The Campaign for a Healthy Alcohol Marketplace was born from the realization of a former alcohol regulator, Pamela Erickson, that we could lose a good regulatory system out of ignorance. Too often she heard how “antiquated” our regulations are as well as the widespread myth that Europe has fewer regulations and fewer problems (not at all true). Our marketplace regulations are based on a three-tiered system which few policy makers understand. In fact, Erickson had to admit, during her seven years as Executive Director of the Oregon Liquor Control Commission (OLCC), she did not entirely understand the three-tiered system and why it is valuable. Only after joining the alcohol abuse prevention field, did she fully appreciate the value of our comprehensive alcohol regulatory system. After leaving the OLCC, she joined Oregon Partnership to run underage drinking prevention programs. It was there that she absorbed the vast amount of research about what works in alcohol abuse prevention. Alcohol regulation is actually effective in reducing problems – particularly if well enforced! And, most of the regulations are not antiquated, but well-conceived. However, they are complicated particularly as they operate in today’s global market.
As a starting point, she decided to establish a pilot program in Oregon which would focus on explaining the three-tiered system and especially the function of the middle tier, the distributors and wholesalers. This tier was created after Prohibition and is critical to preventing Vertical integration is a form of monopoly that often involves merging the wholesaler with either the manufacturer or the retailer. These types of mergers can lead to excessive market domination by large companies. Before Prohibition, large alcohol manufacturers dominated the market by owning distribution and retail operations known as Tied Houses. Heavy pressure was exerted on the retail outlet to sell large quantities of alcohol. The practices of these Tied Houses led to major social problems, particularly among the working class. Today, a similar problem with “vertical integration” exists in the United Kingdom, but this time it’s the large grocery retailers that have integrated the middle tier and work directly with the suppliers. Their substantial purchasing power allows them to buy large volumes of alcohol at very favorable prices. They heavily promote cheap alcohol and the result has been major social problems with alcohol abuse, disease and underage drinking.
The pilot project began with a series of “Executive Interviews” with 20 key policy makers in Oregon to determine their level of knowledge about marketplace regulation. As expected, their knowledge was quite limited and they placed a higher value on regulations dealing directly with DUI and underage drinking. However, there was a willingness to learn more. From survey information, a basic presentation was developed to explain why we need marketplace regulations and how they work. (“Why can’t we sell alcohol like tires and mayonnaise?”) An educational presentation was given to a list of key organizations. A feedback questionnaire indicated increased understanding resulted.
A second pilot project was developed for the state of Washington during the pendency of a lawsuit by the Costco Corporation. They challenged nine different market regulations that would radically change the alcohol regulatory system in Washington. And, given the precedent, other state systems would be placed in jeopardy. Costco won on most issues at the District Court level. The decision followed the philosophy of Judge Marsha Pechman who seemed to believe that most of the regulations do not foster the overall goal of “temperance.” The decision was appealed and Costco lost most of the case at the appellate level. It was clear to Erickson that forces needed to be marshaled to educate the prevention and enforcement communities about why we need marketplace regulations and what could happen if they go away. She convinced the Washington Beer and Wine Wholesalers Association to finance such an effort. It was a critical time as Costco had turned to the Legislature in hopes of getting the regulatory changes they failed to gain in court. They convinced the Legislature to form an interim committee to study the regulations. The prevention community formed a stakeholders group and took a strong position in favor of retaining the regulations. As a result, many of the changes originally proposed were not made. The Legislature did make some changes to the three tiered System, which were intended to be minimal. (In November, 2011, Costco finally achieved their objective of alcohol deregulation in Washington state by spending $22 million on a ballot measure that promised to increase funding for law enforcement and privatize Washington’s liquor stores. (See November 2011 newsletter for details.)
After completing two pilot projects, a national campaign was formed with funding from the Center for Alcohol Policy, a national foundation. Although our states have the primary responsibility for alcohol regulation, we could all be affected by an adverse court ruling. It is important that all states understand the rationale for and importance of marketplace regulation. During the pilot phase of the project, a newsletter and website were developed. These now reach a national audience. The goal for the website is to be the primary repository of educational resources on this important subject. Materials are available for regulators to orient their new employees, commissioners and legislators. There is a section for attorneys who need to defend state regulations.
Erickson has produced three separate reports on these issues, a series of PowerPoint presentations and many other short written pieces. In 2009, she released a report that demonstrates how selling alcohol in a “free market” scenario can propel an actual alcohol epidemic. The report is entitled, “The Dangers of Alcohol Deregulation: The United Kingdom Experience.” It chronicles the story of how the UK gradually deregulated to the point where all forms of alcohol are sold everywhere 24 hours a day, seven days a week. Severe problems of alcohol abuse, alcohol related disease, bar violence and underage drinking followed. A trip to the United Kingdom in the winter of 2010 confirmed the key elements of the report. A pictorial review of that trip can be found in the photo gallery of this website.
Erickson has now worked with over ten states on regulatory issues and has worked on two important lawsuits in Illinois and Kentucky. It is important for members of the industry to understand why we have such regulations, how they make our communities safer, and how it is possible for businesses to flourish in the regulatory environment. In both Oregon and Washington, hundreds of small wineries and micro-breweries exist despite strong alcohol regulation.