“PISS POOR”
THE STATE IN YOUR BEER SUPPLY
Guest Columnist Mikael Sandstrom
To what extent is the state involved in regulating your beer supply?
The “three-tier” system was created after the prohibition of alcohol was repealed and was done so to establish control over the industry as well as a revenue source via taxation. Its basic structure refers to the three distinctly different industries to be regulated: the producers, distributors, and retailers. Simply put, if you want to open a business selling beer, you’ll be required by law to purchase your alcoholic products ONLY from officially licensed distributors and in turn they’ll sell it FOR you. This type of system ensures taxation in each level and the end result is additional cost passed down to the consumer.
The four primary goals of the three-tier system include:
- Avoiding the overly aggressive marketing and sales practices of the pre-prohibition era
- (As if today there isn’t an aggressive marketing and sales practices)
- Generate tax revenues that can be collected efficiently from the beer distributor industry
- (This simultaneously shuns out the competition; the big corporations can deal with the cost of licensing while small time breweries are burdened by the increase in cost of operation)
- Facilitate state and local control of alcoholic beverages
- (The how to guide on maintaining corporatism)
- Encourage moderate consumption
- (Operation: Nanny state)
The free-market system in the beginning of the 20th century had producers that owned their own retail outlets and this pre-prohibition era resulted in low prices and high consumption so when prohibition began, the demand didn’t change but supply diminished which resulted in higher prices for the consumer. The consequences of the prohibition resulted in an all-time high in personal consumption of alcohol and convictions for liquor offenses nearly doubled from 1923 to 1932 so when prohibition of alcohol was repealed, the concept of a three tiered tax system was pushed through. This strengthened government control over alcohol and provided an efficient and reliable way to collect additional taxes.
In several states, including Utah and Pennsylvania, the state has strict control over which products are sold in the government owned liquor stores, which means the products need approval from a bureaucrat before it even reaches the consumer.
The system guarantees higher cost beer for the consumer. The Associated Beer Distributors of Illinois reported that if all the taxes levied on the production, distribution and retailing of beer were to add up, it would account for 44% of the retail price. If we want lower beer prices, there needs to be a serious consideration into a true pre-prohibition free market but since that is very unlikely to occur, the next best step is for the government to step completely out of the way of selling alcohol themselves and allow private corporations to retain the right to distribute and since they’re the ones constantly looking to improve their sales, their incentive to bring in a fresh new beer results in the interest of the consumer- not the bureaucrat.
It’s time to end this nonsense and free the hops!
TLR Editors Note: The government policies towards alcohol now are tough but they used to be brutishly horrific. Consider that during Prohibition the U.S. government poisoned alcohol specifically to punish American citizens who were drinking it against the law at the time. Slate has the story.
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