December 5 is neither a federal nor state day of celebration, but it probably should be. On Dec. 5, 1933, Pennsylvania, Ohio and Utah became the final states to ratify the 21st Amendment to the U.S. Constitution.
The night before, toasting your Aunt Gertrude’s 92nd birthday with a glass of champagne was illegal. That evening, it was not. Prohibition was over.
When it ended, roughly as many people lived in New Hampshire’s as live in Hillsborough and Coos Counties today. To keep them sober, the state created the NH Liquor Commission and granted it control over alcohol sales and distribution.
Intended as a way to restrict the consumption of demon rum and other intoxicating beverages, the Liquor Commission evolved into a revenue-generating commercial enterprise.
One Aunt Gertrude lifetime after its inception, the creators of the NH Liquor Commission might marvel at its 2024 annual report, which states:
“Over the past 90 years, NHLC has successfully established NH Liquor & Wine Outlets as a nationally recognized brand and destination for shoppers, offering an expansive selection of tax-free wines and spirits to 12 million annual customers across the country.”
In 2024, the commission recorded $766.7 million in sales and $122 million in revenues for the state General Fund. When people ask how New Hampshire manages to avoid an income or sales tax, Liquor Commission revenue is part of the answer.
But it’s less of the answer than it used to be.
In state fiscal year 2021, the commission distributed to the General Fund $164 million, with an additional $10 million transferred to the Alcohol Abuse Prevention and Treatment Fund and $8.5 million was transferred to the Granite Advantage Health Care Trust Fund.
Just three years later, the General Fund transfer had fallen by $42 million. (Transfers of $10.7 million went to the Alcohol Abuse Prevention and Treatment Fund and $7.2 million to the Granite Advantage Health Care Trust Fund.)
In FY 2017, the commission’s annual report recorded sales of 38.5 million bottles of liquor and wine. Eight years later, the total had fallen by 1 million bottles.
From 2013-2016, Liquor Commission revenue grew by at least 3 percent per year (7% in 2016). After the COVID drinking binge surged revenue by 12% in 2021, income fell steadily, posting declines of 4.6% in 2022, 2.4% in 2023 and 3.8% in 2024.
These number suggest that declaring Repeal Day a state or federal holiday would be a long shot.
In August, Gallup reported that the percentage of U.S. adults who say they consume alcohol had fallen to 54%, the lowest level since Gallup began polling the question in 1939.
Polling shows that young adults have been drinking less for years, though Reuters reported this week that Gen. Z drinking has risen since 2023.
It’s not clear whether these trends are economic or cultural, or (likely) a mix of both. But for New Hampshire budget hawks, there’s only one takeaway. Liquor Commission revenue probably isn’t returning to 2021 levels anytime soon. So far this fiscal year, Liquor Commission transfers to the General Fund are 12.6% below plan and commission profits are 11.7% below the prior year.
Over its first 90 years, the Liquor Commission reported a total of $4.7 billion in net profits. (Imagine the returns if just 5 percent of that profit had been invested in an index fund each year.)
Liquor Commission revenues are part of New Hampshire’s strategy for avoiding a broad-based sales or income tax. With thoughts of continuing to avoid those taxes, legislators should be mildly concerned about the slide in Liquor Commission profits, which is clearly driven by broad cultural and economic trends.
Cultural shifts are unpredictable. There’s no telling when or if alcohol consumption will trend upward again. In the short term, if lawmakers want to squeeze more revenue from the Liquor Commission, it will probably have to come from events, merchandise and other supplemental sources rather than off-the-shelf alcohol sales.
Official N.H. Repeal Day parties, anyone?
