Varying Alcohol Laws Chill Holiday Spirits

Varying Alcohol Laws Chill Holiday Spirits

January 9, 2018

Prior to December 5, 1933, flappers and mobsters canoodled in speakeasies while sipping moonshine and other contraband beverages. The law of the land – enacted through an amendment to the U.S. Constitution -- was straightforward with all manufacturing, sale, or transportation of intoxicating liquors being prohibited. The nationwide ban on alcohol in the Prohibition Era would be the last era of uniform alcohol laws for retailers throughout the country. In this widespread absence of open sale of alcohol, the industry fled underground. Organized criminal organizations took the lead role in the liquor business and created distribution networks linking suppliers to underground retailers while often holding financial interests in all three tiers. Law enforcement agencies that interfered with this vast network saw their popularity take a nosedive as they stood between drinkers and their booze. Ever since the ill-fated 18th Amendment to the U.S. Constitution was repealed by the 21st Amendment, alcohol regulations have focused on regional concern rather than promotion of intra-state and cross boundary commerce. The colossal failures of Prohibition evidenced that the federal government alone could not regulate the manufacture, distribution and retail sale of alcoholic beverages. The 21st Amendment and post-prohibition regulation therefore ensured that each state would have the ability to regulate alcohol laws within its borders based on its jurisdictional needs. Federal laws still regulate the upper tiers and serve as the foundation for many of the state laws in effect throughout the country relating to the manufacture and distribution of alcohol. The retail tier however struggles with the most diversity in regulations from one jurisdiction to another. While this diversity in regulation preserved the regional interests of post-prohibition alcohol regulation and supported proper tax collection and payment, today’s age of national retail chains and online shopping trends casts doubt on not only the need for rigid tier regulation, but also on regional rules that interfere with e-commerce and national retailer programs. Various industry organizations now lead effective collaboration between industry members and their state regulators in an effort to foster greater agency cooperation and understanding of the modern retail world. While e-commerce and internet shopping predominate on convenience factors, brick and mortar locations for both on and off premise retailers still remain a crucial part of the alcohol industry and the retail industry as a whole. As more retail venues, and even department stores, integrate food and alcohol service, compliance with varying alcohol laws from county to county and state to state can be the largest obstacle to implementing and then operating responsible alcohol service programs. With the holiday season looming in, the festive mood also fuels creative marketing and promotional ideas. That creativity and push for national promotions must, sometimes regrettably, give way to regional regulations. For now, without uniformity in licensing and operating regulations across jurisdictional lines, alcohol retailers need to develop compliance programs that account for the varying regional laws and requirements in key operational areas as discussed below. While these regulations may stifle the free flow of holiday drink specials and promotions, retailers can nonetheless craft compliant service policies.


Advertising in the alcohol industry is one of the more complicated areas of the business. The industry is regulated by tedious and sometimes outdated rules aimed at preventing some of the Prohibition era entanglements that impacted retailer independence and influenced over-consumption. Aside from the controversial “tied-house” regulations, most jurisdictions restrict the ways in which alcohol can be advertised and promoted. These restrictions frequently include regulations on signage, drink specials, happy hour promotions and even themed cocktails. Accordingly, prior to rolling out a peppermint martini two for one special, retailers need to examine the state and local regulations that govern alcoholic beverage promotions and weigh the benefits against cost and risk of implementation.


Even in areas where alcohol can be more freely promoted with drink and happy hour specials, signage restrictions may prevent on-site advertising. Retailers may nonetheless be able to use electronic and online advertising methods to voice upcoming promotions and holiday special events. Signage restrictions can again be regulated on either the state or local level for advertising material displayed directly outside or on the licensed premises. This restriction may also impact private events or other social events taking place on a licensed premises. Retailers should include provisions in rental agreements to provide for proper review and approval of any signage materials used by third parties hosting events on their premises.


Laws restricting alcohol sales typically do so through time, place and manner restrictions. This includes the days of the week and hours during which alcohol can be sold. Many states and local jurisdictions prohibit alcohol sales during late night hours even on nationally recognized holidays. In some cases, local regulations may be more rigid than general state regulations on hours of sale. Luckily, many jurisdictions allow for special event exemptions or permits that can extend permitted hours of sale for a limited time.


Whatever role you play in the alcohol industry, compliance with state laws is a primary area of concern not only for the public welfare but also for maintaining licenses and permits in good standing. While we all enjoy the holiday season, remaining compliant impacts the longevity and success of any alcohol licensee.

Tag: Global News