The 3-Tier System

The three-tier system in the United States is a legal framework for the sale and distribution of alcoholic beverages, including spirits, which was established after the end of Prohibition in 1933. This system mandates that alcohol must pass through three distinct tiers: producers, wholesalers, and retailers before it can reach the consumer. Here's a breakdown of each tier:

Tier 1

producers

This category includes the distilleries, breweries, and wineries that manufacture alcohol. They are responsible for creating the alcoholic beverages but are not allowed to sell directly to retailers or consumers (with some limited exceptions). Instead, they must sell their products to a licensed wholesaler.

Tier 2

wholesale/distributors

Wholesalers purchase the alcoholic beverages from producers. Their role is to act as the middleman in the distribution chain, selling and delivering the alcohol to retailers. They are licensed separately and play a critical role in ensuring compliance with state laws, taxation, and distribution logistics. Wholesalers can't sell directly to consumers.

Tier 3

Retailers

Retailers are the businesses that sell alcohol directly to consumers. These include liquor stores, bars, restaurants, and other venues that are licensed to sell alcoholic beverages. Retailers can only buy their products from licensed wholesalers (with some exceptions for certain small producers).