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A History of Alcoholic Beverage Law
Like cigarettes, the sale of alcoholic beverages
is highly regulated by both the federal
government and state law. A brief description
of a history of beverage law is listed below.
Until the early part of the 20th century, the
distribution system for alcohol consisted of
only suppliers (brewers) and retailers. The
suppliers were typically more profitable,
favoring retailers who sold only their own
brands. Many local producers had ownership ties
to the taverns, and they sold to them on
extended credit terms, furnished equipment and
supplies, paid rebates for pushing their brands
exclusively, etc. Consequently, local brewers
engaged in cutthroat competition for control of
outlets, and some suppliers pushed retailers to
increase sales whatever the social costs. This
led to the rise of excessive consumption.
In the mid 1800's, there
began a call for
temperance. Some states began
 to
implement prohibition laws, but those were soon
declared unconstitutional or vetoed by state
governors. Some states began to implement
prohibition laws, but those were soon declared
unconstitutional or vetoed by state governors.
World War I gave the prohibition cause new
ammunition. Literature depicted brewers and
licensed retailers as treacherously stabbing
American soldiers in the back. Prohibitionists
argued that raw materials were being diverted
from the war effort to an industry that
debilitated the nation's capacity to defend
itself.
As a result, in January of
1920 Congress enacted the
18th
 Amendment
to the U.S. Constitution: the National
Prohibition Act. However, as a
result of the lack of enforcement of the
Prohibition Act and the creation of an illegal
industry, an increase in crime transpired. The
crime rate soon skyrocketed to nearly twice that
of the pre-prohibition period. It can be argued
that prohibition destroyed legal jobs, created
black-market violence, and diverted resources
from enforcement of other laws.
In 1933
the 21st Amendment was
ratified, repealing the failed
 experiment
of Prohibition. While
Prohibition did not end alcohol consumption, it
dramatically changed the conditions under which
it was sold and consumed. Section 2 of the
Amendment gives states authority to regulate the
production, importation, distribution, retail
sale and consumption of alcohol beverages inside
their borders.
Federal and state lawmakers
realized that Prohibition did not work, but they
did not want a return of the merchandizing and
sales patterns that characterized the
pre-Prohibition era. Consequently, they put
together a
three-tier system that uses
distributors as the insulator between brewers
and retailers.
Acting like a safety net,
the three-tier system provides for “checks and
balances” in the way that alcohol is distributed
and sold to retailers as well as consumers.
Producers sell to licensed beverage
distributors, who sell to properly licensed
retailers, and those retailers sell alcoholic
beverages to the public.
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Why Have
a Three-Tier System? |
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When Prohibition was
repealed with the 21st Amendment to the
Constitution, a three-tier system was
established to eliminate the direct link
between the brewers and the retailers
and to ensure local control of the
distribution process. This system has
four primary goals: |
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To avoid the
overly aggressive marketing and
sales practices of the
pre-Prohibition era;
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To generate tax
revenues that can be collected
efficiently from the industry;
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To facilitate
state and local control; and
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To encourage
moderate consumption.
The three-tier
system helps ensure that alcohol is not
sold to minors or citizens who have
voted to live in “dry” counties, it
ensures that alcohol beverage taxes are
reliably collected, and it allows
smaller retailers to have a more level
playing field and access to more
products.
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A Description of The
Texas Alcoholic
Beverage Commission.
The
Texas Alcoholic
Beverage Commission
(formerly the Texas
Liquor Control
Board) was created
in 1935.
Under the
Alcoholic Beverage
Code, the TABC
"shall inspect,
supervise and
regulate every phase
of the business of
manufacturing,
importing,
exporting,
transporting,
storing, selling,
advertising,
labeling and
distributing
alcoholic beverages,
and the possession
of alcoholic
beverages for the
purpose of sale or
otherwise."
"This code is an
exercise of the
police power of the
state for the
protection of the
welfare, health,
peace, temperance
and safety of the
people of the state.
It shall be
liberally construed
to accomplish this
purpose."
The 21st
Amendment, which
signaled repeal of
national prohibition
in the 1930's,
allows each state to
control the
importation and use
of alcoholic
beverages within its
boundaries. This is
probably the only
remaining right
guaranteed more or
less exclusively to
the states.
The Texas
Alcoholic Beverage
Code was enacted to
protect against
involvement of the
criminal element in
alcoholic beverage
trafficking. The
legislature has very
strictly prohibited
persons who have
been convicted of
certain crimes from
obtaining licenses
or permits. Also
prohibited are "tied
house" violations
where ownership
overlaps the three
marketing levels
(manufacturing,
wholesaling and
retailing) in the
beverage alcohol
industry. |
The separation of marketing levels is closely scrutinized. TABC
employees review all
shipments of
alcoholic beverages
into Texas, as well
as any transfer of
merchandise between
wholesalers.
Background
investigations and
other research are
undertaken when a
person applies for a
permit or license to
operate in some
phase of the
industry. Efforts
are made to detect
ownership by others
involved at
different levels, as
well as those
factors which could
tend to disqualify
an applicant, such
as previous criminal
history or
indebtedness to the
state for taxes.
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The Enforcement
Division, the
agency’s largest and
most visible
division, enforces
the Alcoholic
Beverage Code and
other laws of the
state. Commissioned
peace officers
conduct
investigations
involving minors in
possession, public
intoxication,
bootlegging,
prostitution,
gambling, narcotics,
weapons, and
organized criminal
activities.
Enforcement agents
also provide regular
instruction to
school children,
licensees and their
employees, and to
members of civic
groups, to promote a
better understanding
of the law and
encourage voluntary
compliance. For
information, call
(512) 206-3400.
The Marketing
Practices
Coordinator oversees
the promotion of
alcoholic beverage
products. For
information call
(512) 206-3411.
Regulatory control
of the alcoholic
beverage industry is
established through
the process of
issuing more than 60
different types of
licenses and
permits. Each year,
the Licensing
Division issues
approximately
100,000 licenses and
permits throughout
the world. An
individual must hold
the proper license
or permit to be able
to operate in the
alcoholic beverage
business. For
information, call
(512) 206-3360.
Legal staff review
and prosecute
administrative
violations of the
Alcoholic Beverage
Code by permittees
and licensees, as
well as review and
prosecute protest to
the issuance of
original and renewal
licenses and
permits. These
protests may be
filed by the
Commission, local
authorities and/or
private citizens.
The General Counsel
and his staff also
handle general legal
work for the
Commission and
responds to legal
inquiries from the
public, permittees
and licensees. For
information, call
(512) 206-3490.
The Compliance
Division ensures the
proper amount of
taxes and fees have
been reported and
paid by licensees
and permittees. They
perform compliance
audits, process and
verify excise tax
reports and oversee
compliance with
financial
requirements of the
Alcoholic Beverage
Code. They also
oversee product
testing and label
approval of
alcoholic beverages.
For information call
(512) 206-3300.
The Ports of
Entry Section is
responsible for
assuring compliance
with personal
importation laws and
for collecting taxes
and administrative
fees on alcoholic
beverages imported
from Mexico. They
also monitor
compliance with laws
regarding
importation of
cigarettes into
Texas and collect
the applicable
taxes. Agency
personnel are
stationed at all
major bridges along
the Texas-Mexico
border. For
information, call
(512) 206-3351.
TABC strives to
provide the public
with information
about alcoholic
beverage laws and
programs related to
responsible behavior
and the prevention
of underage
drinking. The agency
co-sponsors a web
site specific to
underage drinking:
www.2young2drink.com.
TABC also uses press
releases and public
service
announcements to
support its seasonal
law enforcement
efforts. TABC
provides grant money
to individuals and
organizations
working to prevent
underage drinking
and driving while
intoxicated. The
Seller Training
Section regulates
seller training
schools that train
retail employees on
responsible alcohol
service. For
information about
seller training,
call (512) 206-3420.
The agency’s main
web site (www.tabc.state.tx.us)
provides general
information about
TABC and the
Alcoholic Beverage
Code as well as an
e-mail address to
send specific
question and
complaints to the
agency. For
information, call
(512) 206-3347.
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Great
Western Distributing Company
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3333 East Third |
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Amarillo, Texas
79104 |
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806.376.5674 |
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All Rights
Reserved |
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