Fundamental Reform of Alcohol Laws Is Coming —Are You Ready?

Posted by Tom Wark on Oct 18, 2020

It is worth noting that the pandemic-induced re-invigoration of discussion concerning alcohol regulation is a phenomenon we don’t see happening in any other industry. Whether the topic is interstate alcohol shipping, producer self-distribution or restaurant sales of drinks for takeout, this kind of increased consideration of industry reform is of a type that few if any other industries besides alcohol are having.

The only plausible explanation for alcohol’s unique response to the pandemic is the fact that so much of the alcohol regulations that permeate state legal codes today originated in a bygone era that posed challenges to policymakers that are almost entirely disconnected from the today’s challenges.

So many of today’s licensing and tied-house laws that govern how alcohol gets from producers to consumers were crafted in order to 1) diminish the possibility that gangster-related activities endemic in the Prohibition years are curtailed and 2) ensure that the problems related to the the “saloon” as operated in the late 1800s and early 1900s doesn’t re-emerge.

The point is that while a vast percentage of alcohol laws in the pre-pandemic era were unsuited to address the issues confronting a 21st-century alcohol industry, those same laws, in the Era of COVID, go beyond “unsuited to address the issues” and bound into the territory of “detrimental to the needs of industry and consumers”.

We don’t see the art industry or soap industry or auto industry or steel industry questioning the regulatory and logistics structures in order to address pandemic-related economic issues. We certainly don’t see any other industries discussing whether interstate shipping regulations concerning their products ought to be reformed in order to address the impact of the pandemic. And we don’t see any other industry asking if regulations imposed on their industry’s operations in the 1930s ought to be updated in order to address new conditions created by the economic impact of COVID. This is all unique to the alcohol industry.

This unique circumstance faced by the alcohol industry should motivate nearly everyone working in wine, beer and spirits to question not IF regulatory reforms ought to be pursued, but rather whether it is merely progressive reforms that need to adopted or if radical reform is required not merely to get the industry through this difficult time but to also position it to thrive in a post-COVID world.

I believe it’s radical reform that the pandemic has shown needs to be undertaken. I believe it is reforms that address the contemporary challenges of the alcohol trade that need to be instituted. I believe it is time to reframe the alcohol regulatory focus on modern-day concerns rather than keep it focused on concerns that had their origin in 19th-century cities that bear no resemblance to a 21st century United States.

That reform must focus on the goals of :

1-Combatting Overconsumption
2-Facilitating consumer access to the huge proliferation of alcohol products
3. Facilitating legal and easy access to consumers by licensees.
4-Devising efficient tax collection

Focus reform of the alcohol regulatory system on these goals and you end up with an alcohol regulatory code that satisfies the needs of producers, retailers and wholesalers to address the challenges of a post-pandemic marketplace where consumer access to goods in-store or at home are paramount. Focus reform on the alcohol regulatory system on these goals and you create a marketplace structure that puts power in the hands of consumers and sellers, rather than in the hands of middlemen that have proven to be unsatisfactory advocates for any entity but themselves. Focus reform of the alcohol regulatory system on these goals and the primary problem associated with alcohol (overconsumption) remains front and center while not having to erect near-insurmountable barriers to entry into the marketplace nor monopoly arrangments that serve the tiniest sliver of the American alcohol industry.

Anyone who looks at the alcohol industry in the context of the pandemic knows change is coming to the alcohol marketplace. It’s going to come via work in the legislatures and decisions by the courts. And because the changes wrought by the COVID pandemic are not yet done playing out, because we don’t yet have the vaccine that will allow us to stand back and take total stock of the change, now is the time to start thinking about what kind of regulatory structure the alcohol industry and alcohol consumers deserve once we are charged with remaking the industry.

By my estimate, we have 12 months to have this discussion and get ready to implement what should be the most fundamental overhaul of the alcohol regulatory structure in nearly 100 years.