Just The Facts

Three-Tier System

  • The distributor became an important link between the brewer and the retailer in the years following the repeal of prohibition and the establishment of the 21st Amendment allowing states to control alcohol sales and distribution.
  • Distributors are the locally owned, family-run businesses who are responsible for:
    • Opening markets to a wide variety of brands.
    • Delivering and supplying smaller cities, towns and territories regularly.
    • Preserving fair competition between large and small retailers and establishments.
    • Efficient collection of state and federal taxes in a timely manner.
    • Maintaining responsible marketing of beer locally.
    • Implementing regulations to prevent abuse and unlawful distribution.
    • Funding responsible and moderate consumption programs and campaigns.
  • More information on the Three-Tier distribution system and the 21st amendment.

Iowa Beverage Container Deposit Law

  • Iowa’s Beverage Container Deposit Law was adopted in 1979 and is working as the environmental tool it was designed to be – cleaning up roadside litter and driving recycling efforts.
  • The Beverage Container Deposit Law provides an efficient and cost effective system that has worked in Iowa because it is simple and focused on that goal.
  • The Iowa wholesale beer distributors are currently the only entity in the equation who must pay anything above and beyond the 5-cent deposit.
  • Iowa’s beer distributors must hire full time employees, buy special trucks and maintain equipment to pick up and process the empty containers.
  • Iowa beer distributors paid $8.6 million in 2005 for the cost of operating the bottle bill including transportation, labor and other related costs incurred by distributors.
  • For beer distributors, retailers and consumers, the current deposit law, which requires a 1-cent handling fee creates a deficit that must be absorbed within the cost of beer for Iowans.
  • Iowa beer distributors welcome partnerships to find alternative comprehensive solid waste recycling solutions for Iowa.
  • More information on the Iowa Beverage Container Deposit Law.

Cash Law

  • Prevents unfair marketing practices.
  • Ensures fair competition.
  • Assures funds are available to meet state tax obligations.
  • Eases the enforcement burden at both the state and federal level.
  • Allows for accurate and expedient transactions.
  • Eliminates the incentive to promote the abuse of alcoholic beverages.
  • More information on the Cash Law.

Native Wineries

  •  An Iowa native winery is a manufacturer who processes in Iowa, the fruit, vegetables, dandelioms, clover, honey or any combination of those ingredients, by fermentation into wine.
  • The U.S. Supreme Court decision – Granholm v. Heald – held that the states have extraordinary power to regulate alcoholic beverages. The 21st Amendment, which repealed prohibition, gives states a wide scope of power to regulate alcoholic beverages. That power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers.
  • If a state chooses to allow direct shipment of wine, it must do so on evenhanded terms.
  • Under Iowa’s three-tier system, most alcohol has to come from the manufacturer to a distributor who then distributes it to a retailer.
  • When a manufacturer is allowed to sell directly at retail to the public, the middle tier or the wholesale tier is eliminated and erosion of the three-tier system takes place.
  • Iowa has multiple provisions in Chapter 123 that arguably do benefit in-state manufacturers over out-of-state entities.
  • More information on Native Wineries

Excise Tax

  • Beer distributers carry a heavier tax burden than Iowa industry in general. Distributors pay $5.89 a barrel in state excise taxes. Iowa’s excise tax burden is significantly higher than the tax in all but two neighboring states.
  • Iowa beer distributors act as collectors of the state excise tax and forward it to the Iowa Alcoholic Beverages Division on a monthly basis. There is also a federal excise tax on beer of $18.00 per barrel. Based on information gathered, each case of beer sold in Iowa generates $2.43 in state and federal taxes.
  • The claim that higher taxes will reduce alcohol abuse, decrease auto fatalities, reduce crimes, and so forth is very appealing to the anti-alcohol activists. But real world data clearly show that there is no linkage between alcohol taxes and alcohol abuse: Higher taxes do not cause alcohol abusers to drink less – when faced with a price increase caused by higher taxes, alcohol abusers can simly switch to less expensive brands of the same product, or switch to products which provide higher concentrations of alcohol at the same or lower price. A recent Journal of Health Economics study confirms this common sense fact, finding that the alcohol consumption levels of the heaviest drinkers are not influenced by price at all. Policymakers who want to do more to help alcohol abusers should focus on areas that will truly make a difference – education, treatment, tough laws and strong enforcement. Higher taxes on beer just aren’t part of the equation.
  • More information on Excise Taxes