Study Shows Liquor Laws Cause Minnesotans to Pay More for Alcohol

Minnesotans pay substantially more for alcoholic beverages than residents of Wisconsin, according to a 2005 study by Dr. Charles W. de Seve of the American Economics Group titled Impact of the Highly Regulated Wholesale and Retail Alcoholic Beverage Markets in Minnesota. Based on Dr. de Seve's research, Minnesotans pay 17.5 percent more for alcoholic beverages than they would if they lived in Wisconsin.

In real dollars, that means Minnesota consumers pay $444 million more than they would if they purchased their alcoholic beverages in Wisconsin.

Dr. de Seve argues that this disparity is largely due to a near monopoly on wholesale distribution and a lack of retail competition. Seventy-five percent of the price difference between Minnesota and Wisconsin is because of higher wholesale and retail mark-ups.

By paying what de Seve has coined a "monopoly tax," Minnesota consumers are supporting excessive profits for Minnesota's liquor wholesalers, distributors and retailers. The extra $444 million Minnesotans pay for alcoholic beverages – for the exact same products and services available in Wisconsin – directly benefits Minnesota's liquor monopoly.

It's as simple as that – you and other Minnesotans pay that $444 million because the Minnesota liquor industry refuses to allow Wine With Dinner and other laws that allow for reasonable competition for alcohol sales.

Download the full study (pdf)