The Evolution of the Three Tier System

Part 3 of a 10 Part Series examining the Three-Tier System of Alcohol Distribution

This is the third of a 10-part series examining the Three-Tier System of alcohol distribution in the United States. It is my intent to examine the details, history, impact, politics and alternatives to this uniquely American set of alcohol laws.

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The Three-Tier System (TTS)—with its separate licensing of producers, wholesalers, and retailers and the legal mandate that producers only sell to wholesalers who, in turn, are the only legal source for retailers to procure inventory—was instituted in the wake of Repeal of Prohibition in the early 1930s. Its purpose was to assure that in a post-Prohibition world there would be no return to the “Tied House” system whereby producers owned or exerted great control over saloons, which engaged in excessive sales and marketing techniques that led to overconsumption.

In Part 2 of this series, we noted the unique conditions that created the Tied House marketplace in the first two decades of the 20th century no longer exist today. As a result, today the TTS seeks to prevent in the 2020s the return of a marketplace that existed in the 1910s and that could not exist today.

This leads us to ask how has the TTS evolved over the past 90 years to accommodate these changes to our society and culture.