The

Three-Tier System

FOR ALCOHOL DISTRIBUTION

The 21st Amendment to the United States Constitution gives states total authority to regulate alcohol. While each state has different laws regulating alcohol, most have a Three-Tier System.

The Three-Tier System for distribution of beer and wine is the bedrock of Michigan’s alcohol regulatory structure. Under the system, a brewery or winery sells to a distributor, who in turn sells to a licensed retailer.


Operating under state regulations, beer and wine distributors fulfill a crucial role in providing consumers with an expansive selection of choices. They are dedicated to upholding the highest standards of quality, ensuring exceptional value for consumers while diligently safeguarding public interests. Through their unwavering commitment, they play a vital role in preserving the integrity of the Three-Tier System and the overall health of Michigan's alcohol industry.

SUPPLIERS

Breweries & Wineries

a man is pouring a yellow bucket of grapes into a machine .

DISTRIBUTORS

Wholesalers

RETAILERS

Stores, Bars, & Restaurants

BENEFITS OF THE THREE-TIER SYSTEM

  • Creates competition and provides a level playing field for all.

  • Prohibits one entity from being licensed in or having an ownership interest in another tier.

  • Prevents vertical monopolies, price-fixing, and other anti-competitive behavior. This ensures that all brands, large and small, have access to the market.

  • Provides for efficient collection of state excise taxes.

  • Provides a tremendous variety of beer and wine brands and styles to licensed retailers at a great value while protecting the public.

  • Ensures that beer and wine are traceable; if there is a suspected problem with a product, distributors can efficiently track the identified product in a timely manner and pull it from the marketplace. This helps protect consumers from counterfeit and poisonous alcohol that is prevalent in many other countries that lack an effective regulatory structure.

The beer and wine distribution industry is both fun and complex. Many don’t realize the effort it takes to get products onto store shelves and restaurant menus. Distributors help grow brands—local, regional, and national—while investing in their employees, retailers, and communities to thrive together.

OTHER KEY FEATURES OF THE THREE-TIER SYSTEM

Beer & Wine

Franchise Laws

Require just cause and due process before canceling or terminating an agreement between a wholesaler and a supplier.

Territorial

Integrity Law

Ensures a transparent and accountable supply chain for product recalls, tax collection, and enforcement of the Bottle Bill.

Cash

Law

Requires cash payments upon delivery to prevent a licensee in one tier from gaining an unfair economic advantage or control over another.

Aid

& Assistance Law

Prevents commercial bribery in the marketplace.