Arizona's Three-Tier Distribution System

Tier 1Tier 1 is composed of the licensed producers – the makers and importers of the beer, wine and spirit beverage alcohol products enjoyed by millions of responsible adults in Arizona and around the world.

Tier 2Tier 2 is composed of the licensed wholesalers – the distributors who buy these products from producers, store and transport them safely, and sell and distribute these products to retailers.

Tier 3Tier 3 is composed of the licensed retailers - the convenience stores, supermarkets, wine shops, restaurants, bars, sporting venues, hotels and the like - who sell these products to the public.

Each tier is independent of the other, ensuring accountability to the public and healthy competition. This also helps guarantee that products are unadulterated and reasonably available for customers, prohibits promotions that foster heavy alcohol consumption, and strictly controls sales to minors.

Prior to Prohibition, alcohol was sold in a free-market scenario with little regulation. National manufacturers controlled the industry and owned retail saloons where most alcohol was consumed. This led to irresponsible and unaccountable practices, as well as significant alcohol abuse and underage sales. Enter the three-tier system, which was born out of the repeal of Prohibition. That's when the 21st Amendment to the U.S. Constitution was adopted, giving each state the power to regulate alcohol sales inside its borders. In response to the grant of this authority, all states adopted versions of the three-tier system.

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Through Title 4 of the Arizona Revised Statutes and the DLLC Rules promulgated under it, the three-tier system is fully implemented and provides our state with a comprehensive regulatory framework for beverage alcohol products. Our system is the fastest and least expensive way to handle distribution and sales for a huge variety of beer, wine and spirit products. The current system supports entreprenuership and free enterprise by affording the same opportunities to brewers, distillers and winemakers large and small, and it has been part of the success stories of numerous microbrewers and farm wineries in this state and region.

A critical value point in the three-tier system is the second or middle tier (Tier 2) where distributors ensure product safety and tracking, consumer choice, fair competition, tax collection, product affordability and convenience.

For more on the history behind the development of the three-tier system, and for a glimpse into what could happen if we deregulated the industry, watch these videos from the Center for Alcohol Policy.

The Origin of America's State-Based Alcohol Regulatory System
The Dangers of Alcohol Deregulation: The United Kingdom Experience vs. American Alcohol Regulation

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