Introduction
Alcohol distributors build relationships with wholesalers. They then sell and deliver their products to them. However, some rules govern this distribution. The regulation of alcohol distribution focuses on creating and supporting a system that comprises of producer/suppliers, wholesalers, and retailers. This system’s basic structure is that producers can only sell their products to wholesalers, who may then sell to retailers, from whom customers will buy. The producer cannot sell their products directly to liquor stores, bars, or grocery stores. Almost all states have adopted the ‘three tier system’ to avoid a repeat of evils associated with the pre-prohibition era and form an organized regulatory system for tax assessment and collection. In some states, the state or its contractors run the distribution and the retailing tier. This paper will summarize alcohol distribution regulations in Southern California, Northern California, and Nevada.
Alcohol Distribution Regulations in Nevada
Nevada is among the 33 states that have implemented an ‘open’ model. This model allows private entities to take part in each of the three tiers. They can participate in distilling or brewing, importing or wholesaling, or distributing or retailing. Subject to the Nevada system, a supplier must acquire a ‘Certificate of Compliance’ to distribute alcohol to licensed importers and wholesalers in Nevada. The supplier is usually the brewer or vintner, or the first alcohol owner in the United States. In the case of wine, a supplier may ship directly to the consumers. This law is according to the Nevada Revised Statute. An importer is the first owner of the alcohol in the state of Nevada. A wholesaler is an individual who has a license to sell alcohol to retail liquor stores or other wholesalers. Often, these are the same entity or person. In Nevada, retailers must buy their liquor inventories exclusively from wholesalers.
The retailers are not allowed to purchase liquor directly for resale directly from suppliers or other retailers. Also, a retailer that has a non-restricted gaming license can shift original liquor packages to its associates that also have non-restricted gaming licenses. Transfers are also allowed between associate retailers that operate within a similar marketing area of the wholesaler dealer that has the franchise for the specific brand of liquor transferred. In small Nevada counties, wineries are allowed to bring in wine from wineries based out of the state. The wineries are also permitted to put up for sale any wine that’s created, blended, or aged at the in-state winery by the glass or by the bottle. Also, brewpubs may produce and store malt beverages on their premises and sell these beverages for consumption within or outside the premises. Importation of alcoholic beverages into Nevada must be made to the certified wholesaler/importer’s warehouse, except for wine, which is delivered directly to the customers. According to the three-tier system, importers and wholesalers cannot directly or indirectly operate a retail liquor store. The Nevada Department of Taxation regulates suppliers, retailers, and wholesalers. This department also handles the assessment and collection of liquor excise tax. Anyone who wishes to become an importer or a wholesaler has to make an application to the department of taxation and confirm their approval from their commissioners. Any applicant who wishes to be an alcohol wholesaler or importer must first have a warehouse within the state. It can take about six months to obtain this license. (Vermeys, 2015)
Alcohol Distribution Regulations in Northern and Southern California
The state of California has the right to permit and control the production, sale, purchase, ownership, and shipment of alcoholic beverages within the state. The state also can control the importation and exportation of alcoholic beverages into and from the state. It is illegal for any person or entity that is not licensed to sell alcohol in these states. Only licensed in-state manufacturers and winegrowers are permitted to sell directly to California retailers.
In California, the department of Alcoholic Beverage Control (ABC) implements California’s liquor laws enclosed in the Alcohol Beverage Control Act. Any organization that deals with alcohol in California must be licensed by the ABC. This involvement comprises of production, distribution, wholesaling, retailing, or beer-brewing at home. The department can also invalidate alcoholic beverage licenses and restrict the transfer of permits. The department establishes the highest number of liquor licenses permitted in a specific area using census data. Interested alcohol distributors, sellers, and retailers must apply for a state license. The ABC examines their fitness and morality before they are given the licenses. The licenses must be approved at one of the department’s field offices, at a district office, and at a Sacramento headquarter. License holders undergo regular and spontaneous inspections from the ABC. License holders must cooperate during these inspections all the time whether or not the ABC’s peace officials or local law enforcement personnel have warrants. Under the Alcoholic Beverage Control Act, a license holder must meet certain qualifications. An applicant is required to demonstrate that a new liquor store will only operate for public convenience or necessity. The department carries out background investigations for all applicants. One may not be eligible for a permit if they have a criminal background. The ABC informs the local government in case of an application for a new liquor license or transference of a liquor license. Then, public notices are placed at the establishment that will conduct liquor sale and at the local media. There is a 30-day period for citizens and a 90-day period for government entities to challenge license issuance. ABC offers different kinds of licenses. These licenses are liable to restrictions. For example, a liquor store operating in an area where the crime rate is high may be subject to restricted service hours. In North Carolina, there is a regulatory inclination on wine manufactures within the state. This preference discriminates against other wine manufacturers and sellers outside the state. Licensed establishments that infringe state laws or local laws are subjected to disciplinary action. This violation of law may lead to suspension of a license. In some cases, the license is revoked. (Wallechinsky, 2016)
References
Sonia, C. Vermeys, 2015, Navigating Nevada’s Three -Tiered Alcohol Distribution System.
- Wallechinsky, 2016, Department of Alcoholic Beverage Control, California.