Supermarket

Three-Tier System

Florida's Regulatory System Benefits Everyone

Florida, along with 31 other states, operates under what is known as the “three-tier” or “competitive/license” model. Under this regulatory model, manufacturers may not own distributors or retailers. Similarly, distributors may not own retailers.

An essential corollary to the prohibition against manufacturers and distributors owning retailers is Florida’s Tied House Evil Law. This law prevents manufacturers and distributors from assisting, and vendors from accepting, financial assistance. The rationale for this corollary to the three-tier statute is to prevent financial assistance that falls short of “ownership.” These rules are critical because the alcoholic beverage industry is fiercely competitive. Left unfettered, manufacturers and distributors would engage in all types of conduct to influence or control vendor behavior.

In the competitive model, the three tiers – manufacturers (brewers), independent distributors and independent retailers (groceries, convenience stores, pubs, restaurants etc.) – are licensed by the state, but given the freedom to meet customer demand. Customer demand is the engine that drives competition between manufacturers, distributors and retailers and the regulations ensure a level playing field for all. As a result, we see a robust industry that is changing to meet customer demand in a competitive free-market environment, free of the corruption and scandals that preceded Prohibition in the 1920’s.

3-tier-system

As a result of Florida’s robust competitive model, consumers are afforded an amazingly wide variety of fresh beer and flavored malt beverage choices at the best possible price.

There are many enforcement mechanisms in Florida law. They include a statewide drinking age minimum, limits on locations or hours of sale, criminal statutes, taxes, fines and fees. Further, there are a host of other laws that have eliminated unethical business practices, which allow for some to preclude others from the market (like buying shelf space or purchasing exclusive sales) or give unfair competitive advantages to some brewers over others. These laws also help protect the small retailer.

Through all of these regulatory and statutory consumer protections, the primary regulatory mechanism used in the competitive model is the state-issued license. The license is a privilege to sell a socially sensitive product and it can be taken away if the law is violated.

The three-tier system was created to prevent brewers from controlling the retail market.

Florida’s Division of Alcoholic Beverages and Tobacco (ABT) has a statutory duty to supervise and regulate the alcoholic beverage industry. That’s why it conducts inspections, compliance audits, compliance checks, and tax audits. The ABT is comprised of three bureaus: auditing, licensing, and enforcement. These three bureaus are inter-dependent and critical to the successful supervision of the alcoholic beverage industry.