Repeal Day For the Three Tier System is Coming

Today marks the 86th anniversary of the official Repeal of Prohibition—that 13 year period during which it was illegal to produce and consumer alcohol in the United States of America. It was this constitutional measure that turned the first few years of the Great Depression into the Great Dystopia.

Nevertheless, today we are free still, after 86 years, to consume our favorite beverage. One thing, however, of real interest to me was the spin that different folks put on #RepealDay. The pro-cannabis people like the celebration of repeal because it serves as inspiration for their own goal to legalize recreational cannabis consumption across the country. They want their own #RepealDay.

But the most fascinating reaction to the day came from the National Beer Wholesalers of America. They express their happiness with Repeal of Prohibition by reminding us not that it finally delivered a certain amount of freedom and self determination back to the people, but rather that it “gave rise to state alcohol regulation”:

Talk about missing the point.

But keep in mind, the importance of Repeal to the wholesalers of beer (and wine and spirits) is not that it removed a really nasty kind of restriction on personal freedom, but rather that it led to a system of alcohol sales and distribution, mandated by law in nearly every state, that wholesalers get a cut of every bottle of booze sold in a given state. Think about that. Whether your services are required or not, whether your services are good or bad, your services must be used…so said the law in nearly every state.

Yeah, if I was a wholesaler, I’d celebrate that too I guess.

Of course, what the beer wholesalers are celebrating when they refer to “state alcohol regulation” is actually a reference to the so-called “three tier system”, a form of government regulation that requires producers to only sell to wholesalers and requires retailers/restaurants to only buy from wholesalers. This alcohol regulatory system took hold in a majority of states after Repeal.

While scrolling through my twitter feed and noting that #RepealDay actually was trending and got up to number 30 in most popular hashtags at one point today, I also noticed that the hashtag #Dotard was trending, though for reasons much different than the celebration motivating the #RepealDay hashtag. It struck me that 86 years after repeal, the term “Dotard” was actually a perfect description of today’s Three Tier System of alcohol regulation. Mirriam-Webster provides this definition of “dotard”:

“an old person, especially one who has become physically weak or whose mental faculties have declined.”

The three tier system of alcohol distribution is indeed old and archaic and its power to keep wholesalers in control of the alcohol beverage market has declined substantially over the past couple of decades. Moreover, it’s not difficult to note the decline in intellectual firepower among the current contingent working to keep the justifications for the three tier system propped up today.

Consider following bit of three-tier-inspired wisdom.

In a lawsuit currently at the Sixth Circuit Court of Appeals that has out-of-state wine retailers challenging Michigan’s discriminatory law banning consumers from receiving wine shipments from out-of-state wine stores, while allowing those same consumers to receive wine shipment from in state wine stores, Michigan beer and wine wholesalers defending the discrimination say the law is not discriminatory at all. Why? Well, they say, because in order for an out-of-state retailer to be discriminated against by a state law, the out-of-state retailer must first be licensed and regulated by the state they claim is discriminating against them, and since the out-of-state retailer may not get a license from the state, there is no discrimination.

Spend a moment wrapping your head around that bit of rhetorical and intellectual wizardry.

When I say that the intellectual firepower of those trying to defend the dotardish three tier system is lacking, I’m not kidding. The defenders of the three tier system are attempting to make the case that discrimination against out-of-state wine retailers doesn’t exist because they are being discriminated against. Now, I’m no constitutional scholar. I’m not an attorney. But even I notice that this is the kind of weak sauce that gets folks laughing—then asking if everything is ok with the authors of that particular idea.

Things are not OK, in fact.

The three tier system is on its deathbed, put down by the rise of craft beverages, common sense, angry consumers, advocates for free trade unwilling to back down, the courts, and, in the end, the kind of intellectual talent that argues discrimination is constitutional as long as discrimination is occurring.

Real freedom, after 86 years, is coming to beverage consumers and the alcohol beverage industry. Mark my word. The three tier system has been cracked right down the middle. Freedom to receive wine via shipment from wineries and retailers is just about here. Soon after the freedom of retailers and restaurants to purchase from any kind of producer will arrive. And don’t be too surprised when the freedom of wine retailers and restaurants in one state to purchase inventory from wholesalers in another state is also upon us.

I’m looking forward to #No3TierDay.

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4 Responses

  1. VVP - December 6, 2019

    National Beer Wholesalers of America are wrong. But you are wrong too.

  2. John Hinman - December 8, 2019

    Tom, yes the system is changing but the three-tier system will always be with us in one form or another. That is simply a function of logistical and merchandising necessity. However, the current wholesaler and producer consolidation is forcing parallel systems to co-exist. There is one three-tier system for the large multi-state players, another for the smaller in-state business (which includes DTT from small producers – perhaps interstate based on Tennessee wine) and a third for DTC. Welcome to paradise.

  3. Laughingatthis - March 8, 2022

    Dream on if you think the legal monopoly the wholesalers have will be abolished anytime soon! These oligarchs won’t give up their fortunes easily!

  4. 20bet - September 13, 2023

    Your article gave me a lot of inspiration, I hope you can explain your point of view in more detail, because I have some doubts, thank you.

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