I’m not sure where you got that impression @merlion. Many LACs offer merit aid to varying degrees. Some even offer full tuition merit (Denison used to have a NMF full tuition but it apparently is no longer available - now just competitive full tuition).
LACs are private colleges. I can think of none that offer in-state discounts except if they fall under specific scholarships funded by private organizations (once again Denison has some funded by Batelle, a local company, for students in a specific county).