Prohibition was Repealed Almost 90 Years Ago, but Congress is Still Praising its Progeny
At a time when confidence in Congress—and really all of
Washington, D.C.—remains at an all-time low, congressional representatives seem
more determined than ever to make Americans cynical. Perhaps nothing illustrates
this more than a recent resolution concerning alcohol regulation that several legislators
recently introduced. The resolution, which is ultimately toothless, seeks to “recognize
… 85 years of successful State-based alcohol regulation.” Not only is the
resolution a complete waste of time, it also fundamentally misunderstands the
role regulation has played in the modern evolution of the alcohol industry.
As far as one can divine from its fluffy language, the resolution
appears to operate primarily as a cheerleading vehicle for the three-tiered
system of alcohol regulation. The system, which traces its heritage to the
immediate aftermath of Prohibition, requires that each link in the alcohol
distribution chain—producers, wholesalers and retailers—remain legally separate
entities.
This mandate may seem unremarkable at first blush, but its
importance cannot be overstated. Consider that everyday conveniences such as
Apple Stores—in which Apple acts as both the producer and retailer of its goods
in stores nationwide—are impossible in the alcohol space. The three-tiered
system also lies at the heart of many antiquated
and nonsensical alcohol laws that remain on our books today. For instance, notoriously
silly laws like Indiana’s warm beer law (which forbids gas stations from
selling refrigerated beer) and laws prohibiting the shipment of spirits to
consumers are vestiges of the three-tiered system that have never been cleared
away.
The theory behind the three-tiered system, as the
congressional resolution itself notes, is to prevent vertical integration in
alcohol markets. In other words, the aim is to thwart large producers from
exercising direct control over distribution in a way that could lead to
monopoly behavior. While fears about monopolies are hardly unsurprising—after
all, several 2020 presidential candidates have already claimed they want to
“make antitrust cool again”—these concerns are totally unsubstantiated in the
modern alcohol marketplace.
We live in an unprecedented time in modern history when it
comes to what we drink. The array of different spirits, beers, wines and ciders
is seemingly endless—and only grows by the day. Consumers are also becoming
more locally focused and selective, meaning that the chances of a few large
industry players cornering the drinks market are less realistic than ever. Simply
put, consumers want more options, not
fewer. Such a fragmented marketplace makes monopolistic behavior tricky, if not
impossible.
Instead of waxing poetic about the supposed virtues of an
anachronistic system of regulation, politicians should be focusing on how to
modernize and overhaul alcohol laws across the board. Some laws surrounding
alcohol are certainly necessary—no one wants to legalize driving under the
influence, for example—but the vast majority of alcohol rules have no connection
to health and safety. Citizens are not made safer by laws that prohibit the
sale of cold beer in gas stations or forbid them from having booze shipped to
their door. (After all, if we can find a way to send prescriptions via mail, we
can do the same for alcohol.)
To be fair, politicians frequently spend much of their time
grandstanding. But if they’re going to do so, they should at least grandstand
for something that makes sense.
