Alcohol is the only commodity that has not one, but two U.S. constitutional amendments, the 18th Amendment, passed in 1919, that enacted federal Prohibition and the 21st Amendment that repealed it in 1933. The 21st Amendment gave states explicit power to regulate and tax alcohol within their borders.

Soon after the December 1933 ratification of the 21st Amendment, Minnesota passed the Liquor Control Act, which was established to control the manufacture, distribution and sale of alcoholic beverages (the three-tier system that remains in effect to this day).  At the time, Minnesota decided not to become a control state, but instead permitted the counties to determine whether alcoholic beverages could be sold in their communities or not via location elections where electors would choose between becoming a “wet” or a “dry” county.

A “wet” county is one where the making and selling of alcohol is allowed. A “dry” county is where voters have decided that the making and selling of alcohol is not allowed. Even within a “wet” county, a city government could choose to remain “dry” by imposing its own stricter regulations. As a result, licensing and the sale of liquor varied across the state of Minnesota by county and city. Even though there were many “dry” counties well past the end of prohibition in Minnesota, today, there are no “dry” counties in Minnesota.

Lyon County voted to be a “wet county” in 1934. Marshall voters also voted to be a “wet city’ in that same year and therefore the city of Marshall has been operating a municipal liquor store since 1934. (Source: SMSU Political Science student Angela Stewart “From Control to Cash: A History of the Marshall Municipal Liquor Store”- May 2002).

Although Marshall was no different than other communities around after the end of Prohibition, with the primary goal that a municipal liquor store would control the sale of alcohol, as time went on, Marshall’s municipal liquor store was successful in seeing profits that allowed the city to utilize the profits for a greater community benefit.

Liquor store profits serve two purposes for any Minnesota city. First, cash reserves are necessary to purchase inventory and maintain facilities. Second, profits in excess of needed reserves are transferred to the city’s general fund for use by other departments, capital projects or public facilities to name a few. More specifically for Marshall, in 2024, the liquor store profits of $400,000 reduced the property tax levy and another $200,000 supported paying down of the debt for the construction of City Hall. In addition, past uses of liquor store funds have included capital improvements to Independence Park: replacement of the trails within the park and assisting in funding the construction of the shelter and bathroom currently under construction.

Shenehon, a business and real estate valuation company, conducted independent research into municipal liquor operations and revealed that in general, they do not operate any differently than a private liquor store.  Municipal liquor stores must abide by Minnesota liquor laws, including opening and closing hours, follow the same three-tier distribution model, remit retail sales tax to the Department of Revenue, and cannot charge materially different prices than the private competition and reasonably expect to maintain their customer base. 

Minnesota statutes allowing cities to control alcohol through a municipal owned liquor means it has more municipal liquor stores than any state in the country, according to Paul Kaspszak, the executive director of the Minnesota Municipal Beverage Association (MMBA). In 2023, according to the Minnesota State Auditor, 176 Minnesota cities reported operating 210 municipal liquor stores, with 84 cities operating both on-sale and off-sale liquor establishments.

The city’s liquor store has had multiple locations throughout its history. Marshall’s current municipal liquor store moved from East College Drive and relocated to Boyer Drive near Walmart and Menards in the fall of 2015. At that time the city branded the municipal liquor store as Tall Grass Liquor to better reflect itself as a regional retail liquor store with values centering around customer service and selection of a wide variety of products.

The city’s municipal liquor store controls the sale of alcohol while also providing the economic benefit of lowering the tax burden of city property taxpayers as a result of revenues exceeding expenses (net profit). Additionally, investments with net profits have been made in public facilities and parks. These types of support for public services and projects remind us that the city’s municipal liquor store provides a community benefit beyond the traditional sense of a liquor retail operation.

— Sharon Hanson is the city administrator for the city of Marshall