Picture a world with no alcohol regulation. A world with no age restrictions, where there are no limits to hours of sales and no dry counties or municipalities are allowed. Imagine a world where those involved in the commerce of alcohol are not required to pass a background check and obtain a license for the privilege of selling alcohol, and where states no longer have the enforcement hammer of taking away the licenses of bad actors. A world where there are no restrictions on price promotions, marketing practices, product giveaways, etc., etc. Imagine a world where the local norms and traditions play no role whatsoever in whether or not and how alcohol is regulated.

To some free market purists, these thoughts are nirvana. And many folks probably figure that players in the industry want to work toward these lofty goals. But for those who understand the history of alcohol regulation and care about the fact that beverage alcohol can be subject to abuse, the truth is diametrically opposed to the above vision.

Beer and wine wholesalers are that rare breed of private business persons that acknowledge a need for some regulation of the industry. We do not support irrational and knee jerk policies which demonize the products we distribute and seek to greatly curtail its availability. However, we do support rational and properly enforced regulations designed to accomplish what the courts have called core powers of the state to achieve temperance, orderly markets and revenue collection.

What do we mean by these terms and how has Michigan addressed them? Temperance is defined as the “habitual moderation in the indulgence of the appetite or desire.” The key word here is moderation and state regulatory agencies strive to attain a business climate in the beverage alcohol industry that balances consumer's desire for choice and competition with the state's interest in minimizing the incidence of alcohol abuse. In Michigan there are laws and regulations designed to assure that beer and wine is not over promoted and that prices, while competitive, are not deep discounted in such a way that it can encourage over consumption. Additional laws and rules address an even playing field at the retail level to prevent domination of the market by just a few large players, thus assuring a wide variety of retail outlets and more choice for the consumer. Of course, there are also laws focused on a minimum drinking age, sales to intoxicated persons and drunk driving sanctions which address specific instances of abuse of the products.

Perhaps the area of alcohol regulation that is least understood is the laws and rules designed to achieve “orderly markets.” States have long had an interest in tracking beverage alcohol products that enter the commerce in those states. This is most often accomplished through the licensed three tier system. The manufacturers are required to be licensed and receive "brand approval" to ship product into a state. The product must be received by a licensed wholesaler in the state who either pays the required state excise tax on the product or assists the state in verifying the product shipments for tax purposes. Since the vast majority of beer and wine is distributed in Michigan and all states through exclusive territories, based upon either law or supplier preference, the state can easily track product shipments, deter product diversions and black/gray market activity, identify who's responsible when violations of law or rules occur, thus achieving the order in "orderly markets."

Beer and wine have been subject to federal and state excise taxes both pre and post prohibition. Michigan derives roughly $58 million from beer and wine excise taxes and another $143 million from sales taxes on these products. This is a significant revenue stream that the state has an active interest in protecting and is one more important reason for "orderly markets" with efficient tax collection.

So why the history lesson and defense of the licensed three tier system? Remember the free market purists mentioned at the beginning. These folks, and other commercial interests in the beer and wine industry, have begun a crusade to dismantle the system. Elements of this movement were behind the Granholm V Heald case decided by the Supreme Court last year and are pushing for expansion of this decision far beyond the direct sale and shipment of wine by wineries to consumers. Big box retailers have lawsuits underway in Washington State to dismantle many of the "even playing field" and "orderly market" laws and regulations in that state.

Equally troubling is a new lawsuit filed in Texas claiming that the nation's retailers should be able to ship alcohol beverages across state lines. Think about that one. There is somewhere in the neighborhood of 800,000 alcohol beverage retailers in this country. If hundreds of thousands of retailers from around the country are selling and shipping beer and wine to Michigan consumers, it will be impossible for regulators in our state to have any control whatsoever on the product. So much for temperance, dry areas, orderly markets, tax collection, adherence to local norms and the multitude of other important reasons for rational beverage alcohol regulation!

Wholesalers must be extra vigilant in getting this message across to their community leaders and to our elected officials.