control Authority, the Board of Directors prioritized investment in new information technology and a new warehouse for distribution. Though sales increased, profits declined due to the additional costs. DThe revenue transfer to the state treasury declined from $229 million in 2021 to $221 million in 2023, despite selling an additional $100 million in prducts.

In 2023, Governor Youngkin proposed a reduction in the authority's budget. The independent Board of Directors rejected that proposal. Since the Authority was self-funded from its sales, it did not need to comply with the governor's proposal.²⁰

the ABC store in Staunton still includes the traditional glass bricks, but is now self-service

The 2021 General Assembly loosened restrictions on alcohol consumption by authorizing creation of up to three Designated Outdoor Refreshment Areas (DORA's) in a jurisdiction. They were intended to facilitate towns/cities creating entertainment districts, boosting economic activity by allowing customers to wander outside while carrying alcoholic drinks:²¹

DORAs are different from festival beer gardens, where trucks usually provide the brews and drinkers must stay within a fenced area. A DORA, by contrast, could span multiple blocks – even a whole downtown – and patrons would buy drinks from ABC-licensed restaurants in the zone and then carry them as they browse nearby merchants.

Danville was an early adopter of the Designated Outdoor Refreshment Area flexibility. It hoped to turn the River District into a place where customers could gather and explore food and entertainment venues without having to stop at barriers to finish a beer, glass of wine, or cocktail. Permanent city restaurants would benefit from increased business, as opposed to beer trucks. Though Danville may never rival Bourbon Street in New Orleans, it could offer the same level of flexibility and festival atmosphere for outdoor drinking.

Downtown Roanoke Inc. was one of the first organizations to use a DORA license. The 2021 GO Fest event was held in the city's downtown. It previously had been held at River's Edge Park, with beer trucks brought in to provide alcohol. In a DORA location, temporary beer trucks would compete with existing business selling alcohol, and state regulations required that only permanent retail on-premises licensees could sell alcohol. Downtown Roanoke Inc. used the DORA license so that existing restaurants could sell alcohol to customers and allow them to leave the premises, though drinkers had to remain within the boundaries of the Designated Outdoor Refreshment Area.²²

The three-tier distribution system for beer, requiring brewers to sell to distributors who then sold to retailers, was modified when on-site sales were permitted to breweries. The 2023 General Assembly loosed the system again. The legislature authorized creation of the Virginia Beer Distribution Company as a state agency within the Department of Agriculture and Consumer Services. The new agency created an online portal, allowing retailers to go to one website to purchase beer from craft breweries which had not signed a distribution agreement with another company.

The new law allowed 300 craft breweries in Virginia to self-distribute about 500 barrels (1,400 kegs) each directly to restaurants and other customers each year. The law also closed a loophole through which some almost-direct sales were occurring. Brewery owners were no allowed to own a distribution company, but spouses or family members had been able to own one. The 2013 Beer Industry Limited Distribution Act banned future such "arms-length" arrangements.

The creation of the Virginia Beer Distribution Company (VDBC), the first state-operated beer distributor in the United States, was modeled on the earlier creation of the Virginia Wine Distribution Company. Both the Virginia Craft Brewers Guild and the Virginia Beer Wholesalers Association supported the 2023 law. By expanding self-distribution, craft breweries were expected to find more markets for niche products which distributers found unprofitable to handle.

The creation of the Virginia Beer Distribution Company was designed to assist small operations while maintaining the three-tier distribution system. Breweries producing more than 500 barrels a year were expected to sell through standard distribution channels. The wholesale distributors prioritized doing business with larger breweries, and creating a state distribution company reaffirmed their state-guaranteed businesss model without impacting wholesale profits.

The head of the Virginia Beer Wholesalers Association highlighted that craft breweries:²³

...now have a way to go to market to the retail side and grow their business... If they grow beyond what the VBDC can serve, that would be a success story... It's just another option for small businesses to operate their business as they see fit.

Links

• Governor McDonnell's Commission on Government Reform & Restructuring
• Governor's Staff Recommendation for ABC Privatization Unveiled
• Presentations from the September 8, 2010 Simplification and Operations Meeting
• ABC Overview of Operations - Department of Alcoholic Beverage Control
• Virginia Compared to Other States: Market Structure, Taxation and Outlet Density - Distilled Spirits Council of the United States
• Staff Recommendations: Proposed ABC Privatization Model - Eric Finkbeiner, Senior Advisor for Policy to Governor McDonnell
• Virginia Transportation Infrastructure Bank (VTIB) - Secretary of Transportation Sean Connaughton
• ABC Privatization and State Revenue - Secretary of Finance Richard Brown
• State Cost Savings Presentation - Commonwealth of Virginia
• Virginia Department of Alcoholic Beverage Control
• Virginia Joint Legislative Audit and Review Commission (JLARC)
• Review of the Proposal to Privatize Virginia's ABC System (November 22, 2010)
• Washington Post
• McDonnell may abandon his proposal to privatize liquor stores (January 13, 2012)
• McDonnell is handed legislative defeat as Virginia assembly drops bill to privatize liquor stores (February 9, 2011)
• McDonnell outlines new scaled-back, retail-only ABC plan (January 11, 2011)
• Rural Va. communities' long liquor runs could come to a halt (November 27, 2010)
• McDonnell starts over on ABC privatization proposal, according to new consultant contract (November 10, 2010)
• Virginia ponders losing ABC stores; studies conflict on privatizing liquor sales (August 29, 2010)

former Bowman distillery - and former Wiehle town hall/Methodist church - at Sunset Hills farm (now Reston)
Source: Virginia Department of Historic Resources, Bowman Distillery 029-5014

References

1. "History of Virginia ABC," Virginia Department of Alcoholic Beverage Control, p.53, no longer available from Virginia Department of Alcoholic Beverage Control; http://www.abc.state.va.us/admin/hist1.htm; "Mission in Review - 2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.8, p.10, https://www.abc.virginia.gov/about/agency-overview/sales-and-revenue; "Modernizing ABC says counter-service stores are on their way out," Virginia Mercury, December 19, 2022, https://www.virginiamercury.com/2022/12/19/modernizing-abc-says-counter-service-stores-are-on-their-way-out/; "Virginia ABC insisted it would phase out counter stores. A new one is opening in Portsmouth," Virginia Mercury, September 15, 2023, https://www.virginiamercury.com/2023/09/15/virginia-abc-insisted-it-would-phase-out-counter-stores-a-new-one-is-opening-in-portsmouth/ (last checked September 18, 2023)
2. "Advertising; exterior," Virginia Administrative Code 3VAC5-20-30, http://leg1.state.va.us/cgi-bin/legp504.exe?000+reg+3VAC5-20-30; "Sunday deliveries by wholesalers prohibited; exceptions," 3VAC5-60-90, http://leg1.state.va.us/cgi-bin/legp504.exe?000+reg+3VAC5-60-90 (last checked August 26, 2012)
3. "Mission in Review - 2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.5, https://www.abc.virginia.gov/about/agency-overview/sales-and-revenue (last checked September 27, 2015)
4. "Store Information," Virginia Department of Alcoholic Beverage Control, https://www.abc.virginia.gov/about/store-information (last checked September 27, 2015)
5. Garry Wills, James Madison, Macmillan, 2002, p.13, https://books.google.com/books?id=EtEqdvpuOwQC; "Booze on Election Day was an American tradition," National Constitution Center, http://blog.constitutioncenter.org/2012/11/booze-on-election-day-was-an-american-tradition/>; Daniel Okrent, Last Call: The Rise and Fall of Prohibition, Simon and Schuster, 2010, p.47, https://books.google.com/books?id=MJbBqn3XWqAC (last checked September 27, 2015)
6. "2019 Annual Report," Virginia Department of Alcoholic Beverage Control, p.2, https://www.abc.virginia.gov/library/about/pdfs/2019ar.pdf(last checked January 5, 2019)
7. "Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2022," Virginia Department of Alcoholic Beverage Control, p.34, https://www.abc.virginia.gov/library/about/pdfs/2022-virginia-abc-annual-report.pdf; "2020 Annual Report," Virginia Department of Alcoholic Beverage Control, p.36, https://www.abc.virginia.gov/library/about/pdfs/virginia-abc-2020-annual-report.pdf; "2019 Annual Report," Virginia Department of Alcoholic Beverage Control, p.34, https://www.abc.virginia.gov/library/about/pdfs/2019ar.pdf; "2018 Annual Report," Virginia Department of Alcoholic Beverage Control, p.25, https://www.abc.virginia.gov/library/about/pdfs/2018-annual-report.pdf; "2016 Annual Report," Virginia Department of Alcoholic Beverage Control, p.20, https://www.abc.virginia.gov/library/about/pdfs/2016ar.pdf; "Mission in Review - 2013 Annual Report," Virginia Department of Alcoholic Beverage Control, p.11, https://www.abc.virginia.gov/about/agency-overview/sales-and-revenue; "Mission in Review - 2014 Annual Report," Virginia Department of Alcoholic Beverage Control, p.11, https://www.abc.virginia.gov/library/about/pdfs/2014ar.pdf (last checked September 9, 2023)
8. "Among Virginia's ABC stores, Hilltop is king booze," The Virginian-Pilot, August 26, 2012, http://hamptonroads.com/node/649991 (last checked August 26, 2012)
9. "Governor's Staff Recommendation for ABC Privatization Unveiled," news release by Governor McDonnell's Government Reform & Restructuring Commission, September 8, 2010, http://www.reform.virginia.gov/News/viewRelease.cfm?id=361 (last checked August 26, 2012)
10. "McDonnell is handed legislative defeat as Virginia assembly drops bill to privatize liquor stores," The Washington Post, February 9, 2011, http://www.washingtonpost.com/wp-dyn/content/article/2011/02/08/AR2011020806203.html; "ABC gets OK to move on HQ deal," Richmond BizSense, June 5, 2018, https://richmondbizsense.com/2018/06/05/abc-gets-ok-move-hq-deal/; "ABC announces plan to relocate headquarters to Hanover, freeing parcel near The Diamond," WTVR, March 2, 2018, https://wtvr.com/2018/03/02/abc-announces-plan-to-relocate-headquarters-to-hanover-freeing-parcel-near-the-diamond/; "Richmond Braves era coming to an end," Gwinnett Daily Post, August 30, 2008, ; "A year after VCU, Squirrels announced exploration of ballpark feasibility, project quietly continues," Richmond Times-Dispatch, September 12, 2017, https://www.richmond.com/sports/flying-squirrels/a-year-after-vcu-squirrels-announced-exploration-of-ballpark-feasibility/article_ef56d74f-6e96-569c-b6ea-8ac08e813c37.html; "VCU can buy state land eyed for Richmond ballpark, but only after lawmakers see their site plan," Virginia Mercury, February 26, 2019, https://www.virginiamercury.com/blog-va/vcu-can-buy-state-land-eyed-for-richmond-ballpark-but-only-after-lawmakers-see-their-site-plan/; "Riverstone plays ball, ups proffers for ABC HQ relocation," Richmond BizSense, May 8, 2019, https://richmondbizsense.com/2019/05/08/riverstone-plays-ball-ups-proffers-abc-hq-relocation/; "VCU buys ABC site across from The Diamond for $16M," Richmond BizSense, June 14, 2022, https://richmondbizsense.com/2022/06/14/vcu-buys-abc-site-across-from-the-diamond-for-16m/ (last checked June 14, 2022)
11. "SB 1110 Alcoholic beverage control; local referendums," Virginia General Assembly, http://leg1.state.va.us/cgi-bin/legp504.exe?191+sum+SB1110 (last checked February 15, 2019)
12. "2001 Annual Report," Virginia Department of Alcoholic Beverage Control, p.53, http://www.apa.virginia.gov/reports/ABCAnnualRep01.pdf; "2013 Annual Report," Virginia Department of Alcoholic Beverage Control, p.24, http://www.abc.virginia.gov/admin/annual/docs/2013ar.pdf; "2014 Annual Report," https://www.abc.virginia.gov/library/about/pdfs/2014ar.pdf; "2015 Annual Report," Virginia Department of Alcoholic Beverage Control, p.35, https://www.abc.virginia.gov/library/about/pdfs/2015annual-report; "2016 November General Results - Referendums," Virginia State Board of Elections, http://www.wcyb.com/news/virginia/russell-county/lebanon-voters-approve-liquor-sales-in-restaurants/147978129 (last checked November 9, 2016)
13. "Floyd County lands its first ABC store," The Roanoke Times, August 14, 2015, http://www.roanoke.com/news/local/floyd_county/floyd-county-lands-its-first-abc-store/article_d9fdbda6-44e4-5169-ac5e-325fb173ed96.html; "Floyd County's first ABC store is now open," The Roanoke Times, September 14, 2015, http://www.roanoke.com/business/columns_and_blogs/blogs/storefront/floyd-county-s-first-abc-store-is-now-open/article_b76f0110-bfec-5c7a-be29-661a9a3563bb.html (last checked September 16, 2015)
14. "2017 November General," Virginia State Board of Elections, http://results.elections.virginia.gov/vaelections/2017%20November%20General/Site/Referendums.html; "2018 November General," Virginia State Board of Elections, https://results.elections.virginia.gov/vaelections/2018%20November%20General/Site/Locality/TAZEWELL%20COUNTY/Sale%20of%20Mixed%20Beverages%20(TAZEWELL%20COUNTY).html (last checked November 6, 2018)
15. "Title 4.1. Alcoholic Beverage Control Act, Chapter 1. Definitions and General Provisions, Section 4.1-126. Licenses for establishments in national forests, certain adjoining lands, on the Blue Ridge Parkway, and certain other properties," Code of Virginia, https://law.lis.virginia.gov/vacode/title4.1/chapter1/section4.1-126/; Steve Haner, "Virginia Goes Wet With Nary A Whimp," Bacon's Rebellion, February 15, 2019, https://www.baconsrebellion.com/wp/virginia-goes-wet-with-nary-a-whimper/ (last checked February 15, 2019)
16. "Imagine," Woodbury Inn, http://www.woodberryinn.com/About_Us.php (last checked April 4, 2020)
17. "Why Are Virginia's ABC Stores Considered Essential?," Virginia Public Media, April 2, 2020, https://vpm.org/news/articles/12133/why-are-virginias-abc-stores-considered-essential; "Temporary Restrictions On Restaurants, Recreational, Entertainment, Gatherings, Non-Essential Retail Businesses, And Closure Of K-12 Schools Due To Novel Coronavirus (COVID-19)," Executive Order 53, Office of the Governor, March 23, 2020, https://www.governor.virginia.gov/media/governorvirginiagov/executive-actions/EO-53-Temporary-Restrictions-Due-To-Novel-Coronavirus-(COVID-19).pdf (last checked April 4, 2020)
18. "Fiscal Year 2020 Revenue," Virginia Alcoholic Beverage Control Authority, September 2, 2020 news release, https://www.abc.virginia.gov/about/media-room/2020/09022020-fiscal-year-2020-revenue; "ABC reports record $1.2B in FY 2020 revenue," Virginia Business, September 2, 2020, https://www.virginiabusiness.com/article/abc-reports-record-1-2b-in-fy-2020-revenue/ (last checked September 7, 2020)
19. "Virginia ABC surpasses $1 billion in sales for the third year in a row; Tito's remains the top seller in the state," Richmond Times-Dispatch, August 25, 2021, https://richmond.com/business/local/virginia-abc-surpasses-1-billion-in-sales-for-the-third-year-in-a-row-titos/article_86187ce9-e95b-5b85-a303-f4143d244729.html (last checked August 25, 2021)
20. "Youngkin administration criticizes falling ABC profits," Virginia Mercury, July 27, 2023, https://www.virginiamercury.com/2023/07/27/youngkin-administration-criticizes-falling-abc-profits/ (last checked July 27, 2023)
21. "With new ABC license, Virginia localities can create permanent open-air alcohol zones," Cardinal News, November 30, 2021, https://cardinalnews.org/2021/11/30/with-new-abc-license-virginia-localities-can-create-permanent-open-air-alcohol-zones/; "Designated Outdoor Refreshment Area – Frequently Asked Questions," Town of Abingdon, https://abingdon-va.gov/wp-content/uploads/2021/10/DORA-FAQ.pdf; "HB 2266 Alcoholic beverage control; outdoor refreshment area license," Virginia Legislative Information System, 2021 General Assembly session, https://lis.virginia.gov/cgi-bin/legp604.exe?ses=211&typ=bil&val=HB2266 (last checked November 30, 2021)
22. "With new ABC license, Virginia localities can create permanent open-air alcohol zones," Cardinal News, November 30, 2021, https://cardinalnews.org/2021/11/30/with-new-abc-license-virginia-localities-can-create-permanent-open-air-alcohol-zones/; "Virginia Enacts Outdoor Refreshment Area Legislation," Virginia Main Street, Department of Housing and Community Development, May 24, 2021, https://virginiamainstreet.com/2021/05/24/virginia-enacts-outdoor-refreshment-area-legislation/ (last checked November 30, 2021)
23. "Brewery self-distribution bill passes through GA, awaits Youngkin’s signature," Richmond BizSense, February 27, 2023, https://richmondbizsense.com/2023/02/27/brewery-self-distribution-bill-passes-through-ga-awaits-youngkins-signature/; "State budget funds launch of self-distribution arm for Virginia breweries," Richmond BizSense, September 19, 2023, https://richmondbizsense.com/2023/09/19/state-budget-clears-launch-of-self-distribution-arm-for-virginia-breweries/ (last checked Septembr 19, 2023)

the 2018 General Assembly authorized sale of the Alcohol Control Board headquarters and warehouse on Hermitage Street in Richmond
Source: ESRI, ArcGIS Online

new headquarters and warehouse in Henrico County near Mechanicsville
Source: Virginia Alcoholic Beverage Control Authority, Media Library

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Virginia and Alcohol
Virginia Places