As Anniversary of End of Prohibition Nears, State Alcohol Rules Challenged

Even as Repeal Day approaches, many states are still grapple with overly burdensome regulations.


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Next week will mark the 84th anniversary of the ratification of the Twenty-First Amendment, which repealed alcohol Prohibition. The repeal of Prohibition is worth celebrating, even if the amendment was (and remains) a deeply flawed vehicle.

The chief flaw with the Amendment is, as I wrote earlier this year, that it "simply shifted much of the power to prohibit and incessantly regulate alcohol from the federal government to the states."

States have truly made the most of their teetotalitarian authority for decades, to the detriment of both alcohol producers and—much more so—consumers.

Much of the negative impacts of states' approach to alcohol regulation can be tied to what's known as the three-tier system, a Prohibition relic under which states generally prohibit direct alcohol sales from a brewer, vintner, or distiller to a consumer. The three-tier system mandates these alcohol producers first sell to a distributor or retailer—a mandatory middleman—who can then sell to actual drinkers.

Laws that require this approach create a host of problems, including, for one, that they drive up consumer costs dramatically and needlessly. States' plenary control over alcohol has been controversial for decades, as this 1987 article in the Journal of Public Health Policy makes clear, noting that "the idea of a government monopoly of a consumer product seems odd and even bizarre[.]"

Great arguments in favor of scrapping the dreaded three-tier system are often countered by those who claim doing so will bring about the end of days, or worse.

As Jacob Sullum (who's more often than not right) noted in a 2015 piece, the apocalyptic scenarios floated by neo-Prohibitionists often make little sense, and tend to contradict each another.

"The current system must be maintained because it makes drinking easier, and it must be maintained because it makes drinking harder," Sullum wrote, characterizing two central and diametrically opposing arguments in favor of maintaining state liquor monopolies.

States with some form of liquor monopolies—there are currently seventeen of them—actually have their own lobby group, the National Alcohol Beverage Control Association. They're big supporters of monopoly "control." For example, the group notes that "citizens of Montgomery County, MD enjoy the many benefits offered by a control jurisdiction."

I lived in Montgomery County for several years. At no point did I enjoy the county's monopoly, which restricted my choices.

Washington State, where I now live, was the first state to rid itself of the three-tier system, after voters overturned the system in 2011. Not much appears different in Washington State today on its face. Each of the three tiers still exist. But alcohol rules here—enforced by the same government body that also now regulates cannabis in the state—no longer force all producers, distributors, and sellers to work together. They can—and do, in most cases—because they want to.

As I've noted previously—as in this 2013 column—state alcohol regulations are generally trending in the right direction. For example, Indiana is currently taking baby steps to legalize Sunday alcohol sales. An Alcohol Code Revision Commission (yes, that's a thing) has proposed allowing some Sunday sales between noon and 8 p.m.

The state isn't always the direct beneficiary of monopoly powers. Sometimes the state grants such powers to one powerful segment of the marketplace. But those laws, too, are falling out of favor. Next year, for example, Oklahoma will end a "virtual monopoly" on many sales enjoyed by liquor stores in the state.

State alcohol monopolies are by no means a uniquely American problem. Take Canada, where laws often bar residents from bringing alcohol from one province to the next. But those laws, too, are under fire.

Canada's highest court is set to hear arguments soon in a case which could spell the end of that ban and serve to rein in provincial alcohol monopolies.

Back in Oklahoma, one liquor store owner there says he's "worried about losing a lot of business" under the new law, when grocers and others will be allowed to sell many drinks only liquor stores now sell in the state. The shopkeeper explains how the change in the law is forcing him to install new equipment, open more hours, and hire new staff. To prepare to compete, in other words.

That sounds like good news for consumers. More of this, please.

NEXT: Senate Republicans Just Took a Big Step Toward Permanently Overhauling the Tax Code

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  1. …to the detriment of both alcohol producers and?much more so?consumers.

    Both of which are also known as voters. This is the problem with ceding so much power to the state, unless people become single-issue voters on the same issue at the same time, there will always be lower level injustices that will never go addressed on election day. There’s probably no going back. The country will collapse before that last soccer mom sees the error of her meddling ways and votes for less government.

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  2. For example, Indiana is currently taking baby steps to legalize Sunday alcohol sales. An Alcohol Code Revision Commission (yes, that’s a thing) has proposed allowing some Sunday sales between noon and 8 p.m.
    If we can get Georgia’s alcohol laws changed to end Sunday prohibition of sales then all the other states can do it too.

  3. I’ve been asking this question for a great many years. So far, no rational answer.

    By what legitimate authority do non-voluntary governments – and those who vote for them – control the lives and choices of people anywhere? By what legitimate authority does any non-voluntary government exist? The only actual purpose of the “state,” any involuntary government, is the control of most people by other people.

    The desire/compulsion of some people to control the lives and property of other people is the ROOT of all evil.

    1. The Libertarian dream of nothing but voluntary associations for governing is a nice one. Much nicer than the Socialist dream of an all ruling central power. But it has a flaw. The vast majority of us do not WANT to spend the time and effort necessary to check,out the bonafides of every person or agency we have dealings with, nor do we want to take the time and trouble necessary to enforce contracts in person rather than through the courts.

      Should a network of workable non-State checks and enforcements appear overnight, I would be delighted to see the State cut back to patroling the borders against invasion. I don’t see it happening.

      Government is like fire. If you are young, vigorous, and skilled you CAN live without it. But doing so is uncomfortable and damgerous. Fire and government are dangerous in themselves, too. You have to watch them, and for too long we haven’t kept enough of an eye on the State. But the majority of us, even with the delusions of Socialist Progressivism ripped from our eyes, do not want to attempt to live without government. We’re too old, too fat, and too tired.

      1. I would be happy if we rolled back about 70% of what government does. What would be leftover would be a combination of essential functions, and a few much more manageable things.

      2. You wouldn’t check everyone’s bonafides there would be private accreditation companies.
        The reason I believe in minarchy is because I don’t think their would be enough crime in Libertopia to support private defense companies.

        1. Hmm, like the bond rating companies?

          Seriously, I too would like to see private impartial agencies. But the temptations are just too strong (e.g. private weather forecasting, either hyped up to create more market excitement or skewed to avoid discouraging holiday travelers).

          1. You think the same perverse incentives aren’t there for the government, too?

    2. It’s possible to have a non voluntary government that’s not about control. The proper function of government is to defend individual negative Liberty with the retaliatory use of force. Restricting government authority to the retaliatory use of force solves the control issue.

  4. I’m kind of a fan of those pre-prohibition cocktails, especially the ones that use egg whites.

    1. You mean pre-prohibition of raw eggs?

    2. in favor of raw milk too, no doubt! THE END DAYS COMETH!!!

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  6. It’s the economy, stupid.
    Follow the taxes.

  7. Think of all the lives saved if it was still illegal to make and distribute alcohols ?

    The problem with the prohibition is that it ended.

    Think of all the little children who would not have been alcoholics if prohibition was still an amendment to the US Constitution.

    Think of the children.

    Let’s make alcohol illegal again !!!

  8. Why has no one argued that controlling the sale of liquor, especially on Sunday, violates the separation between Church and State? It can’t be a “public health” matter since you can still buy cigarettes and Twinkies.

    1. To a statist, all they heard in your comment was ‘make cigarettes and twinkies illegal to buy on Sunday’. That’s always their response to such an apparently hypocrisy.

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