Top control state officials discuss the latest developments within their jurisdictions.

This is the ninth straight year that State Ways has contacted top control state officials in the 19 jurisdictions and asked them to provide an overview of recent initiatives in their respective states. As we have seen in the past, several common themes emerge from the state overviews. First, virtually all control state executives continue to report year-over-year sales and revenue increases, with many gains in the high single-digit percentages. In many instances this robust growth has translated into increased contributions from beverage alcohol operations to the states' general funds, as well as additional dollars to devote to important programs--whether it be overdue staffing increases, capital improvements, technology upgrades, etc.--in the agencies themselves. In many cases, modernization of retail stores continues throughout the states, as do new store openings and existing store relocations, based on the latest demographic data.

As has been noted here before, it seems as if, without exception, the beefing up of enforcement and education initiatives remains a driving force for combating the abuse and underage misuse of beverage alcohol products through the control states. Control state officials cite numerous examples of this in their reports, in addition to describing a number of new organizational plans to help streamline operations. Many states have enacted--or are in the process of enacting--new legislation, which will affect the rules and regulations of these various control states. In several instances, the states continue to respond to the legal challenges of U.S. Supreme Court and federal court cases. Overall, we hope that the following comments provide a meaningful snapshot of the activities taking place throughout the control states. As always, we'd like to thank the various commissioners, chairpeople and administrators from the control jurisdictions who took time out from their busy schedules to respond.

ALABAMA

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Things continue to run smoothly at the Alabama Alcoholic Beverage Control Board. We are currently installing a new, and much needed point-of-sales system in all 160 ABC stores at the cost of $4 million. The new Point of Sale/Inventory Control System allows for faster checkout with Internet credit card and debit card processing. It will also manage inventory and stock levels and provide real time store sales data to the central office. This will be extremely helpful in demand planning and sales forecasting.

We have continued our efforts to improve our store operations by opening and/or relocating stores during the year and are in the process of opening several more. In each case, we feel the new locations provide a safer, friendlier environment in a more convenient location for our customers, and, in addition, generate increased revenues for the State of Alabama. We have also de-listed many slow-moving products, which has opened up shelf space for promising newcomers. The vendor representatives are well aware that if their products do not meet sales expectations, they will no longer be on ABC store shelves, but they will still be made available for sale (by the case) as a special order.

Alabama ABC Regulation 20-x-7-.08 prohibits all sales, deliveries, purchases or supplying of alcoholic beverages directly to consumers by wire, internet, order forwarding, telephone or telegraph gift services, or related communication services whether interstate or intrastate. However, due to the increasing popularity of wine clubs and internet shopping, any person, firm, organization, or corporation desiring to purchase, for personal use, any alcoholic beverages outside of Alabama for delivery into Alabama shall first secure writ ten approval from the ABC Board Product Management Bureau. Upon approval of the request, it is the customer's responsibility to make arrangements for the alcoholic beverage shipment, freight prepaid, to a designated ABC Beverage Store. When the merchandise arrives at the store, Alabama taxes are collected and the merchandise is released to the customer.

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After all the ABC Board's expenses are paid, approximately $185 million will be distributed to the state's General Fund and other agencies, while continuing to fulfill our primary mandate of producing revenues, regulation, enforcement, and education of alcohol, tobacco and illegal drug use. The Alabama ABC Board is pleased with its achievement of producing another record year of sales and looks forward to continued success in the years to come.

EMORY FOLMAR 

Administrator

Alabama Alcoholic Beverage Control Board

IDAHO

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A surge of growth over the past decade continues throughout Idaho, the third fastest-growing state in America, according to the U.S. Census Bureau's most recent numbers at the end of 2006. The Idaho State Liquor Dispensary (ISLD), in order to keep pace with the ever-increasing population boom, has focused on the revision of its personnel needs and a seemingly never-ending building expansion.

ISLD recently added a new Deputy Superintendent, former Boise sportscaster and businessman Larry Maneely, as part of a transition with the retirement of longtime Chief Financial Officer Ken Winkler. Maneely, who joined ISLD in July 2007, earned numerous awards for his TV work in Boise and Sacramento, before venturing into private business more than a decade ago, as a principal in a food export company. That export brokerage earned the Idaho Governor's Export Marketing Award for helping grow international sales of Idaho agricultural products around the world, including premium wines from a number of Idaho wineries. Maneely was also co-owner of a specialty foods grocery market, and worked directly with distributors and Idaho wineries. Maneely's role will be to assist and support the Superintendent in day-to-day operations of the Dispensary, the management team of the Central Office, the four statewide District Managers, and our 161 stores.

Idaho's population rose by nearly 40,000 during calendar 2005, an increase of 2.6%, pushing Idaho's total population to more than 1.4 million residents.

As you can imagine, this continued statewide growth requires an ever-growing commitment by the Idaho State Liquor Dispensary to stay ahead of consumer demand, and provide the variety of products and level of customer service that will reflect well on our stakeholders, the citizens of Idaho. Revenue from sales this past fiscal year increased by nearly 11%, a growth spike mainly attributed to the population increase, and consumers' thirst for premium and ultra-premium products. This continues an upward spiral that has seen revenues more than double in the past 11 years.

Sunday liquor sales of distilled spirits continue to expand, with recent approval granted by county com missioners in Twin Falls and Ada counties. Five of 14 stores opened for Sunday sales in Ada County, encompassing Boise and its suburban communities, this past Father's Day, with others expected to follow shortly. Presently 26 of 44 counties statewide have Sunday liquor sales, generating nearly $1.5 million in revenue in the first six months of 2007, on what has become the second-busiest shopping day of the week across the country.

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With statewide liquor sales increasing 87% over the past six years, the need for additional warehouse space is well underway, and continues to be a top priority. ISLD is mid-way through a three-year project to expand and modernize the warehouse/distribution center. When complete the project will have a state-of-the-art Warehouse Management System (WMS) and automated pallet storage, through the use of an Automated Storage/Retrieval System (AS/RS). It will also allow for expanded Single Pack availability through the use of a new and expanded single pack pick module and other warehouse improvements.

The Idaho Legislature, in approving this expansion, asked that the project be funded from profits, through three fiscal years: Phase 1, completed this month, increased the building capacity by 17,000 square feet; Phase 2, scheduled for completion June 30, 2008, will be the WMS and single pack expansion; Phase 3, to be completed June 30, 2009, will include installation of the AS/RS equipment, which will house over 2,800 pallets when fully installed. Phase 3 will also provide for new racking and equipment in the existing warehouse, and the complete building will bring the building capacity to 72,000 square feet.

Two new state District Managers have joined the organization this year: Tom Legerski, named in early 2007 to manage District 4, encompassing South Central Idaho and parts of Southwest Idaho; Cheryl Hurley Peterson was recently named to succeed the retired Neil Clark as ISLD's first female District Manager, responsible for Northern Idaho's District 3.

This year, the Dispensary has opened 5 new stores, with another 4 in various stages of preparation, all due to be operating by the end of the calendar year. The new stores, located in each of the state's geographic regions, bring the retail operation to a total of 59 state stores and another 102 contract stores.

The Idaho State Liquor Dispensary, like others nationally, is continuing to be more active in sponsoring and supporting numerous alcohol education initiatives. This year, the ISLD joined forces with the Century Council, the Idaho Attorney General's office, the Idaho State Police, the state's Alcohol Beverage Control agency, local mayors, police chiefs and media, to support the "We Don't Serve Teens" campaign. In Boise and Idaho Falls, media events were held to kickoff the program and alert adults to the importance of the dangers of serving alcohol to underage youth, unfortunately, a growing national problem we must all confront. Another such event is planned shortly in Northern Idaho, as the campaign grows.

This past March, the ISLD partnered with Boise Police Crime Stoppers, local Jackson Food stores (a four-state, 100-outlet chain of convenience stores), and motion-picture complex giant Edwards Theaters on an awareness campaign to remind citizens of underage drinking and other irresponsible consumption of alcohol, and encourage them to contact police or Crime Stoppers when aware of issues. Local Edwards Theaters ran Public Service Announcements prior to movies for the three-month period ending June 30 to support the campaign. The campaign was funded by a $5,000 grant from the NABCA to ISLD, and awarded to the Boise Police Department, aimed at enhancing and expanding alcohol education efforts.

Under this new program, in 2006, Boise Police officers issued 1,225 citations to minors consuming or in possession of alcohol. We feel anything we can do to reduce the irresponsible sales or use of alcohol is a high priority, particularly with regard to our vulnerable teen and pre-teen populace. In addition, the ISLD supported training in conjunction with Training for Intervention Procedures (TIPS) in various locations throughout the State.

Idaho Governor Otter has also recently formed an Alcohol Rules Advisory Committee to discuss potential revisions to the Alcohol Beverage Control Bureau's code and rules. The Governor wants modernization and clarification of existing alcohol laws, many of which are antiquated and confusing, given that they date back as early as the mid-1930s. The aim is to have the administrative process be less cumbersome for prospective licensees. Additional areas being reviewed by the committee include: 1) Possible separation of administrative functions from the enforcement role, both of which are currently served by ABC; 2) and eliminating the quota system and waiting list for the issuance of licenses to sell distilled spirits. The committee will make its recommendations to Governor Otter within the next two months.

With the many challenges ahead, we will strive to modernize our business while not losing sight of our mission of encouraging responsible consumption.

DYKE NALLY

Superintendent

Idaho State Liquor Dispensary

IOWA 

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Martinis shook, corks popped and taps flowed in record numbers in Fiscal Year 2007 (July 1, 2006-June 30, 2007). According to the Iowa Alcoholic Beverages Division's year-end sales statistics, sales for each of the three beverage alcohol categories--spirits, wine and beer--reached all-time highs in Iowa last fiscal year.

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Distilled spirits took another major leap forward in FY07 with wholesale sales of $177.5 million--an increase of $16.6 million or 10.4% over the prior 12 months. In terms of gallonage, the division recorded FY07 sales of 3.9 million gallons versus 3.7 million, an increase of 6.3% for the year. Spirits, therefore, have realized sustained gains for 11 consecutive years and, for the past five years, double-digit or near double-digit growth.

In the other categories, the division collected an additional $14.3 million from the beer gallonage tax and $5.9 million from the wine gallonage tax. While beer's increase was relatively slight, malt beverages remain the vast preference among consuming Iowans with an annual per-capita consumption rate of 35.8 gallons, compared to 1.9 and 1.5 gallons for spirits and wine, respectively.

As the beverage alcohol industry continues its climb in all three categories, I would like to take a moment to break down the impact of the industry relevant to "people, product and profits."

Several behavioral factors among consumers are contributing to the growth. A major explanation for the increase in sales is consumer demographics. Specifically, the largest consuming segment--21 to 29 year olds--is expected to grow 2% per year through 2010. The performance of brands such as Captain Morgan and Jagermeister, both top 10 brands in Iowa, attest to the strength of young adult consumers to influence the market.

The "trade up" phenomenon is yet another key variable. As consumers order mixed drinks, the practice of "calling" for particular spirit brands, especially for premium spirits, has become commonplace. The uptick, while small in scale, is part of an overwhelming trend among consumers desiring finer goods. And, with the state's 50% markup on the wholesale price of distilled spirits, the division collects more money with the sale of higher-end premium products. Image-conscious consumers, in the end, contribute more to a bar's profit and to the state's general fund.

Product

With the influx in liquor sales in the past decade, distilled spirits companies are releasing more products that lend themselves to the "trade-up" phenomenon, particularly among the 21 to 29 year old age segment. Of the 56 new products listed by the division this past year, the vast majority includes mid-level to top-shelf brands. Moreover, 20 of the new products are flavored spirits, brands that lend themselves to exotic martinis and trendy new drinks.

With the growth in spirits have come new players. Anheuser-Busch, for instance, recently entered the Iowa spirits arena this past spring with the introduction of Jekyll & Hyde, a berry and an herbal liqueur. More recently, Anheuser-Busch announced that it will soon be distributing Vermont vodka, an ultra-premium spirit. Clearly, others are trying to capture--and cash in--on the success that spirits are enjoying in the current marketplace.

Profits

In FY07, the Iowa Alcoholic Beverages Division transferred nearly $85 million to the state's general fund, an increase of $30 million over the past decade. As such, the division's annual transfer has increased by 55% over the same period. Moreover, the division does not anticipate a change in that pattern in the foreseeable future.

Unquestionably, the $85 million transferred represents a stable contribution to the state's bottom line, representing almost 3 % of total state revenues. As such, the state of Iowa, as a whole, has profited from the division's business operation, as well as the current trend in the marketplace.

Lee Iacocca distilled all business operations to "people, product and profits." The Iowa Alcoholic Beverages Division couldn't agree more with Mr. Iacocca. Going forward, the Division intends to continue to grow its business operation with a similar focus on "people, product and profits."

LYNN WALDING

Administrator

Iowa Alcoholic Beverages Division

MAINE

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The Maine Bureau of Alcoholic Beverages in cooperation with its wholesale liquor distributor and 325 privately owned liquor stores had a very successful year.

Sales for distilled spirits in Maine for 2006 increased 7.1%. Case sales were up approximately 2%. Allen's Coffee Brandy continues to enjoy tremendous success as the state's number-one-selling product. Mainers enjoy coffee-based products and Allen's uses a specially distilled, straight heavier coffee, rather than an imitation flavor. Orloff vodka, which ranked second in sales, is known as a locally distilled product that has a strong "value price" following for both on-premise and off-premise sales alike.

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Consumers demonstrated a willingness to trade up across most categories. Jagermeister experienced a 22% growth in sales while sales for Grey Goose and Skyy vodkas each increased sales 16% respectively. Captain Morgan Spiced Rum, Bacardi Rum and Smirnoff Vodka are big sellers in the state, but there continues to be a market for "value priced" products.

The Bureau spent considerable time during the 2006-07 legislative session ensuring that the state's proven and effective control system remains firmly intact. The bureau was successful in passage of legislation designed to allow greater use of rebates, coupons and sampling by the spirits industry to further enhance sales and promote branding. Several pieces of proposed legislation aimed at increasing fees or alcohol taxes were defeated.

Maine continues its mission to effectively regulate the beverage alcohol industry, insure responsible business practices and create a favorable economic climate while prohibiting sales to minors.

DAN GWADOSKY

Director

Maine State Liquor & Lottery Commission

MICHIGAN

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Following the 2005 Supreme Court Decision in Granholm v Heald, 544 U.S. 460; 125 S. Ct. 1885; 161 L.Ed.2d 796 (2005), Michigan Public Acts 268 and 269 created direct shipping provisions that allow in-state and out-of-state wineries to sell a limited amount of wine per year directly to Michigan consumers. In July of 2007 a similar legal action was filed by the Siesta Village Market, LLC, a Florida alcohol retailer, stating that by not having a provision for out-of-state wine retailers to be able to deliver wine directly to consumers as in-state wine retailers may, the State of Michigan is in violation of the Commerce Clause of the United States Constitution. The plaintiffs claim to have been deprived of their constitutional rights and privileges to engage in interstate commerce and are seeking an injunction barring the State of Michigan from enforcing Michigan liquor laws prohibiting out-of-state wine retailers from selling, shipping and delivering wine to Michigan consumers.

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In a responding brief, Michigan's Attorney General outlined the details involved in Michigan's three-tier distribution system and emphasized the importance of the state having control over retailer actions--especially those potentially involving the delivery of alcohol to homes where a minor may be present. The U.S. District Court will hear the case later this year and is likely to revoke delivery privileges of Michigan retailers if forced to do so. The bottom line is that there is virtually no way to properly regulate out-of-state businesses and virtually no way to effectively police direct ship retail sales to ensure that minors do not obtain alcohol delivered to their homes and that all proper packaging and taxation rules are followed.

In other developments, the Michigan Legislature passed Public Act 501 creating Redevelopment Project Area and Development District Licenses. These licenses require a resolution from the local governing body establishing the project area and a variety of other documents describing the investment being made. The initial licensing fee is $20,000 bringing only serious development offers to the table. To date, no licenses have been issued under this provision though several are in the process of application.

As usual, the MLCC Licensing, Enforcement, Financial Management and Executive Services teams were busy improving business processes to provide the best services possible under extremely tight budget constraints. The future holds great promise for increased efficiencies and customer service with the implementation of technology tools such as automatic document submission.

NIDA SAMONA

Chair

Michigan Liquor Control Commission

MISSISSIPPI

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After experiencing Hurricane Katrina during our last fiscal year, I am pleased to report that the year ending June 30, 2007, was hurricane-free! Case sales and corresponding revenue, however, continue to increase. Case sales were up by 86,000 cases over FY 2006, and revenue increased by $14 million. This was a 6.3 % revenue increase.

Our on-premise accounts made up 12% of our sales volume this year. Casinos opening or re-opening on the Gulf Coast (after Katrina's destruction) accounted for half of this on-premise volume. Our off-premise private package stores made up 88% of our sales volume.

The Mississippi Liquor Distribution Center distributes both wine and spirits to our permittees. Wine case sales were up by 6.73% and spirits sales increased by 2.03 %. The largest spirits' percentage increases were in the vodka and the tequila categories.

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We are presently in the midst of elections for statewide and county officials. Our current governor, Haley Barbour, is a very strong candidate for a second term. We will have a new lieutenant governor, as our current one is term-limited. Many statewide offices will see new faces.

Enforcement

Our enforcement activity continues to concentrate on underage drinking. One new initiative focuses on the rural areas of our state, attempting to prevent underage drinking in remote areas not routinely monitored by other law enforcement groups. The authority for our enforcement officers to enforce certain provisions of the beer laws, specifically the sale of beer in dry areas, sales of beer or possession for sale by non-permitted establishments, sale to minors, and other unlawful acts was extended through July 1, 2011.

Legislation

New legislation during our 2007 session was particularly voluminous, especially for an election year. We offered clean-up language to outdated code sections in the ABC law, to which several amendments were added at the Capitol. Alcohol on college/university campuses has been a long debated issue, and Senate Bill 2370 clarified that alcohol beverages cannot be sold or consumed at any public athletic event at any university. (This does not pertain to beer.) Also, it more closely ties consumption of alcohol beverages on campuses to the local option laws applicable to each specific campus location. Another amendment to SB 2370 provides for the sales of alcohol beverages from mobile carts on golf courses, when the course holds an on-premise permit.

ALICE GORMAN

Deputy Commissioner

Mississippi State Tax Commission

Alcoholic Beverage Control Division

MONTGOMERY COUNTY, MD

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When our fiscal year ended on June 30, 2007, Montgomery County saw that total sales had increased 5.4% over FY06, as DLC gross sales of product totaled $202,193,521. Over $112 million resulted from wholesale operations, while approximately $90 million was generated by retail sales in our county-owned and operated liquor/wine stores. These gross sales figures are in addition to all taxes, regulatory fees and enforcement revenues collected over the year. Retail sales in our DLC stores continue to demonstrate strong growth as they increased by 7.6% over the same period last year.

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We will be challenged in the next few years to maintain a favorable gross profit margin in order to ensure we continue providing a robust revenue contribution to the County's General Fund. Many of our fixed costs of operation are projected to increase substantially over the next few years, forcing us to continue identifying efficiencies and creatively increasing gross revenue growth in a responsible manner. Expanding our retail penetration by opening additional new stores is one strategy we are pursuing.

Our Department successfully implemented a reorganization during this past year that consolidates all alcohol-related government functions within the Department of Liquor Control. Our newly constituted "Division of Licensure, Regulation and Education" provides comprehensive service to our licensees and the local hospitality industry, by combining traditional regulatory functions along with community outreach efforts. This one office issues all alcohol licenses, provides training and regulatory advice for licensees, and coordinates in-house alcohol enforcement activities with those of the Police Department. Additionally, this office creates programs and partners with outside resources to offer unique training opportunities that benefit the entire community. One such program is our "Latino Initiative." Funded primarily from grants and using a culturally competent state certified alcohol trainer, this program is a methodical and inclusive approach to bring Latino-owned and operated businesses into the community network, develop attachment to the community, and include them in solutions to community problems that can arise as a result of the inappropriate sale of beverage alcohol. Strategically coordinating our regulatory, enforcement and educational efforts will allow us to provide an increased level of quality service to our individual businesses and the neighborhoods in and around our business districts.

At the state level, Maryland is confronting the realities of a serious "structural deficit" situation with the state budget. Some tax increases appear to be inevitable, but today there is little consensus regarding the types of taxes likely to be modified or the magnitude of the increases. All potential revenue sources are currently being scrutinized by the Governor and legislative leaders. Given that Maryland's beverage alcohol excise tax is among the lowest in the nation--and hasn't been changed in decades--it is a given that all alcohol-related taxes and fees will definitely be considered a potential target for increases when the General Assembly convenes in early January.

GEORGE F. GRIFFIN

Director

Montgomery County, MD

Department of Liquor Control

MONTANA

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The past year proved to be a successful one for the Montana Department of Revenue's Liquor Control Division.

The division continued to experience substantial increases in sales revenue. In fiscal year 2007, sales grew 10% for the second consecutive year, topping $92.3 million. The number of cases sold increased to 616,400, up 6% from the previous year.

The department played a role in getting some notable pieces of alcohol-related legislation passed by the Montana Legislature in the first half of 2007. Bringing Montana's liquor laws into compliance with the U.S. Constitution's Interstate Commerce Clause--In a manner acceptable to all affected parties--was the department's main focus. Here are summaries of the most notable legislation:

Revise Residency Requirement for Liquor Licenses 

This legislation brings Montana residency requirements into compliance with a Montana District Court decision that determined our state law to be unconstitutional with respect to the Interstate Commerce Clause.

Out-of-state residents will be allowed to apply for liquor licenses. The legislation provides clear, uniform statutes on who must qualify for license ownership for all entities (sole proprietorships, publicly traded corporations, privately held corporations, partnerships, and limited liability companies) applying for a liquor license. Generally, those required to qualify are those persons with 10% or more ownership or interest in a license.

In addition, this legislation provides our agency with statutory authority to review a license applicant's funding source to ensure it is legitimate.

Revise Wine Distribution and Beer Distribution

These pieces of legislation are the result of the 2005 U.S. Supreme Court decision in Granholm v. Heald. Currently, in-state wineries and breweries may sell their product directly to retailers while out-of-state wineries cannot.

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Out-of-state wineries will be allowed to "opt-in" and become licensed. They may then ship limited amounts of wine directly to a licensed retailer in Montana. Otherwise, they may remain registered and must ship to a distributor or licensed connoisseur. If a winery uses its own personnel, vehicles and equipment to deliver wine to a retailer, the winery may ship up to 4,500 cases annually. If wine is delivered by a common carrier, up to 4,500 cases may be shipped annually, but only 3 cases per day per retailer may be delivered by the common carrier.

Out-of-state brewers will be allowed to "opt-in" to directly distribute product. They may then ship limited amounts of beer directly to a licensed retailer in Montana. Otherwise, they may continue to ship to a distributor or licensed connoisseur. Brewers who manufacture less than 60,000 barrels of beer per year can directly distribute to licensed retailers within the state who choose to purchase from them. The brewers can distribute beer to licensed retailers if the brewer uses the brewer's own personnel, vehicles and equipment to deliver the beer provided that 1) individual deliveries other than draught beer are limited to the case equivalent of 8 barrels per day, per licensed retailer and 2) the total amount of beer sold or delivered to retail licenses does not exceed 10,000 barrels per year.

The tax on any wine or beer shipped directly to a retailer must be paid to our agency by the winery or brewery. The winery or brewery must report the amount of product shipped directly to a retailer monthly and the retailer must report the amount of product it purchased from an out-of-state winery or brewery monthly.

SHAUNA HELFERT

Administrator

Liquor Control Division

Montana Department of Revenue

NORTH CAROLINA 

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North Carolina continues to experience strong growth in retail sales of spirituous liquor. Sales for the fiscal year ending June 30, 2007, totaled approximately $650 million, up 8% over the previous year. In order to meet the demands of the consumer, the local ABC boards continue relocating, modernizing, and upgrading existing ABC stores. With case shipments from the state's 23-year-old central warehouse in Raleigh exceeding 4 million cases last year, the growing demand has led the ABC Commission to begin considering options for warehouse expansion. With the state's population projected to grow by 40% in the next 20 years, careful consideration to size and location(s) are being studied.

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During the 2005 legislative session, the North Carolina General Assembly passed House Bill 1518 requiring holders of certain Alcoholic Beverage Control permits to separate, store and recycle all recyclable beverage containers. The bill affects holders of on-premises malt beverage, on-premises unfortified wine, on-premises fortified wine and mixed beverages permits. Furthermore, recycling is only required for those containers that are sold at retail for on-premises consumption. This bill becomes effective Jan. 1, 2008 and the ABC Commission plans to require applicants to prove implementation of a recycling program in fall 2007 before issuing any business an ABC permit.

Also this year, the ABC Commission increased its penalties by 20% for ABC permit holders that violate the ABC laws in North Carolina. The Commission requires any business found to be in violation of the ABC Law to attend a free Responsible Alcohol Seller/Server Program (RASP) class sponsored by the Commission's Education and Training Division. From June 2006 through June 2007, 4,938 participants attended RASP training. In addition, alcohol education programs were conducted for 16,688 K-12 and college students.

The Commission has increased internal efficiency and embarked on a new programming initiative. In the near future, the Commission plans to accept debit and credit card payments online and in its main office for all permit matters and violation payments. Each spring approximately 15,000 registration and renewal reminders are mailed to permittees. Beginning with spring 2008, these permittees will be able to go to the Commission's website, access their account, and pay the renewal/registration fee with a credit or debit card.

In keeping with our theme of improved efficiency and modernization, the Commission rolled out its new website on Friday, July 20. Not only does the site have a fresh new look but an enhanced navigation structure as well.

DOUGLAS A. FOX

Chairman

North Carolina Alcoholic Beverage Control Commission 

OHIO 

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The Division of Liquor Control recently completed another record year of liquor sales.

Spirituous liquor dollar sales at the state's 432 contract liquor agencies reached $672.7 million in fiscal year 2007. This was an increase of $33.9 million (or 5.31%) over sales in fiscal year 2006. The continued increase in liquor dollar sales can be attributed mostly to increases in product prices, consumers purchasing premium priced products, an increase in the volume of retail sales, and a rise in the level of consumption.

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Total gallons of spirituous liquor sold in fiscal year 2007 was 10.2 million gallons, an increase of 246,779 gallons (or 2.5%) compared to fiscal year 2006.

In addition, the division's net profit margin increased to 29.54% for a total net profit of $203.2 million, which is an increase of $11.6 million over Fiscal Year 2006. Due to efficient management in areas such as inventory control, standardization of product placement, product selection, and the placement of contract agencies in growing and economically viable locations, the division's net profit and profit margin have steadily increased over the past ten years allowing the division to continue to contribute significant revenue to the state benefiting all Ohioans.

The division's transfer to the state's General Revenue Fund (GRF) for fiscal year 2007 was $135 million, which was $3 million less than that of last fiscal year. In addition to the GRF transfer, the division contributed another $122.8 million in liquor sales and tax revenue to help fund a variety of state services. The division's total contribution for fiscal year 2007 was $257.8 million.

TERRY POOLE 

Superintendent

Ohio Division of Liquor Control

OREGON

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The Oregon Liquor Control Commission has beefed up its public safety services staff with five new inspectors to strengthen key programs such as preventing liquor sales to minors and over service of alcohol by licensees.

The staff build-up was OK'd by the Legislature and the new enforcement people have been assigned to Portland, regional offices in Salem and Eugene, and a new OLCC office at Ontario in eastern Oregon.

As the OLCC enhances its ability to carry out our traditional missions of enforcement and licensing, we've also responded in a big way to meet the growing demand for distilled spirits--by purchasing a second warehouse/distribution center. The modern, 104,800 square-feet facility augments the existing 124,000 square-feet Milwaukie distribution center and is located just a few hundred yards away.

The new warehouse has office space and will be used primarily as a bulk receiving/storage site and to house some of our staff. We gain efficiencies with the ability to unload inbound truck shipments at both locations and gain more room for packaging and outbound shipping at the existing location. And the cost of the project was substantially less than constructing a new warehouse.

With projections indicating that demand for distilled spirits will continue to grow in Oregon, the new warehouse should meet agency needs for at least a decade and beyond.

Mirroring national growth trends, Oregon spirits sales soared to $379.5 million in 2006-07, up $31 million, or 8.9%, from the previous year. Case movement also climbed from 2.3 million in 2005-06 to 2.43 million in 2006-07, a 5.91% increase.

And, the temporary distribution center workers we hired last year were made permanent by the Legislature this year, giving us a more stable workforce for the new warehouse.

New Store Opening

The OLCC is about to open our 242nd liquor store in a revitalized and rapidly-growing section of downtown Portland called the Pearl District. This is the 13th new store to open since 2000 to meet population growth and customer demand around the state.

Commissioners recently reviewed the results of a comprehensive study of liquor agent compensation to determine if it adequately covers the cost of doing business and upgrading facilities. I've called together a blue ribbon panel to analyze the findings and make recommendations for consideration by the governor and lawmakers.

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On a personal note, earlier this year I finished my term as chairman of the board of the National Alcohol Beverage Control Association (NABCA). As I traveled throughout the country, and even overseas, I stressed social responsibility, which means educating people so they can make the right choices when it comes to alcoholic beverages. This includes informing the public and working with others to prevent the inappropriate and high-risk use of alcohol. It may include establishing laws, setting policy, funding programs, enforcing regulations or other actions state and local governments may take to meet this goal.

The people who sell, serve or provide spirits, beer and wine are on the front lines when it comes to ensuring safe and responsible alcohol use. These may be liquor licensees in bars, restaurants and taverns, or social hosts who serve alcohol to family and friends at private gatherings. Social responsibility isn't just the personal choices of the drinker, but also the choices and decisions made by those who provide the alcoholic beverages.

Moreover, I'm proud that while serving as NABCA chair, we created a National Alcohol Policy Alliance to improve communications among alcohol producers, industry people, public health representatives and policy researchers on alcohol responsibility and other issues of mutual concern.

Turning back to the OLCC, this year we've found innovative ways of delivering the message of responsibility to both alcohol servers and consumers. This fall, the agency will begin offering alcohol server education courses online. After two decades of offering a classroom-only course using licensed instructors, we decided to offer computer-based training as an additional method of delivering this required course.

And, in a novel program aimed at alcohol consumers, the OLCC is distributing more than 100,000 bar coasters free to licensed premises around the state. They're designed for patrons to "Test Your Alcohol IQ," and learn something about alcohol and drinking safety in the process.

OLCC staff members created five different color coasters, each with three alcohol-related questions on one side, with the answers and a "Did You Know" fact on the other side. The project was funded by a grant from NAB CA.

The coasters should provide an enjoyable and informative way for patrons to test their general knowledge of alcohol-related laws and educate them about their responsibilities when consuming alcohol. Plus, the coasters will serve as a reminder that licensees and servers also have responsibilities when selling or pouring alcohol.

In the area of alcohol enforcement, one of the OLCC's most important responsibilities is prevention of underage drinking, which remains a serious problem in Oregon and throughout the country. One key method of accomplishing this is through compliance checks of licensees, using underage minor decoys.

Last year, OLCC liquor inspectors participated in 1,600 checks with an average compliance rate of 76%. Midway through this year, the agency had participated in 679 checks with a 78% compliance rate.

In the regulatory area, the OLCC responded to a petition this year by Oregon's wine industry to update 30-year-old administrative rules on wine labeling and identity standards. These rules were created when there were only a few dozen wineries in the state. Now there are 325.

Phillip D. Lang

Chairman

Oregon Liquor Control Commission

PENNYSYLVANIA

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The past year has marked major changes at the Pennsylvania Liquor Control Board--new leadership to our agency, better service to our customers around the state, and a greater sense of mission for the more than 4,000 employees who make up the PLCB team.

The most significant development in the PLCB's management this past year was the hiring, in December, of a chief executive officer to oversee day-to-day operations of our agency. For this key role, we are fortunate to have Joe Conti, a former state senator (who at one time chaired the PLCB's oversight committee) and former restaurateur with years of experience and innumerable insights into the legislative and business aspects of our operations.

Our CEO's mandate is to guide our agency to greater profitability and efficiency, while we maintain the steady sales growth of recent years. This will enable the PLCB to continue to make significant financial contributions to the state to benefit all Pennsylvanians.

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In January, Gov. Edward G. Rendell named me Chairman of the PLCB. After serving nine years as a board member, it's an honor for me to take on this new role. Board Member Thomas Goldsmith has recently been nominated for a second term on the board, and Robert Marcus, an Indiana, PA., attorney and business owner, has also recently been nominated to the board to complete the term of our former colleague Jonathan Newman.

Together, our team has made significant strides improving sales and service to our customers and enhancing our regulatory and educational missions.

For the fiscal year just ended, the PLCB grossed $1.68 billion in sales, an increase of 7.2% from FY 2005-06. This marks the PLCB's fourth straight year of 7%-plus sales increases. Overall, our agency generated more than $450 million in revenue for the Commonwealth via taxes and returned profits from our stores.

Numerous initiatives have contributed to this continued sales growth. This spring, we focused on the product itself. We expanded the popular Chairman's Selection wine program, which offers terrific wines at great prices. Following its success, we unveiled two new retail programs that also make use of Pennsylvania's purchasing power: Sommelier Collection, critically acclaimed and collectible wines $29.99 and up; and Power Purchase, value-priced wine and spirits $9.99 and below.

We've also joined with E. & J. Gallo and Future Brands in a cooperative project to study our customers' preferences. This category management initiative, undertaken at no cost to our agency, comprises months of planning and research on sales and traffic at the PLCB's 628 stores. These findings will be used to make changes in store setup, inventories, promotions and overall operations.

Until 2006-07, increases in the PLCB's expenses outpaced sales growth. We are now moving aggressively to identify and shrink costs, reorganize our management structure and examine every aspect of our business operations. CEO Conti and his team are working to develop more efficient and competitive procurements, tighter and more performance-based contracts with vendors, and governance structures for our information-technology and real estate operations that ensure fiscal responsibility.

This renewed focus on the bottom line has already had an impact, as the PLCB has identified some $10 million in cost savings in just the past six months. We are confident we can continue to trim unnecessary expenses and increase returns to the people of Pennsylvania--our shareholders.

The PLCB also regulates alcohol sales in the Commonwealth. Our store employees last year verified that more than 922,000 customers were of legal drinking age. Our Bureau of Licensing has continued to reduce turnaround times and successfully negotiate Conditional Licensing Agreements. This team also worked with communities to control nuisance bars, while providing administrative oversight to more than 16,000 licensees across Pennsylvania.

Our Bureau of Alcohol Education continues to lead the discussion about alcohol misuse in Pennsylvania. Last year, we allocated $3.1 million for alcohol education and prevention initiatives, in which the PLCB works with local law enforcement, parents and educators to discourage underage and binge drinking and to improve alcohol awareness and enforcement. Among the bureau's achievements were co-hosting the Bridges Conference, a two-day meeting on high-risk and underage drinking prevention; a $250,000 grant to the Pennsylvania State University to plan strategies to prevent underage drinking on the school's 23 campuses around Pennsylvania; and the first Act 85 report to our General Assembly, a comprehensive survey of trends in high-risk drinking and Commonwealth efforts to address them.

In 2008, the PLCB will celebrate its 75th anniversary. Building on the business initiatives now under way, we mark this anniversary by continuing to regulate the alcohol industry in a fair, timely and consistent manner; providing comprehensive alcohol education; offering our customers superior service, selection, pricing and product information; and contributing a reliable source of revenue to the Commonwealth to benefit the people of Pennsylvania.

Patrick "P.J." Stapleton

Chairman

Pennsylvania Liquor Control Board

UTAH 

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Several changes took place at the Utah DABC in July 2007. The first, and probably the most significant, was the retirement of Ken Wynn. Ken has been the director of the Utah Department of Alcoholic Beverage Control for 30 years. At 71 years of age, he said it is time to pursue other adventures in life. We wish him well. I [Dennis Kellen, who has been Deputy Director at the department for over 30 years], have been unanimously appointed by the Alcoholic Beverage Control Commission and confirmed by the Governor to replace Ken.

Also in July, the Governor appointed three new Alcoholic Beverage Commissioners. Two were appointed to four-year terms and the other to a three-year term. This will ensure that no more than two commission posts are vacant at the same time in the future. The new commissioners are Sam Granato, who was voted to be Chairman of the Commission at his first meeting, Gordon Strachan, and Bobbie B. Coray. They will join Mary Ann Mantes (voted Vice-Chairman) and Kay Balmforth who are currently in the middle of four-year terms.

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Other changes at the Utah DABC are: John Freeman who will replace Me as Deputy Director, Tom Zdunich who will replace Dallas Froisland as Director of Purchasing (Dallas is retiring after 41 years), and Dave Willis who replaced retiring Brad Brown as I.T. Director.

We at the Utah DABC are enthusiastic about our future with our new Commission and staff.

Dennis Kellen

Director

Utah Department of Alcoholic Beverage Control

VERMONT

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Issues facing Vermont in the next year include: evaluating and reporting on the newly enacted direct shipment legislation, completing a second review of current regulations, beginning the warehouse automation project, preparing new technology initiatives which include a new licensing and enforcement system, a legislatively mandated study of catering laws and regulations and, finally, prioritizing expenditures for the upcoming FY09 budget process.

New Legislation

The 2007 Legislative Session adjourned May 12, 2007. Here are some highlights of legislation passed and debated.

H157--Amends the current statute that allows for home fermented malt or vinous tasting events. It also added some clarifying language for the Educational Sampling Permit that was passed in 2006. Finally, it calls for a study of commercial caterers in the state.

S120--Allows Vermont Wine Manufacturers to sell Vermont manufactured wines at farmers markets. The bill adds language that reduces the number of days notification wine wholesalers must provide for wine samplings at second class stores by their sales staff, from ten to five days. It also adds a provision that allows beer and wine wholesalers to invite management and staff of stores, bars and restaurants (first, second and third class license holders) to sample their wine and beer at a restaurant for promotional purposes. A wholesaler may also give notice for a tasting at a trade association convention.

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Direct Shipment

The U.S. Supreme Court held in May 2006 that states could not discriminate by allowing direct shipments from in-state manufacturers and prohibiting those from out of state. A departmental report will be issued that addresses compliance with the Court's decision and allows for shipment to consumers, restaurants, and grocery stores. See www.state.vt.us/dlc for further information. The department is required to report to the legislature in December 2007 all revenue associated with the new shipping requirements.

Warehouse Management System Status

DLC's Warehouse Management System (WMS) project is well through the design process, with most of the major issues and decisions having been made, and plans laid for the configuration of the software to match changes already being made in the warehouse's material handling systems. Though the project has been delayed unavoidably due to a loss in the family of the Robocom staffer assigned as our account's primary liaison, we're expecting to receive the third deliverable, recommendations for hardware, along with further direction on what will be our next step, within a month.

Retail/Merchandising

DLC is experiencing its 12th straight year of growth in sales dollars. In Fiscal year 2007, sales reached $54,760,111; this represents a 3.6% ($1.9 million) increase over FY2006 figures. The department estimates that sales volume would have been much higher but were impacted by a lack of snow in December and January.

Education, Licensing & Enforcement

The Enforcement Division continues to be busy with alcohol and compliance testing, along with licensee inspections. Catering regulations will be reviewed this summer under a mandated legislative study, in the hope of expanding the types of caterers allowed under current law.

Alcohol and Tobacco Education

This continues to be a very important part of DLC's mission. The education staff, along with field investigators, has provided seminars to thousands of license holders and their employees over the past year. Combining that with monthly alcohol and tobacco compliance testing, the statistics continue to improve, with 90%+ alcohol and tobacco compliance for those who attend DLC seminars. Education and Enforcement are making a difference in denying youth access to alcohol and tobacco products. DLC also conducted workshops in August at the National Underage Drinking Conference in Orlando.

Walter Freed

Chairman

Vermont Department of Liquor Control

VIRGINIA

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Virginia Department of Alcoholic Beverage Control (ABC) completed Fiscal Year 2007 with a record $607.4 million in annual gross sales. Although slightly below forecast, sales increased by 6.18% over last year.

Efficiency continues to increase after the completion of a multi-million dollar warehouse automation project. The new system is capable of processing an average of 20,000 cases in a normal shift, and meets the demands of 327 ABC stores across the state.

Virginia wines are back in ABC stores. In September 2006, the U.S. Court of Appeals reversed the April 2005 ruling by a federal judge that the statute limiting wines from other states was unconstitutional. About 25 years ago, the Virginia General Assembly had decided to eliminate wine sales in state stores; however, ABC was allowed to continue selling wines produced by Virginia farm wineries in support of the state's then fledgling wine industry.

As of July 1, 2007, five new licenses became available for stakeholders, specifically limited caterers, Internet wine retailers, limited mixed beverage restaurant, restricted wholesaler, and meal-assembly kitchen owners. ABC has updated its license application package to add these licenses and to include checklists for required documents, updated instructions and information for each license type.

In Virginia, under the leadership of Governor Tim Kaine, new guidelines have been developed to ensure fiscal accountability while safeguarding the Commonwealth's assets. Those guidelines are called: Agency Risk Management Internal Control Standards, or ARMICS. ARMICS is the state government's equivalent to the Sarbanes-Oxley Act, or SOX, in the private sector.

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To comply with ARMICS, ABC must show that it cultivates and maintains high ethical standards and take action if and when anything is found that could interfere with the ability to achieve strategic goals or with financial processing. ARMICS requires extensive documentation of all processes that touch the agency's financial statements and as a result, involves every division at ABC.

Another mandate requiring planning and accountability is the Continuity of Operations Plan, or COOR ABC's COOP is a set of documented procedures to resume or restore critical business processes following a disruption. The agency has essential functions that must be performed, or rapidly and efficiently resumed, in an emergency.

ABC special agents based out of eight regions across the state enforce criminal and ABC laws in more than 14,000 licensed establishments. The agency offers compliance training programs and DVDs to licensees, as well as tools such as "Do Not Sell" age stickers.

Partnerships are at the heart of the prevention program at ABC. The agency provides thousands of dollars in grant funding to enhance prevention coalitions through Rural Law Enforcement, Community Coalition and Operation Undergrad grants. Prevention materials and a compilation of "best practices" in alcohol education are also offered.

ABC remains committed to balancing control, service and revenue for the citizens of Virginia.

Susan R. Swecker

Chair

Virginia Department of Alcoholic Beverage Control

WASHINGTON STATE

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Building on the continued success of our retail operations and the perspectives of two new board members, the Washington State Liquor Control Board (WSLCB) is re-emphasizing the public safety aspect of its mission. The new emphasis consists of statewide public education efforts targeting youth, building partnerships with the private sector and strategic placement of Enforcement resources.

Protecting Kids

In fall 2006, the WSLCB launched a public education campaign targeting middle school students across Washington. The campaign's aim is to inspire a conversation between students and their parents about alcohol. Studies show that children who have held flank and informed discussions about alcohol with their parents are much less likely to experiment with it.

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Following best practices recommended in the nationwide "Start Talking Before They Start Drinking Campaign," the WSLCB campaign included 14 alcohol awareness assemblies at middle schools across Washington. The assemblies included high-profile government and celebrity speakers. The campaign continued in spring targeting communities and middle schools that scored significantly above the statewide average for youth drinking on a state-sponsored survey.

The campaign's focus in the coming year will be based on 11 focus group sessions recently sponsored by the WSLCB. The focus groups targeted sixth and eighth grade, high school and college minors to gather information on youth drinking practices and perceptions. The WSLCB will use the focus group data for setting the course of the alcohol awareness program's future.

Preventing Underage Drinking

In June, Boardmember Roger Hoen accepted an invitation to serve as co-chair of the Reduce UnderAge Drinking (RUAD) coalition. The coalition is comprised of prevention leaders from across Washington. It focuses on increasing public awareness about the harmful effects of underage drinking and provides guidance on public policy impacts.

Among Hoen's goals as vice chair of the coalition is to bring manufacturers together with the prevention community to address youth alcohol-related issues. In July, he invited members of RUAD to attend the WSLCB's quarterly Business Advisory Council. The meeting presented an opportunity for the industry representatives to share their current efforts regarding social responsibility and to identify potential opportunities for partnership.

Strategic Enforcement

To address the high demand for liquor enforcement in Washington's major cities, the WSLCB is strategically using existing enforcement resources while simultaneously seeking legislative approval for additional enforcement officers. Tactics include:

* Housing a liquor enforcement officer within the Seattle Police Department to respond to problems as they arise;

* Instituting emphasis patrols in the Seattle downtown core;

* Using technology to pinpoint problem areas for deploying enforcement officers; and

* Seeking legislative approval for additional line officers.

This is an exciting time for the WSLCB. While our public safety initiatives are just beginning, the potential for a positive impact is very promising.

LORRAINE LEE

Chairman

Washington State Liquor Control Board

WEST VIRGINIA 

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* Sales continue to increase with FY 07 distilled spirit sales totaling $69,729,188.71, up 5.6% or $3,692,207.00 from FY 06 sales totaling $66,035,981.23.

* Case volume was up for FY 07 to 594,001 cases, up 16,057 or 3% from the FY 06 total of 577,944.

* Passage of SB 712 extended retail liquor sales by two hours on Monday through Saturday, thus allowing stores the opportunity to remain open until midnight.

* Recorking and Resealing legislation was also part of SB 712. With approved packaging and/or corks patrons may now take their unconsumed wine home.

* The passage of SB 712 created a direct shipper's license subject to the WV ABCA requirement permitting the direct shipment of wine to the consumer in limited quantities.

* Finally, under SB 712 new classes of licenses were established to allow for Bed & Breakfast and Private Wine Spa.

* A new email database has been established for our retailers. This database allows the WVABCA to update stores with new regulations, track inventory and feature promo items. This new form of communication also allows for the review of sales in comparison with marketing plans and projected sales goals.

* Increase in gross profits is also attributed to our Annual Trade Show which will be held in Chester, WV, at the Mountaineer Race Track and Gaming Resort on September 24th and 25th. This year's event will feature 8 master distillers' presentation and tastings and permit retail stores to make special orders for the holidays and receive once a year discounts.

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* Installation of video conferencing service for internal communication, trainings and hearings will reduce travel expense for the state and the industry.

* Received a grant from the National Alcohol Beverage Control Association (NABCA) to develop an educational carding video and disseminate to the 5,100-plus ABCA licensed establishments. The video received a national production award.

* Continues to receive grant funding from the Office of Juvenile Justice and Delinquency Prevent (OJJDP) as part of the Enforcing Underage Drinking Laws (EUDL) administered by the WV Division of Criminal Justice Services. These funds allow the WVABCA to conduct compliance checks, work with local law enforcement and offer free Tips trainings.

* Continues to receive grant funding from the National Highway Traffic Safety Administration (NHTSA) administered through the WV Governor's Highway Safety Program. These funds sustain the WV Higher Education Initiative (WV-SWI) project, allows the enforcement division to participate in Sobriety Check Points. The grant also funds our Fairs and Festivals program, a program that travels around the state and meets with local communities to educate West Virginians on the use and misuse of alcohol.

* The WV-SWI now includes every public and private college and university in the state. The membership is over 300 and the group conducts yearly training summits. The WV-SWI recently completed a statewide evaluation and used the data to benchmark and develop a strategic statewide plan, which includes the development of a Social Norms Program. The WV-SWI has held 4 BASIC training classes this past year and each campus meets on a monthly basis. These meeting sinclude representatives from school, community, law enforcement, industry and bar owners.

* The WV ABCA hosted the National Liquor Law Enforcement Association (NLLEA) Training Academy this past June.

DALLAS STAPLES

Commissioner

West Virginia Alcohol Beverage Control Administration 

WYOMING

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A "Boom-Bust" cycle is not new to Wyoming and it does create some unique challenges for the

Wyoming Department of Revenue and each of its divisions including the Liquor Division. Currently Wyoming is in a "Boom" cycle that is driven by the mineral industry and it has created some unique challenges with some encouraging numbers. Direct shipment of wines into Wyoming by licensed out-of-state shippers increased by 40% in the last fiscal year. The number of licensed out-of-state shippers increased from 335 in FY06 to 541 in FY07. With the increased demand for restaurants, from communities throughout Wyoming, the Liquor Division staff helped draft and worked with the legislature to pass a new type of liquor license called a Bar & Grill liquor license.

With an increased demand for energy labor the food and beverage as well as the hospitality industry has had an enormous turnover in labor. The Wyoming Liquor Division in a working relationship with the Wyoming State Liquor Association increased the number of TIPS trained personnel from 1,527 in FY06 to 1,896 in FY07. Included in the latest TIPS numbers the Liquor Division staff trained all city clerks in the TIPS program along with some legislators. The regulatory staff also produced a 15-minute training video in cooperation with the Wyoming Association of Sheriffs and Chiefs of Police, The Wyoming State Liquor Association, The Casper Police Department and the Cheyenne Police Department with funding from NABCA and the Liquor Division. This training video has been distributed to every licensee in the state along with other training materials provided by the Wyoming Department of Health and the Sheriffs and Chiefs Association.

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On-site inspections have also been increased from 847 in FY06 to 1,905 in FY07. The compliance rate did drop just a bit from 94.1% in FY06 to 89.2% in FY07, which was expected due to the large employee turnover in the industry.

GREG COOK 

Administrator

Wyoming Department of Revenue

Liquor Division