83 Year Old Law Still On The Books That Regulate How Wine Is Sold And It Is Expensive For Consumers

The sale of alcohol-oriented drinks is a highly regulated system in all 50 states. These systems are known as both three-tier systems and control system models operating in 18 controlling states / courts. Basically, the three-tier system (very simply): manufacturers provide alcoholic products to wholesalers / distributors who then distribute these products to retailers, and eventually the consumer gets into the mix.
Why should the government make the relatively simple distribution issue so complicated? We are specifically talking about alcoholic beverages and alcohol. The consumer generally loses when there are few options. Every industry has some kind of subcategories or inactions that consumers do not understand, especially when there is no added value in a morsel of rules. The reference for wine lovers (and all alcoholic beverage consumers) is of the complex system of obtaining wine to consumers. The argument is somewhat misleading, if not completely contradictory. The three-tiered distribution system is a government-mandated system that must be followed to obtain alcoholic beverages to the consumer, while protecting fragile consumers for themselves. Unfortunately, this system is not uniform from one state to another relative to the laws regulating wine, spirits and beer and has become a veritable goal for consumers to debate and understand.
This classification of state laws was mandated by the federal government in 1933 and left to the states to implement and manage the system. Originally, the three-tiered distribution system mandated the system by which alcoholic liquor, spirits, and beer producers must employ the consumer to obtain their product. Not surprisingly, the three-tier system has a plethora of exceptions and exceptions are based on individual state regulations. Nevertheless, specific to wines, the system mandates (with the exception of the rule) that producers can sell their wines only to those wholesale distributors who then sell to retailers, and only retailers to consumers. A shining exception is consumer direct liquor sales at wineries or on-premises winery sales. Obviously, a mark-up is added to the cost of products at every level in the distribution process. This politically mandated control system adds about 30% more to product costs.
If you are a consumer of Utah reading this, you are a criminal if you bring back your favorite wine case from California; Two bottles are your limit! Technically, the three-tier system is not solely about tax collection, they are mechanisms in place that ensure that governments (state and federal) receive their tax on alcoholic products produced and sold.
In general, 32 states allow private companies to be distributors and 18 states employ some or all of the "control distribution model" in which the state owns distribution for retail sales. Washington and Pennsylvania are two such states.
Generally, state governments allow or permit a private company to be the sole distributor within a state in a state or territory. Even in states where there are multiple distributors, the areas of those distributors are protected by state laws, which are held by state governments. To illustrate the harmful effects of such systems, imagine if states could authorize / endorse only one gasoline distributor to sell in their state. Wouldn't it be a monopoly?
The question that is begging is that we are also getting liquor (beer and spirit) to the consumer? The three-tier system is not about the state and federal government receiving taxes. It was decided long ago to collect that tax. The history of any tax on alcohol goes back to 1791 when Alexander Hamilton proposed an excise tax to help fund a federal government. The common man felt that this "tax" targeted the citizen highly. Alcoholic beverages were considered a major part of life, part of the social fabric, and were akin to taxing the air they breathed. Thus the Whiskey Rebellion eventually came into existence in Pennsylvania. But, the excise tax still remains today.
It was the passage of the 21st Amendment, the repeal of the 18th Amendment, which gave individual states the authority to control most aspects of the distribution of alcoholic beverages (beer, liquor, and spirits). Based on one's prediction, two of the stated objectives of the three-tier system were: States were interested in keeping citizens from over-consumption and yet they wanted to encourage sales for tax revenue. It may also be a way to reward some companies with franchises. In any event, it developed into a three-tier distribution system in 1933.
NABCA represents the Control States system (similar to the three-tier system but state-owned distribution system) and promotes the benefits of the three-tier system / control state system:
The regulator-each tier in the system is responsible for ensuring that laws are executed; Self regulationEconomic benefit