Photo by Deb Gau Customer interest in non-alcoholic beers and THC beverages has grown over the past two years, said Tall Grass Liquor manager Eric Luther.

MARSHALL — The introduction of legal edibles and hemp-infused drinks in Minnesota in 2023 may have been good for Tall Grass Liquor’s profits, store manager Eric Luther said.

In 2023, Tall Grass Liquor was among the top municipal liquor stores in the state for profit as a percent of sales, according to a report released by the Minnesota State Auditor’s Office this week. Tall Grass Liquor had a net profit of over $1.15 million that year, and transferred over $774,000 into Marshall city funds.

“Sales continue to kind of inch up, which is good to see,” Luther said.

Products like THC beverages have tended to be higher-margin than liquor, which affects the store’s profits, he said.

Luther said the most positive part of the State Auditor’s report was that the liquor store continues to generate money for city projects. Using those funds can help take pressure off taxpayers, he said.

On Wednesday, the Office of the State Auditor released an analysis of municipal liquor store operations for 2023. That year, net profits at municipal liquor stores were up more than $4.2 million across Minnesota, the report said. Statewide, city-owned liquor stores had a net profit of $31.6 million.

Municipal liquor stores also had another year of record sales in 2023, with a total of $437.4 million in sales. Among individual stores, total sales ranged from $123,730 in Elmore to $22.7 million in Lakeville, the report said.

Not all municipal liquor stores were profitable in 2023. Stores in a total of 31 cities reported net losses that year. The list included some southwest Minnesota communities, like Dawson, Hanley Falls, Sacred Heart, Boyd, Russell and Ivanhoe. The Russell municipal liquor store reported net losses of over $64,000 in 2023. The Ivanhoe municipal liquor store had a net loss of over $108,000.

The report said the number of city-owned liquor stores in Minnesota has steadily declined over the past 10 years.

According to the report, Tall Grass Liquor in Marshall had a total of about $7.3 million in sales in 2023, and a net profit of over $1.15 million. The store’s net profit was 15.7% of sales — ranking it the eighth highest in the state.

Luther said there were some events in 2023 that likely helped with sales and profits at Tall Grass. That was the year that Tall Grass first began selling lower-potency hemp edibles and drinks.

“That started to catch on,” Luther said. In addition, he said, those products were “a little higher-margin, compared to beer and liquor.”

Customer interest in THC-infused drinks stayed “pretty consistent” into 2024,” Luther said. Over the past year, the amount of store shelf space for THC beverages has grown, and the products now have their own section in the cold case.

Luther said another type of product that has grown in popularity is non-alcoholic beverages. Tall Grass now also stocks a selection of non-acoholic beers, wines and liquors.

“People want to be at a social gathering and maybe don’t want to have liquor or beer,” Luther said.

Luther said the city of Marshall uses profits from Tall Grass Liquor to help fund city projects like parks improvements. One upcoming example is planned updates to the main shelter and restrooms at Independence Park, he said.