Three-tier System Gets Unexpected Support

The three-tiered system should be preserved, as it ensures alcohol is distributed responsibly, all parties are accountable and taxes are collected properly, according to testimony from Michele Simon, policy director at Marin Institute, an alcohol industry “watchdog” organization based in San Rafael, Calif. Simon was testifying before the New York State Law Revision Commission on its Preliminary Report on the Alcoholic Beverage Control Law and its Administration.

“The three-tier system creates a structure that ensures that the state has adequate oversight of alcohol sales,” Simon stated. “It is in this way that the three-tier system helps prevent aggressive and abusive marketing and sales techniques, as well as encourage moderation. For these reasons, Marin Institute strongly supports maintaining the integrity of the three-tier system … the 21st Amendment grants states with the power to regulate alcohol within their border. New York should not cede this authority without a very good reason.”

Simon’s statement comes at a time when the three-tiered system has come under scrutiny and criticism, especially from larger retailers wishing to buy direct. State control of alcohol sale and distribution — created by the 21st Amendment — also has come under fire.

Marin Institute, which advocates excise tax increases on alcohol and criticizes alcohol products and advertising it believes promote over-consumption or appealing to youth, surprised many in the industry with this testimony, as the organization is often at odds with alcohol producers, marketers and wholesalers. On the issue of the three-tiered system, however, there appears to be common ground.

“There are real threats to the current, effective state-based system from economic interests attempting to break down regulatory safeguards for their own financial gain — and at the expense of public health,” National Beer Wholesalers Association (NBWA) senior vice president and general counsel Paul Pisano told attendees at the National Liquor Law Enforcement Association’s (NLLEA) 23rd Annual Conference in Dallas in mid-August. “Recently, litigation in more than 20 states seeks to have federal judges make alcoholic beverage laws more ‘business- friendly’ without public health and law enforcement perspective.

“It is more important than ever for law enforcement to understand and support state alcohol laws that protect the public health by requiring in-person ID checks to guard against underage purchases; determine the proper amount of outlets and pricing regulations for alcohol; and enforce hours of sale so that alcohol is not sold any time to anyone without regard for the community,” he said. 

Another wrinkle is the recently released report about the impact of alcohol deregulation in the U.K. The Dangers of Alcohol Deregulation: The United Kingdom Experience, is authored by Pamela S. Erickson, former executive director of the Oregon Liquor Control Commission and now CEO of Public Action Management, PLC, a public policy leadership advisory firm. The report finds that liberal alcohol policies — including sale at a broad range of retail outlets 24 hours a day — have resulted in high rates of alcohol abuse, binge drinking, alcohol-related crime and disorderly behavior and underage intoxication in the U.K.

The debate about the three-tiered system and alcohol regulation by the states will undoubtedly continue as the industry evolves and consolidates, technology advancements reveal potential buying and selling scenarios and social thinking on alcohol continues to change. Stay tuned.


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