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Patrick Ishmael

While it remains an issue of generally low public awareness, Missouri’s three-tier alcohol regulatory system is one that the average Missourian should care about. Without going into great depth, many states, including Missouri, require alcohol sales to follow a process by which alcohol producers, distributors, and retailers—the “three-tiers”—have discrete and different ownership interests. A relic of post-Prohibition efforts to mitigate the harm and maximize the revenue of the return of widespread alcohol consumption, the modern effect of the system has been to raise the cost of booze by forcing a middleman between alcohol producers and alcohol consumers.

It’s an issue we don’t talk a great deal about, but it’s one that we’ve had a clear and long-standing stance on. Back in 2012, my colleague Michael Rathbone wrote about the problems with a proposal that would have further limited vertical integration of alcohol distribution in the state, and in 2013, my colleague David Stokes testified on the matter before the Missouri Legislature. It was logical, then, that we would have a stance on litigation that the United States Court of Appeals for the Eighth Circuit ruled on yesterday, and for which we submitted an amicus brief in collaboration with the Washington Legal Foundation in 2018.

The case, Missouri Broadcasters Association v. Dorothy Taylor, centered on a very specific aspect of Missouri’s three-tier law that prevents producers and distributors from providing certain advertising materials to retailers. Although there are many policy problems with the three-tier law, the First Amendment issue here is particularly egregious. Even though commercial speech has historically been subject to greater regulation, courts are generally reticent to impose or enforce content restrictions and burdens on commercial speakers. And as our amicus brief notes, these content impositions are substantial:

In § 311.070.1, Missouri prohibits alcohol manufacturers and distributors from “directly or indirectly, loan[ing], giv[ing] away or furnish[ing] equipment, money, credit or property of any kind” to “retail dealers.” Mo. Rev. Stat. § 311.070.1. This blanket ban prohibits manufacturers and distributors from giving any advertising-related support to retailers. In § 311.070.4(10), however, Missouri allows manufacturers and distributors to advertise on behalf of retailers, so long as the advertisement (1) excludes any mention of retail price, (2) lists “two or more unaffiliated retailers,” (3) does so only once, and (4) displays the retailers’ names inconspicuously. Mo. Rev. Stat. 4 § 311.070.4(10). But this “exception” is just an unconstitutional condition on exercising First Amendment rights.

And yesterday, the court of appeals agreed. Readers can find the ruling and our full amicus brief attached at the bottom of this page. We may have more to say on this matter in the future, but for now, suffice it to say that we are pleased with this outcome and hope that policymakers will, separately, consider doing more to dismantle Missouri’s antiquated alcohol regulatory regime in the future.

 

About the Author

Patrick Ishmael
Director of Government Accountability

Patrick Ishmael is the director of government accountability at the Show-Me Institute.