The three-tier system of alcohol distribution is the system for distributing alcoholic beverages set up in the United States after the repeal of Prohibition.The three tiers are importers or producers; distributors; and retailers. The basic structure of the system is that producers can sell their products only to wholesale distributors who then sell to retailers, and only retailers may sell to consumers. Producers include brewers, wine makers, distillers and importers.
Some states chose to become alcoholic beverage control jurisdictions after Prohibition. In these states, part or all of the distribution tier, and sometimes also the retailing tier, are operated by the state government itself (or by contractors operating under its authority) rather than by independent private entities.
The only state with a privately operated retailing and distribution system that does not require any form of three-tier system is the State of Washington. In Washington, retailers may purchase alcoholic beverages directly from producers, may negotiate volume discounts, and may warehouse their inventory themselves. However, the three-tier system largely remains in fact a reality in Washington despite the lack of a law requiring it.
In 1933 the 18th Amendment was repealed by the 21st Amendment. (Previously, the 18th Amendment had outlawed alcohol in the US in 1919 and led to Prohibition in 1920.) Section 2 of the 21st Amendment specifies that the power to control alcohol resides with the states, leaving each state to decide when and how to repeal Prohibition.
After Prohibition, the states began to seek methods to regulate and control the alcohol industry. The states were also eager to devise a method to levy and collect taxes on alcohol producers. Both of these concerns led to the states individually creating environments in which single ownership of all three tiers (production, distribution and retail) was entirely or partly prohibited. As states were left by the 21st Amendment to regulate themselves, alcohol laws and the nature of the three tier system can vary significantly from state to state.
States have various exceptions to this rule, the most prevalent one being the case of a brewpub, which is simultaneously a producer and retailer, and has no requirement to sell to a distributor. Some states allow an entity to have a part in two of the tiers, letting small breweries act as their own distributor, for example. Many states permit wineries to sell bottles of wine on-site to customers.
Usually producers will give a distributor exclusive rights to market their product within a geographical area, so that there will not, for example, be two distributors of Anheuser-Busch products competing against each other.
Rules also vary according to what kind of relationships each of the tiers can enter into with the other two tiers. For example, a producer may not be allowed to give promotional items or services to a retailer. Another example is that a beer distributor might be responsible for setting up and maintaining draft lines in a restaurant, or may be legally prohibited from doing so, depending on the state.
Also, several states are alcoholic beverage control states - in any of these jurisdictions state governments maintain a monopoly on the distribution tier of the system (at least for distilled beverages). Some (such as Utah and Pennsylvania) monopolize the distribution and retail tiers. Those that maintain monopolies over the distribution system only (such as Michigan) could still be said to have a three-tier system – in such states producers sell to the distributor (in these cases, the state as opposed to a private operator) who in turn sells to private retail outlets.
A substantial exception to the three-tier system is the State of Washington. In November 2011, voters in Washington approved Initiative 1183, which dismantled the state-operated retailing system and removed the legal requirement for a three-tier distribution system for alcoholic beverage sales.Under the modified law, the prior state-operated liquor retailing system was eliminated in favor of heavily taxed private retailing. By a substantial margin, Washington has the highest liquor tax rate in the nation. With a liquor tax rate around $35 per gallon, its liquor tax is about 50% higher than in Oregon, which has the next highest rate. In Washington, retailers may bypass distributors by purchasing directly from producers, may negotiate volume discounts, and may warehouse their inventory themselves. Private retailing began on June 1, 2012. Although private retailing should increase competition in principle, in many cases producers have entered into exclusive marketing agreements with distributors for the market region, to the extent that each brand is often only available from a single distributor in the state (although large retailers such as Costco have been able to take some advantage of the law and in some cases have introduced their own house brands). Contrary to the fears of some in the political process, the number of drunk-driving arrests and alcohol-related motor vehicle accidents actually dropped in the year after the conversion to the new system.
A different type of exception to the three-tier system is in Oklahoma, whose laws have historically mandated a four-tier system for package sales of beer of greater than 3.2% alcohol by weight (4.0% by volume). Brewers in that state have historically been prohibited from selling to distributors; they instead must sell to brokers, who in turn sell to distributors. Following the passage of a voter referendum in 2016, the broker and distributor levels will be effectively merged effective on October 1, 2018, resulting in the three-tier system common to the rest of the U.S.
Wine and Spirits Wholesalers of America (WSWA), an influential trade organization and lobby group based in Washington, D.C.that works to oppose initiatives to alter the three-tier model, contends that wholesalers not only sell alcohol but also perform state functions and are in the business of encouraging social responsibility concerning alcohol.
The National Association of Wine Retailers (NAWR) is a group which represents the wine retail industry, advocating the free movement of wine across state lines. They generally oppose the view advocated by the WSWA.
A similar use of a three-tier system is enforced for tobacco products in some jurisdictions.In June 2017, tobacco wholesalers proposed that the three-tier system also be imposed for recreational marijuana in Massachusetts. They argued that this would improve tax collection enforcement.
The Liquor Control Board of Ontario is a Crown corporation that retails and distributes alcoholic beverages throughout the Canadian province of Ontario. It is accountable to the Ministry of Finance. It was established in 1927 on the advice of Ontario Premier Howard Ferguson, to sell liquor, wine, and beer. Such sales had been banned outright in 1916 as part of prohibition in Canada; thus, the creation of the LCBO marked an easing of the province's temperance regime. By September 2017, the LCBO was operating 651 liquor stores.
In the United Kingdom, a tied house is a public house required to buy at least some of its beer from a particular brewery or pub company. That is in contrast to a free house, which is able to choose the beers it stocks freely.
Beer in the United States is manufactured by more than 7,000 breweries, which range in size from industry giants to brew pubs and microbreweries. The United States produced 196 million barrels (23.0 GL) of beer in 2012, and consumes roughly 28 US gallons (110 L) of beer per capita annually. In 2011, the United States was ranked fifteenth in the world in per capita consumption, while total consumption was second only to China.
A liquor store is a retail shop that predominantly sells prepackaged alcoholic beverages — typically in bottles — intended to be consumed off the store's premises. Depending on region and local idiom, they may also be called an off-licence, bottle shop, ABC store, package store, party store, or other similar terms. Many jurisdictions have an alcohol monopoly.
Granholm v. Heald, 544 U.S. 460 (2005), was a court case decided by the Supreme Court of the United States in a 5–4 decision that ruled that laws in New York and Michigan that permitted in-state wineries to ship wine directly to consumers, but prohibited out-of-state wineries from doing the same, were unconstitutional. The case was unusual because the arguments centered on the rarely invoked 21st Amendment to the Constitution, ratified in 1933, which ended Prohibition in the United States.
The Oregon Liquor Control Commission (OLCC) is a government agency of the U.S. state of Oregon. The OLCC was created by an act of the Oregon Legislative Assembly in 1933, days after the repeal of prohibition, as a means of providing control over the distribution, sales and consumption of alcoholic beverages. To this end, the agency was given the authority to regulate and license those who manufacture, sell or serve alcohol. Oregon is one of 18 alcoholic beverage control states that directly control the sales of alcoholic beverages in the United States. In 2014, the passage of Oregon Ballot Measure 91 (2014) legalized the recreational use of marijuana in Oregon and gave regulatory authority to the OLCC.
Alcoholic beverage control states, generally called control states, are 17 states in the United States that, as of 2016, have state monopoly over the wholesaling or retailing of some or all categories of alcoholic beverages, such as beer, wine, and distilled spirits.
The Alberta Gaming, Liquor and Cannabis Commission is an agency of the government of the Canadian province of Alberta, and regulates alcoholic beverage, recreational cannabis, and gaming-related activities. References to cannabis were added to AGLC's name and governing legislation as cannabis in Canada moved towards legalization in 2018. AGLC was created in 1996 as the Alberta Gaming and Liquor Commission by combining the responsibilities and operations of the Alberta Liquor Control Board (ALCB), Alberta Lotteries, the Alberta Gaming Commission, Alberta Lotteries and Gaming and the Gaming Control Branch. The current Chief Executive Officer is Alain Maisonneuve.
The Washington State Liquor and Cannabis Board, formerly the Washington State Liquor Control Board, is an administrative agency of the State of Washington. The Liquor and Cannabis Board is part of the executive branch and reports to the Governor. The board's primary function is the licensing of on and off premises establishments which sell any type of alcohol, and the enforcement and education of the state's alcohol, tobacco, and cannabis laws.
A liquor license is a governmentally issued permit to sell, manufacture, store, or otherwise use alcoholic beverages.
An alcohol monopoly is a government monopoly on manufacturing and/or retailing of some or all alcoholic beverages, such as beer, wine and spirits. It can be used as an alternative for total prohibition of alcohol. They exist in all Nordic countries except Denmark proper, and in all provinces and territories in Canada except Alberta. In the United States, there are some alcoholic beverage control states, where alcohol wholesale is controlled by a state government operation and retail sales are offered by either state or private retailers.
The Virginia Alcoholic Beverage Control Authority is one of the eleven public safety agencies under the Secretariat of Public Safety and Homeland Security for the Commonwealth. The agency administers the state's ABC laws with an emphasis on public service and a focus on protecting citizens by ensuring a safe, orderly and regulated system for convenient distribution and responsible consumption of alcohol.
Oklahoma allows any establishment with a beer and wine license to sell beer and wine up to 15% ABV, under refrigeration.
The alcohol laws of Kansas are among the strictest in the United States, in sharp contrast to its neighboring state of Missouri, and similar to its other neighboring state of Oklahoma. Legislation is enforced by the Kansas Division of Alcoholic Beverage Control.
The alcohol laws of Pennsylvania contain many peculiarities not found in other states, and are considered some of the strictest regulations in the United States.
The state laws governing alcoholic drinks in New Jersey are among the most complex in the United States, with many peculiarities not found in other states' laws. They provide for 29 distinct liquor licenses granted to manufacturers, wholesalers, retailers, and for the public warehousing and transport of alcoholic drinks. General authority for the statutory and regulatory control of alcoholic drinks rests with the state government, particularly the Division of Alcoholic Beverage Control overseen by the state's Attorney General.
Alcohol laws are laws in relation to the manufacture, use, being under the influence of and sale of alcohol or alcoholic beverages that contains ethanol. Common alcoholic beverages include beer, wine, cider, and distilled spirits. The United States defines an alcoholic beverage as, "any beverage in liquid form which contains not less than one-half of one percent of alcohol by volume", but this definition varies internationally. These laws can restrict those who can produce alcohol, those who can buy it, when one can buy it, labelling and advertising, the types of alcoholic beverage that can be sold, where one can consume it, what activities are prohibited while intoxicated, and where one can buy it. In some cases, laws have even prohibited the use and sale of alcohol entirely, as with Prohibition in the United States from 1920 to 1933.
Republic National Distributing Company, LLC (RNDC) is the second largest beverage alcohol distributor of premium wine and spirits in the U.S. with wholly owned operations in Alabama, Colorado, District of Columbia, Florida, Louisiana, Maryland, Mississippi, Nebraska, North Carolina, North Dakota, South Dakota, Texas, Virginia, and West Virginia. RNDC operates in Arizona, Indiana, Kentucky, Ohio, Oklahoma, and South Carolina through venture partnerships. In total, RNDC employs more than 9,000 individuals nationwide.
Blue laws, also known as Sunday laws, are laws designed to restrict or ban some or all Sunday activities for religious reasons, particularly to promote the observance of a day of worship or rest. Blue laws may also restrict shopping or ban sale of certain items on specific days, most often on Sundays in the western world. Blue laws are enforced in parts of the United States and Canada as well as some European countries, particularly in Austria, Germany, Switzerland, and Norway, keeping most stores closed on Sundays.