Bottles of wine on the shelves inside Tall Grass Liquor in Marshall in 2016. Tall Grass Liquor, had sales of more than $5.5 million in 2019.

MARSHALL — Area municipal liquor stores had a mixed year in 2019, a new state report said. While some city-owned liquor stores, including Tall Grass Liquor in Marshall, reported net profit, others struggled.

In Russell, the municipal liquor store operated at a loss of close to $17,000 in 2019, according to an analysis of liquor store operations conducted by the office of the Minnesota State Auditor.

Marshall’s municipal liquor store, Tall Grass Liquor, had sales of more than $5.5 million in 2019, and a net profit of $588,227 — or over 10% of sales, the report said. Tall Grass Liquor was able to transfer $225,000 into Marshall city funds in 2019.

In Balaton, the municipal liquor store made $350,130 in sales in 2019, and had a net profit of $5,230, the report said. Balaton has both on- and off-sale operations at its liquor store.

Tracy’s municipal liquor store had sales of about $676,000 in 2019, and net profits of $32,543.

Last week, state auditor’s office released its annual financial analysis of municipal liquor stores in the state. In 2019, 182 Minnesota cities operated a total of 215 liquor stores, with 93 cities running off-sale liquor stores and 89 cities running both on-sale and off-sale operations. The majority of city-owned liquor stores are in greater Minnesota, State Auditor Julie Blaha said in a presentation last week.

Overall, the number of municipal liquor stores across Minnesota has declined over the past 10 years, at the same time as profits have increased, Blaha said.

“I think local governments are saying, ‘We’re going to be very careful,'” and close liquor stores that are not meeting the city’s needs, she said.

Municipal liquor stores serve a few different purposes for cities, Blaha said. Having a city-owned liquor store allows a city to control liquor sales, and generate income for the city. But for cities that operate on-sale establishments, municipal liquor stores also serve as a gathering place.

In 2020, Minnesota may see the differences between on-sale and off-sale liquor stores exacerbated by the COVID-19 pandemic, Blaha said. On-sale establishments would be impacted more by social distancing restrictions and COVID-related shutdowns. But at the same time, Blaha said municipal liquor stores played a key role in adapting off-sale operations to COVID-19 safety.

“They helped figure out how to open safely,” she said. “We really owe them quite a big debt of gratitude.”

Statewide, municipal liquor stores made a total $27.9 million in net profit last year. That total is down about $1.1 million from 2018, the report said. Net profits for on-sale establishments totaled $3.5 million in 2019, while net profits for off-sales totaled $24.4 million.

Among individual liquor stores, the stores with the top 10 highest gross sales in 2019 tended to be from the Twin Cities metro area, the report said. However, Marshall’s liquor store ranked 22nd in the state for gross sales, and 26th in the state for net profit.

The Pipestone municipal liquor store was the most profitable city liquor store in southwest Minnesota in 2019. The Pipestone liquor store had sales of over $1.6 million, and net profit of $219,071, or 13.4% of sales.

Overall, municipal liquor stores transferred a total of $20.8 million into city funds in 2019.

A total of 33 Minnesota cities reported net losses in 2019. All of those cities were in greater Minnesota, the report said. Several area liquor stores were among those that lost money last year. The Russell municipal liquor store had a net loss of $16,941 in 2019. The Ivanhoe and Walnut Grove liquor stores each had losses of over $14,000, and the Hanley Falls liquor store had a $9,671 net loss.

All four of those cities have had net losses for at least two of the past three years, the report said. That meant Russell, Ivanhoe, Walnut Grove and Hanley Falls were required to hold public hearings about their liquor stores on or after Nov. 17, 2020.

Blaha said public hearings are an important chance for cities to talk about municipal liquor store operations, and to discuss the purpose of their liquor stores.

For example, if a store’s primary purpose is to raise money for the city, operating at a loss could be a problem, Blaha said. If an on-sale liquor store provides a gathering space for the community, that could also be part of the discussion.