Beer Law Mashing

Beer Regulation and Change

I was doing some research this morning on the history and original intent of North Carolina’s beer distribution laws, and several quotes jumped out at me. They relate to the interplay between statutory law, regulation, and change in society—a topic I’ve always enjoyed. And I thought it might be fun to share a few of them, along with some random thoughts.

The quotes aren’t famous or fancy. Both are from Toward Liquor Control, an influential study commissioned in the 1930s by John D. Rockefeller, Jr. The study recommended best practices for state alcohol regulation following the failure and repeal of Prohibition in 1933. [1]

Here are the quotes:

The only service that law can render is to give effect to the necessities and ideals of a given time and place, and necessities and ideals cannot escape the process of change. We need to be on guard against any system of control that has outlived its usefulness or that no longer represents the prevalent ideas and attitudes of the community. . . . For law is itself a social phenomenon and has no meaning apart from the uses and necessities which it springs.

– Raymond B. Fosdic & Albert L. Scott [2]

“Law in America is what the people will back up.” 

– Samuel M. (Golden Rule) Jones [3]

Law can impede innovation and growth when it fails to keep up with evolving industries and society. We often see this clearly in technology and science, but it happens in other areas too. And some would say it is happening in North Carolina’s craft beer industry.

Regulations are written at a specific moment in time based on the experiences, needs, and ideals of that time, but they rarely contemplate future innovation and evolution in business practices. For example, the general scheme of North Carolina’s beer distribution laws (i.e., the three-tier system with beer franchise laws) was adopted decades before today’s craft beer industry existed.

Free markets adapt automatically to changing circumstances, but tightly regulated markets cannot. Consequently, if we are going to rely on regulation, we have a responsibility to monitor and change it when it no longer serves its intended (or otherwise valid) purposes or those purposes no longer exist.

Amending an existing regulatory scheme is hard, however, because the process is inherently political. This is particularly true when vested interests are at stake. In such cases, any changes must be made thoughtfully. They will generally occur only incrementally over time, with their speed and success depending on factors such as money, political influence, economic benefits, and perceived social implications.

It is for these precise reasons the authors of Toward Liquor Control recommended against a license-based regulatory system, which is what North Carolina and most states use for beer regulation. [4] The authors understood the political implications of creating vested ownership interests in licenses. Instead, the authors recommended tight regulatory control (i.e., governmental monopolies) over liquor and “heavy” beer and wine, with limited regulation over lighter beer and wines. [5]

In the end, Samuel (Golden Rule) Jones was probably right to say that law is “what the people will back up.” But that is not always easy to discern and can take significant time, effort, and money to pin down. That doesn’t mean we shouldn’t change laws when necessary, but it requires thoughtful goals, realistic expectations, and careful planning.

[1]  Raymond B. Fosdick & Albert L. Scott, Toward Liquor Control (1933)

[2]  Id. at 87

[3]  Id. at 19, quoting Samuel M. (Golden Rule) Jones, Mayor of Toledo, Ohio (1897 – 1904)

[4]  Id. at 42-43

[5]  See id. at 31.

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