Panelists at NBWA/Brewers Legislative conference discuss three-tier threats

Modern Brewery Age, April 25, 2005

Phil Terry: Steve, why is the three-tier system in the public interest, and why should it be protected?

Steve Diamond: As demonstrated by over 70 years of history, the present system has proven a reasonable and effective one for alcohol beverage regulation.

A license system of close regulation was developed to permit effort to minimize abuse. This was followed by states using this model to create variations of what we know as the three-tier system.

[Diamond cited the publication, Toward Liquor Control, written by Raymond Fosdick and Albert Scott in 1933, as an important influence on post-Repeal regulatory thought].

As Justice O'Connor has recognized, and many state regulators have rediscovered, Fosdick and Scott call for regulation at the state and not at the federal level.

[Diamond sketched out three "moderations" provided by the three-tier system] The first moderation is moderation of regulation. Permit as much entrepreneurial autonomy that is conducive to effective regulation. The creation of licensed entities with the incentive to play by the rules in a transparent and accountable distribution system. The second moderation is moderation in profit-making, and the third moderation is moderation in consumption.

The three-tier system can be confidently and comfortably protected. The virtues of this system have been taken for granted and must be reasserted now.

There is no contradiction between public interest and private profit. Wholesalers perform a public service. Wholesalers help control and facilitate distribution, and without profit wholesalers could not do so.

It is a balanced system. The aim is pragmatic, but not utopian. Protecting this system, like protecting liberty, will require eternal vigilance.

Craig Purser: Every time you pick up the newspaper, you read bad news. We are having the hell kicked out of us. Your national trade association has been working very diligently to meet the legal challenges. Some of these activities you won't read about, because we've been playing an inside game. But what we're doing more of, and what you will hear more about, is how we will play the outside game. Our association has a group of leaders that get it. They understand that these issues are the future, the now. We have also been fortunate to have a great legal team working behind the scenes. We also have great allies in the state association to meet these challenges.

But, the fact is, we will have to become better ambassadors and advocates for our system. Not just in the state legislatures and with members of Congress. We are going to have to take this issue to the streets. We will have to engage coalition partners and educate people about our reason for being.

We are not alone. This issue is not of exclusive interest to the wholesale tier. How about the suppliers? What dog do they have in this fight? If you are a smaller supplier your interest in this issue is in continuing to get your product to market. The three-tier system provides great opportunity to get product onto the shelf. The three-tier is not perfect, but it is the best thing we could have.