Marc Hyden is Director of State Affairs at the R Street Institute. You can follow him on Twitter at @marc_hyden.
After a recent conversation about Georgia’s outlandish and antiquated alcohol laws, I recalled a scene from the cult comedy Office Space.
In the film, two consultants – the Bobs – tried to lay off unneeded employees at a technology company called Initech, and they interviewed various employees, including Tom.
When asked what his job at Initech entails, Tom replies, “Look, I already told you. I deal with the [expletive] Customers so the engineers don’t have to! I know people! I can deal well with people! Can’t you understand?! What the [expletive] is wrong with you people?!”
Tom was little more than a middleman between engineers and customers – an extra cog created by his bosses – and he knew it. His answers left the Bobs completely unimpressed.
While the scene should be light-hearted, it’s reminiscent of Georgia’s three-tier system of alcohol regulation. It’s an antiquated holdover from the Prohibition era.
In large part, restrictions are imposed “so that no beer maker can sell beer to a customer without first taking it to a wholesaler who then supplies it to a retailer.
Similar structures exist for wine and spirits in Georgia,” according to 11 Alive News.
The notion of the three tier system is obviously silly. In few other industries, the government would ban producers/manufacturers from distributing their wares to retailers or selling directly to consumers, rather than forcing them to rely on middlemen like Initech’s Tom.
But that’s the system we have. Breweries can’t sell their products directly to just about anyone on a large scale. Rather, by law, they must hire a wholesaler to perform this role.
Thankfully, as Georgia’s craft beer, wine, and distillery industries have expanded, some exceptions to the three-tier system have been enacted, but they remain overly limited and restrictive.
Currently, no one can buy more than 288 ounces of take-out beer per day from a brewery, which equates to 24 12-ounce bottles — essentially a case of beer. That’s incredibly strict. In fact, traditionally teetotal Alabama allows three times that level, while other states have no limit whatsoever.
There is good reason to remove the daily limit for small breweries, as proposed in Senator Chuck Hufstetler’s bipartisan bill – SB 420. While 288 ounces may sound like a lot of beer, if you’re only buying beer every few months or buying it for a get together, reception, or family reunion, it’s not.
In fact, I think most would agree that you might need well over 24 beers to survive a family reunion. More than that, why did legislators set a limit of 288 ounces instead of 388, 488 or some other number? No one seems to be able to give me a good answer.
Many Georgia breweries are small businesses struggling to stay afloat, and regulations restricting their sales naturally hurt their bottom line. This may indicate why Georgia has one of the lowest number of breweries per capita in the country. Removing the daily limit would extend a small – but useful – exception to the three-tier system for fledgling companies that would otherwise have to rely on wholesalers and pay them for the privilege of getting their products into consumers’ hands.
But relying on wholesalers has other downsides. Adding an intermediary – wholesaler – to the equation puts a strain on breweries and drives up the price of alcoholic beverages – costs that are passed on to customers.
None of this is meant to be an insult to alcohol wholesalers. They play an important role in our economy – especially for big producers who can afford their services – but extending the strict rules of the three-tier system to small breweries to limit their direct sales to consumers is bad for business.
If breweries don’t want to sell more than one case of beer per customer per day, and instead prioritize off-site sales through wholesalers for the majority of their sales, then so be it. However, the government should not force them to take this path to their detriment.
Rather, Georgians should want small businesses like breweries to thrive and boom across the state. SB 420 could help make this a reality without severely impacting wholesalers’ bottom line, as on-site brewery sales for take-away consumption represent a relatively small part of the market.
While it’s up to lawmakers to reconsider the state’s alcohol regulatory framework, it’s easy to imagine that if the Bobs were examining the impact of the three-tier system on Georgia’s small breweries, they would ask wholesalers, “What exactly do you do?” here?” You might reply, “Look, I already told you. I deal with the [expletive] Retailers so the breweries don’t have to! I have retail knowledge! I’m good with retailers! Can’t you understand that?!”
With all due respect, no, I can’t.
Marc Hyden is Director of State Affairs at the R Street Institute. You can follow him on Twitter at @marc_hyden.
