What’s the Justification for Anti-Free Market Wine Laws?
November 5, 2007 – 9:02 am
In the course of doing research on how alcohol-related laws are constructed and passed in America I came across a document that I hadn’t read in some time. It was an article written and published by the Washington State Bar Association entitled, “Time to Untie the House? Revisiting the Historical Justifications of Washington’s Three-Tier System Challenged by Costco v. Washington State Liquor Control Board”.
The crux of the articles investigation can be summed up in this quotation from it:
“While it is true that no other legal and widely consumed product has had the checkered history of beverage alcohol (such as the “great experiment” of Prohibition), whether this “difference” of liquor is sufficient to justify the continued anti-free-market structure of the industry is a valid question.”
Indeed it is a valid question.
Certainly there are some very valid and convincing reasons to retail a number of regulations that are sewed into the three tier system and into the common alcohol regulations we see across the country. But what’s crucial to understand is that by removing some of the three-tier related restrictions that lead to an “anti-free market structure”, we are not altogether dismantling the three tier system.
It stands to reason that if the political and social and economic circumstances have changed since the three tier system was instituted back in the 1930s, then perhaps it is time to rethink the efficacy of a system that is built to address a time and situation that no longer exists.
From the article:
“The beer, wine, and spirits industry has changed substantially since the three-tier laws were enacted. While there were once few producers and many wholesalers, the opposite is true now, at least in wine and beer. In 1950 there were 5,000 alcohol wholesalers nationwide, today there are only 170 with the result that in some regions retailers are served by as few as two wholesalers. Conversely the numbers of breweries has grown from 401 to 1,522 while the number of wineries has quadrupled”
The result of this kind of monumental change is that wholesalers are in every way incapable of offering the full scope of products available. Unless it is the goal of the states to actively prevent consumers from accessing the entire scope of legal products, then either the wholesalers need to be commissioned in a different way so that they are capable of offering retailers the entire scope of products available or wholesalers need to get out of the way of consumers.
This article, penned by Erik Price in June 2004, is still a very good primer on how to understand the 3 tiers system and how to investigate its utility 70 years after the system was created.
The entire article can be found here