Montana DOR briefs Business and Labor committee on alcohol licensing, warehouse expansion and emerging THC beverages

HELENA — Officials from the Montana Department of Revenue’s Alcoholic Beverage Control Division (ABCD) told the Legislative Business and Labor Committee that the state operates a control-model wholesale for liquor, is expanding its warehouse after two recent legislative funding allocations and is monitoring new intoxicating products such as THC beverages.

The briefing, delivered by Deputy Director Scott Mendenhall and ABCD Administrator Becky Schlauch, summarized how Montana’s control-state system works, licensing categories and quotas, recent sales and transfers to the general fund, enforcement tools and limits, and outreach efforts including training and scholarships for students.

“[T]his resource, the biennial report, can be found at mtrevenue.gov,” Scott Mendenhall said, introducing the ABCD handout the department provided to committee members. Becky Schlauch explained the control-state model and the agency’s duties, saying the ABCD acts as Montana’s wholesaler and has licensing, distribution and outreach functions.

Schlauch told senators that Montana is one of the nation’s control or monopoly states, a structure set after repeal of Prohibition and reflected in the Montana Liquor Control Act and subsequent law. She described license types ABCD issues — on-premise, off-premise, manufacturers (breweries, distilleries, wineries), wholesalers and special permits — and noted ABCD currently issues more than 5,200 licenses. She also explained population-based quota areas (city and county quota rules dating to the 1947 quota system) and the department’s competitive-bid process for some all-beverage licenses that began after the November 2017 special session.

On distribution and finances, Schlauch briefed the committee that ABCD’s warehouse shipped nearly 1.1 million cases in fiscal 2024 and that gross sales were about $211 million. As she described it, the state paid agency-store commissions, operating costs and then transferred roughly $19.2 million in net profits to the general fund for fiscal year 2024; ABCD also reported other tax transfers in the tens of millions. The department said weekly deliveries go to the 95 agency liquor stores across the state.

Schlauch described a legislature-funded expansion to the state liquor warehouse: the department received just over $22 million to add a roughly 30,000-square-foot automated addition to the existing 100,000-square-foot facility, with construction begun last March and completion expected in July (year not specified in the presentation). The addition, she said, will increase storage and use an automated storage-and-retrieval system.

Committee members asked detailed operational questions. Vice Chair Trebas asked whether the state owns delivery trucks; the department replied it does not and contracts with a third-party delivery company. Senators asked about price differences between communities, floating licenses, how many wineries actually grow Montana grapes (ABCD said that is not a required reporting field and the number is not specified), and licensing counts (ABCD said totals are in their annual report and provided links on request).

On enforcement and illegal shipments, Schlauch said Montana law requires that liquor entering the state come through the state liquor warehouse; unlicensed shipments (including many online purchases from out-of-state retailers) are violations the department cannot fully police because of limited resources. She said ABCD receives shipping reports from carriers and will contact senders when packages are identifiable as alcohol and unlicensed, but that criminal enforcement and larger shutdowns have sometimes required coordination with the attorney general and law enforcement. “We do receive shipping reports from both FedEx and UPS,” Schlauch said; “if they were marked as alcoholic beverages and we can clearly determine that they’re not licensed with us … we will reach out to the sender and tell them, please stop.”

Schlauch also briefed the committee on compliance tools ABCD uses against licensed retailers: reprimand, civil penalties up to $1,500, suspension of a license for not more than three months, refusal to renew and revocation. She described common violations (sale to underage persons, sale to intoxicated persons, location manager issues, undisclosed ownership) and explained how contrived underage-buy stings lead to enforcement (three failures are required to issue a violation under code provisions she cited).

On outreach, Dasha English, ABCD’s outreach and education manager, described two current efforts: a fake-ID awareness campaign and a scholarship program that was offering $52,000 total in awards to high school seniors (application deadline listed as Jan. 26 in the handout). Schlauch also invited committee members to an ABCD “lunch-and-learn” series and to tour the liquor warehouse and expansion.

Several senators raised emerging-product concerns. Schlauch told the committee that THC beverages and other intoxicating non-alcohol beverage products exist in other states and are available in Montana only through licensed cannabis dispensaries under current state law; there is not currently legislation from ABCD to change alcohol law to allow sale of THC beverages at alcohol retail locations. “There are THC Beverages in the markets. In Montana, they are currently only allowed to be sold at a licensed cannabis dispensary,” Schlauch said, and the department is tracking other novel intoxicating products not clearly addressed by current code.

Several senators asked the department to provide additional data or follow-up reports (pricing comparisons with neighboring states, breakdowns of licensing counts, tax revenue allocations, and counts of alcohol-related deaths). Committee members discussed whether interim committees or the department could deliver faster reports on rapidly evolving products such as THC beverages. Schlauch and Mendenhall said ABCD will provide links to the reports and offered to send additional information to the committee.

The committee also announced that tomorrow’s scheduled meetings were canceled because a bill sponsor did not have a fiscal note; Chair Nolan read that notice at the meeting’s start.

The presentation closed with an offer from the department to host committee members for a warehouse tour and with ABCD staff available for follow-up questions.