In control states, a state agency acts as the wholesaler, and in some cases the retailer, usually for distilled spirits. Brands must be listed by the state, prices follow the state's markup formulas, and listings can be reviewed for performance. In license states, private distributors and retailers fill those roles.
The two models
License states follow the standard three-tier system: private, licensed distributors buy from suppliers and sell to private retailers.
Control states run part of the system themselves, most often for spirits. According to the National Alcohol Beverage Control Association (NABCA), there are 17 control states, along with some local control jurisdictions such as Montgomery County, Maryland. The 17 states are Alabama, Idaho, Iowa, Maine, Michigan, Mississippi, Montana, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, West Virginia, and Wyoming.
How control states differ from each other
No two control states work exactly alike. In some, the state operates retail stores; Pennsylvania, Utah, and New Hampshire are examples. In others, the state controls wholesale while private retailers sell to consumers; Michigan and Iowa are examples. Some states also control certain wine or beer categories, but spirits are the most common focus.
What it means for your brand
- Listings: to be sold, a product generally has to be accepted, or listed, by the state, often through a scheduled review process.
- Pricing: you typically quote a price to the state, and the state applies its markup formula to set the retail price. Build those formulas into your pricing ladder.
- Performance reviews: many control boards review sales and can delist slow-moving products, so plan support for after you're listed.
- Representation: many suppliers use brokers or agents who work with control boards and in-state accounts.
- Special orders: some states let accounts or consumers order unlisted products, which can help build a case for a full listing.
Planning around control states
Treat each control state as its own market plan, with listing calendars, pricing formulas, and the support it takes to keep the listing. Control states can be attractive because the state handles distribution, but a listing without demand-building can stall. Destino factors control-state rules into market expansion and go-to-market plans.
Common questions
How many control states are there?
NABCA lists 17 control states: Alabama, Idaho, Iowa, Maine, Michigan, Mississippi, Montana, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, West Virginia, and Wyoming. There are also local control jurisdictions such as Montgomery County, Maryland.
Is a control state easier or harder for a new spirits brand?
It's different, not simply easier or harder. The state handles wholesale distribution, but you have to win a listing, price within the state's formulas, and generate enough sales to keep the listing.