In theory, the three-tier control system is in place to control the distribution of alcoholic beverages and protect consumers against counterfeit products by ensuring that any single entity can only have direct business interests in no more than one tier of the supply chain.

As each state is responsible for governing the sale and distribution of alcoholic products inside their borders, the laws governing each territory can vary dramatically. Some states have stricter laws in place that provide extra protection to wholesalers. In non-franchise states, suppliers and manufacturers can freely negotiate the terms of their distribution contracts with wholesalers, effectively laying a clear foundation for terminating a contract if the terms of said contract are not being satisfied by the contracted distributor. In franchise states, once a distribution contract has been established between the supplier and the wholesaler, the supplier must have 'good-cause' to terminate the contract. The definition of 'good-cause' in franchise states is very limited.

Often, this translates to the manufacturer being locked into their partnership, regardless of the wholesaler's sales performance. Of the fifty states, 17 of them (Oregon, Idaho, Montana, Wyoming, Utah, Iowa, Michigan, Ohio, Mississippi, Alabama, North Carolina, Virginia, West Virginia, Pennsylvania, Vermont, New Hampshire and Maine) are considered control states. There are also several jurisdictions within Alaska, Maryland, Minnesota and South Dakota that have adopted some form of franchise laws.  You can learn about the exact laws and regulations in place in each control state by visiting their official websites.  The TTB has a directory listing of each governing body's website here: https://www.ttb.gov/wine/state-ABC.shtml#US for inside insight into best practices being used by leading beverage companies in the US Market.  Reserve your ticket today!

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Beverage Trade Network USA Trade Tasting is brought to you by Beverage Trade Network, the leading online platform dedicated to connecting the global beverage industry. Beverage Trade Network (BTN) successfully connects wineries, breweries, distilleries and brand owners with international importers, distributors, brokers and beverage industry professionals on a daily basis. Strong partnerships with international and US organizations have helped BTN establish USA Trade Tasting as a premiere sales and marketing event committed to connecting the beverage industry.