December 5 is a date every drinking American should recognize as the end of one the bleakest spots in the nation’s history. On this date in 1933, the 21st Amendment was ratified, and the nationwide ban on spirits was lifted.
After more than a decade of hiding in the shadows of illegal speakeasies and producing jug wine in secret, Americans were once again free to have a drink and earn a living making and serving spirits. The momentous occasion met nationwide jubilation. Many celebrated in the streets, and saloons filled with merry tipplers charging their glasses high.
Newspapers proclaimed “Prohibition Ends At Last!” and the country breathed a collective sigh of relief. The hardship of such an egregious law had wreaked havoc on the United States, and the repeal seemed to hold the promise of fully restored freedom to all citizens.
Prohibition’s Lasting Grip
In reality, Prohibition could not be undone in a day. The lasting effects of such a severe act of the federal government are still strongly felt. Booze in every state is subject not only to federal regulation, but also powerful and unwieldly state and local government regulations. These varying limitations are imposed on the producers, sellers, consumers, advertisers, and everyone in between.
A report from R Street Institute shows that the litany of varying rules imposed on alcohol and its consumption in the United States range from slightly annoying to absolutely bonkers. Many of these absurd laws operate under the pretense of protecting youth and even protecting people from themselves, but the truth is that they only exist to remind everyone that alcohol in the U.S. hasn’t ever recovered from Prohibition.
It is difficult to understand how Prohibition could have happened in the first place, but temperance had been on the tongues of many Americans following the abolition of slavery in the late 19th century. For many at the time, it seemed that the end of slavery was such a positive change in the course of the country that it must be followed by another drastic alteration. There was expanding common thought that unregulated spirit consumption was corrupting the lives of many Americans and destroying the moral fiber of the nation.
Following the end of the First World War, the temperance movement was very strong. There had been a ban on alcohol at the end of the war to divert grains to the war effort, but groups pushing for permanent national teetotalism formed and gained traction all over the country. The rallying cry was that making all alcoholic beverages illegal would be an immediate, effective, and lasting solution.
The 18th Amendment was thus proposed by the Senate and ratified in January 1919. The Volstead Act officially enacted the terms of the amendment, and exactly one year later, sales, production, importation, and consumption of spirited drink was banned in the United States.
Extralegal functions began immediately. Bootlegging reigned, and speakeasies popped up in the tens of thousands. No brewer or distiller was able to stay in legal business, and only wineries producing sacramental wine were able to remain in closely monitored production. Support for the 18th Amendment, which had been quite strong, disappeared almost immediately.
The ensuing 13 years saw an enormous surge in gang crime, with bootleggers profiting off scores of black-market spirits. Deep corruption within law enforcement became commonplace across the country, and general consumption of spirits actually increased as speakeasies became more numerous than the saloons they had replaced. The American people had no interest in being told their life would no longer include the freedom to have a drink.
After 13 years of turmoil, the repeal came as a great relief to a beleaguered nation, given that the production and consumption of spirits had previously been an undisputed right of all Americans. The repeal of its ban restored the federal legality of both, but under the terms of the amendment, control of spirits was given explicitly to individual state and local governments. Some states preferred to remain dry. Among the longest holdouts, Mississippi only restored legal drinking in 1966, and Kansas had a ban on public bars until 1987.
No Direct Sales to Consumers
Post-Prohibition, in their eagerness to collect taxes on the newly legal production of spirits, states developed the three-tier system. This prohibited the producer of any liquor, wine, or beer to sell directly to the consumer, requiring a distributor to first purchase the product.
Other than a vague excuse of being a spirit curator for the consumer, the distributor serves no other function than as a way for a spirited product to collect sales tax twice. It offers no benefit to either producer or consumer. Because the states retained all the power to develop their own system, the three-tier system is different all over the country. Each state also individually dictates the alcohol level of a beverage that defines it as either liquor, wine, or beer, making it endlessly complicated for producers to export their product nationwide.
Before Prohibition, the United States had more than 4,000 breweries, thriving wineries in every state, and countless distilleries. The repeal found a barren wasteland of abandoned vineyards and breweries across the country that have never been replaced. States laid such severe regulations on distillers of hard liquor that the old tradition of family whiskey production died entirely. Even with the boom of craft beer brewing in the past 30 years, severe regulations prevented the beer industry from reaching pre-Prohibition levels of production until 2016.
The individual state and local government control over spirits in the last 85 years has yielded some of the most absurd, lasting laws on the books in this country. The R Street Institute report highlights a dozen of these debilitating alcohol-related laws that show how reckless and harmful some state regulations truly are. Myriad of these ridiculous laws still have champions claiming health and safety benefits for closely guarding an industry the promotes the use of an intoxicating substance.
History has surely shown that, as long as alcohol exists, some people will abuse it, whether or not it is legal. Totalitarian state control of spirits only benefits cronies.
Virginia Makes More Money than Distillers Do
One of the most egregious examples from the R Street report is that Virginia’s Alcohol Beverage Control Authority acts as the middle man instead of the usual distributor in sales of hard liquor. This means that if you visit a craft distiller of whiskey and buy a bottle to take home, the distiller sends every penny of that sale to the state government and receives only 46 percent of the total sale amount back.
Restaurants and bars in Virginia do not buy their liquor from anywhere except a state-run “ABC” store; they do not receive deliveries or wholesale discounts, instead having to drive to the liquor store and pick up their orders at normal retail pricing. If you think your Virginia cocktails are too expensive, don’t blame the bar, blame the state.
Idaho doesn’t allow spirits to be infused by anyone other than the original producer. In the boom of craft cocktails, infused spirits have become increasingly popular, so the ban blocks many cocktail bars from giving customers what they want. After sweeping confiscations and citations in 2013, the state of Idaho offered an explanation that the ban was to protect consumers from drinking a lesser spirit than they had paid for.
The regulation is not limited to just the way spirits are made and consumed. Advertisement and labeling must also adhere to specific state code. In Ohio, no label or advertisement for a drinking event may include images of references to Santa Claus. Alabama has a similar law that targets images of people posed in an “immoral or sensuous manner.” Because of the advertising laws, most producers have many labels for specific markets to make sure they comply with the multitude of rules for national distribution.
States remain untethered in their control of spirit production and consumption, taxing and regulating at levels not seen in any other industry. On this anniversary of the repeal of Prohibition, it is important to look back on the importance of free markets in the United States. Individual state rights were not meant to replace central government as absolute authorities in the lives of spirit producers and consumers. It is time for a reconciliation with alcohol laws in this country’s state and local governments. As free Americans, we should make and drink what we want to, no matter which state we’re in.
