Tag Archives: three-tier system

Federalism’s Tension with the National Love of Craft Beer

Federalism allows the individual states to function as “laboratories of democracy.” Innovations in the law of one state can spill over into others; in some cases creating a national consensus. Since alcohol regulation was largely left to the states after Prohibition, each became such a “laboratory” with respect to alcohol laws.

While the general three-tier system has been in place throughout the country, each state has put its own stamp on it. And some of the laboratories have performed more experiments than others, whose lab equipment still bears the dust that settled shortly after the passage of the 21st Amendment . Some of those experiments have benefitted small brewers because the three-tier system generally “protects” distributors and retailers from big bad manufacturers.

In particular, a strict three-tier system prohibits brewers from selling (or in some cases, even offering samples of) beer from the brewing premises directly to the public. Brewers in those states must employ a distributor to get their beer to retailers if they hope to make any money. Many states, such as California, allow breweries (small and large) to self-distribute and to offer tasting (for profit) at the brewery. And lo, the world has not ended. But it has provided start-ups with an instant revenue stream from the ability to sell beer on-site before they’ve even managed to find local accounts or considered a strategy for expansion/distribution.

It has also provided the public with an excellent way to appreciate their local beer: they can look at the brewing equipment and chat with the brewers and proprietors as they enjoy the beer made on site. Then, they can take growlers of it home. Of course, not everyone gets to enjoy local beer this way. Consequently, not everyone gets to enjoy a great variety of local beer: restrictive beer laws mean fewer would-be entrepreneurs will think it is worthwhile to start up.

In tension with these variations across the states is the national culture of beer appreciation growing rapidly in the United States. Drinkers just joining the ranks are well aware of the best beers across the nation, thanks to rating sites, social media, and the general modern ease of knowing about things beyond one’s own state’s borders.

When such a person reads something like this: “If their strategic plan was based on them opening up a microbrewery then changing state law, then that was a poor strategic plan,” he or she may be confused, even angry. He or she may know about the lines to fill growlers at Hill Farmstead or the Alchemist’s Heady Topper kerfluffle. He or she may have seen the picture of the lady with a 2-month-old baby waiting all night for a shot at some Pliny the Younger. Such a person may want a phenomenon of that nature to occur in his or her back yard.

Georgia’s Senator Jack Murphy added, “The three-tier system has been in place for, what, 80 years now? And what it was designed to do and is designed to do is regulate an industry that needs regulating,” Murphy said. Such a person, upon hearing this, is apt to think, “Federalism Sucks!” (Perhaps not in those terms). An opportunity for civic engagement, I suppose. It does seem that more and more politicians recognize the opening of small breweries as an opportunity to tout job creation, particularly in [rural] places that have not seen a lot that. Consequently, a challenger to an old “three-tier” guy may have a lot of success talking about small business growth, new jobs, and the good small brewing businesses have done for local communities.

While it is good that states can establish their own policies, the online and inherently borderless nature of like-minded communities, such as craft beer nuts, puts federalism in tension with the national mood. One national mood of craft beer is: locally made, locally consumed, [very] locally enjoyed. Small breweries (where they can) have teamed with the food truck phenomenon to turn their industrial-zone warehouse sites into cool, brewpub-esque hangouts. And it is a shame that residents of some states can only be spectators [and tourists] to this aspect of beer appreciation.

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