What is the Center for Alcohol Policy? What are its goals? How does it achieve them?

I. Center for Alcohol Policy

The Center for Alcohol Policy is a non-profit organization. The National Beer Wholesalers Association founded and funds it. That’s a trade group. 

The executive director for the Center is Mike Lashbrook. He was president of the Michigan Beer and Wine Wholesalers Association for 26 years. Lashbrook was chair of the Wholesale Beer Association Executives. He was also on the Advisory Council of the Wine and Spirits Wholesalers of America.

The Center’s goal is to protect the interests of its members. It does so largely by defending the three-tier system of alcohol distribution.

Three Tier System

The three tier system requires that producers must use a wholesaler. And also that retailers must buy from a wholesaler. So preserving the three tier is essential for the profits of wholesalers. 

Thus, the Center defends the status quo. So it opposes the right of wineries to sell directly to consumers. Or the existence of brewpubs. 

The Center also strongly opposes competition. Of course, competition benefits customers. They get lower prices, wider selections, and better service. But it also lowers the profits of retailers. And wholesalers rely on profitable retailers. So the Center also protects retailers against competition.

Some Background

John D. Rockefeller, Jr. was a strong advocate of National Prohibition. So as Repeal was being ratified, he commissioned a book to argue in favor of temperance. 

That book, Toward Liquor Control, was published in 1933, the year of Repeal. In 2011, the Center for Alcohol Policy republished it. The Center uses the book to defend the interests of wholesalers.

II. Case Study

Tennessee law discriminated against non-residents who applied for retail alcohol licenses. That discrimination was designed to reduce competition and keep alcohol prices high.

The state required applicants to be residents of Tennessee for at least two years. In addition, all of a company’s officers, directors and stockholders had to meet that requirement.

The law also set up even much more serious roadblocks. Licensees had to live in the state  for ten years in order to renew. But the licenses must be renewed annually. Assume that a person moves into the state for two years and then gets a license good for one year. Then the person must lose it for seven more years!

Not surprisingly, the state’s attorney general had issued two opinions declaring the law unconstitutional. So the Tennessee Alcoholic Beverage Commission agreed to approve two applicants who failed those requirements.

Then the Tennessee Wine and Spirits Retailers Association sued the Commission for approving the applications. “The Retailers Association lost in the lower courts but kept appealing in hopes that they could block competition from out of state.”¹ And finally, they appealed to the U.S. Supreme Court.

The Center for Alcohol Policy submitted a brief to the Supreme Court. In doing so, it relied heavily on Toward Liquor Control to oppose the competition. Indeed, it referred to Rockefeller and his temperance document on each and every page of its argument to the Court. 

Yet, in a 7 to 2 decision, the Supreme Court struck down the anti-competitive Tennessee law. It held “Because Tennessee’s two-year residency requirement for retail license applicants blatantly favors the state’s residents and has little relationship to public health and safety, it is unconstitutional.”

III. Resources

Reports

The Center promotes reports defending the three-tier system. They are only available on its website. These are the titles of five such reports.

The Dangers of Common Ownership in an Uncommon Industry.

Alcohol Beverage Control. The Basics for New State Alcohol Regulators.

The Need for State Alcohol Regulatory Funding.

The Dangers of Alcohol Deregulation.

Exploring Alcohol Regulation in the 21st Century.

Footnotes

1. 1. Binion, B. Supreme Court Strikes Down Nonsensical Tennessee Liquor Law. Reason, June 26, 2019.
   2. Kendall, B. and Bravin, J. Supreme Court Strikes Down Tennessee Alcohol-License Regulations. Wall Street J, June 26, 2019.