United States: Regulations

Following repeal of Prohibition in 1933, each of the 48 (now 50) states was allowed to set its own regulations governing the sale and distribution of alcoholic beverages. As a result an arcane, confusing regulatory environment involving in effect 50 separate countries has evolved. The prevailing three-tier system is, however, under increasing economic and legal pressures. The consistent theme throughout the rules is that no enterprise can act as supplier, wholesaler (distributor), and retailer. A chief exception to this rule is California, where wineries can circumvent this structure. In many states, boutique (farm) wineries can sell their wines directly to consumers, but most sell them to wholesalers, which then sell to retailers and restaurateurs. After a series of aggressive acquisitions, the number of different wholesalers was dramatically shrunk between 1985 and 2005, each enjoying what is effectively a state-sanctioned monopoly on alcohol sales and profits. An actual state monopoly operates in Pennsylvania and New Hampshire.