While our U.S. Constitution allows for the sale of alcoholic beverages since the repeal of Prohibition in 1933, the basic regulatory framework became the purview of each individual state. This state-based system ensures a robust and orderly marketplace primarily controlled by state legislatures and local communities. About half of the states enacted a three-tier system for alcohol distribution consisting of a separate supplier/producer, a distributor and a retailer. The other half of the states enacted a government control system. Each regulatory model traded the potential benefit of unfettered competition for a more orderly market and moderate promotion. Today, more than 30 states utilize the competitive/license regulatory model.
The federal Alcohol and Tobacco Tax and Trade Bureau (TTB), regulates the manufacture and labeling of alcoholic beverages. The TTB is also the federal agency responsible for enforcing federal law designed to encourage competition in the marketplace while ensuring safe products are sold at competitive prices.