States and Cities' New Stimulus Strategy: Booze Sales

Thanks to new laws, restaurant patrons in Massachusetts can now start ordering cocktails at 10 a.m. on Sundays, instead of noon. In Arizona they can start hitting the bottle at 6 a.m.—four hours earlier than previously allowed.

Ghislain & Marie David de Lossy |Taxi | Getty Images States and municipalities are loosening alcohol sales laws for the extra revenue.

Fans of the new rules can clink their glasses and toast the recession, which has state and county leaders looking to revise their alcohol sales laws in order to give small businesses in their borders more sales and also increase tax revenue as they face large budget deficits.

Other law revisions are in the works. City and state politicians in Connecticut and Virginia are leading efforts to modify alcohol laws in their states.

“I have followed the ebb and flow of blue laws for 30 years, and in my opinion the pattern is that repeal efforts tick upward every time there’s a downturn in the economy,” said David Laband, economics and policy professor at Auburn University, who wrote a book on the laws that restrict alcohol sales on Sundays.

In the case of Massachusetts, the extra two hours of alcohol sales are meant to give small businesses a needed boost, officials in the state said, but it will also give some added revenue to the state.

“We have noticed a definite increase in our liquor sales and overall traffic on Sunday mornings,” says Alexa Demarco, the general manager of Mooo…, a restaurant within the XV Beacon Hotel in Boston. “This has been also an added luxury to our Sunday morning brunch guests who are looking to order a bloody Mary, mimosa or one of our signature cocktails we now have listed on our brunch menu.”

Expanding alcohol sales hours also keeps residents to stay and spend money within a municipality's borders, rather than leaving to buy alcohol from a neighboring state or county, says Laband. That was the case in Zephyrhills, Fla. The city passed legislation this year that allowed alcohol to be sold starting at 11 a.m. on Sundays instead of 1 p.m. because local restaurants and convenience stores were losing customers to surrounding counties that were selling alcohol at earlier hours, says Linda Boan, the Zephyrhills city clerk.

In Arizona, allowing alcohol sales to start at 6 a.m. on Sundays is expected to give added revenue to businesses around the state and especially to resorts in Phoenix and Scottsdale, says Representative Matt Heinz (D) who backed the amendment after a resident complained about not being able to buy a bottle of wine while doing her Sunday morning shopping for the week. “It’s common-sense, pro-business legislature,” says Heinz.

In Virginia, the governor is proposing to change the entire alcohol sales structure altogether.

In that state, residents can buy alcohol only from government-owned stores. Governor Bob McDonnell (R) proposed a plan in early September to privatize the alcohol system by selling 1,000 alcohol licenses. The sale is expected to give the state $500 million that would be used to improve its transportation systems.

And in Connecticut, the mayors of the three largest cities—Bridgeport, Hartford and New Haven—are pushing the governor to repeal the state's blue laws, which ban alcohol sales on Sunday altogether. The mayor’s are saying the state could reap in $8 million in tax revenue after the repeal.

Experts say that with states and cities continuing to face large deficits, more of them will move to relax their laws.

“The economy is definitely a factor,” says Lisa Hawkins, spokesperson at the Distilled Spirits Council of the United States. “States are realizing they’re missing out on much needed revenue.”