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What is Indiana’s three-tier system?

The 21st Amendment to the Constitution, which repealed Prohibition in 1933, authorized each of the states to make its own rules for the sale of alcoholic beverages. In most states, some version of a “three-tier” system was created post Prohibition, including here in Indiana. Tier one is composed of producers, tier two is comprised of distributors (also known as wholesalers), and tier three is made up of retailers, restaurants and bars. Each is licensed by the individual states, with producers and distributors also licensed by Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury.

How many types of permits are there in Indiana to sell alcoholic beverages?

There are currently more than 90 different types of permits available to sell alcohol in the state of Indiana. Package stores are just one of those types of entities. Package store permits are issued by the Indiana Tobacco & Alcohol Commission and are known as 217 permits. Of the 10,000 different types of businesses that are permitted to sell alcohol – from restaurants to riverboats – about 1,000 of those are package stores. The association represents the interests of all package store owners.


Are the number of permits that exist for package stores limited in Indiana?

Yes. The number of available permits to sell alcohol in Indiana are based on what’s called a quota system that is linked to the size of community populations. That means a single community cannot be inundated with new outlets that sell alcohol. The number of available permits should not exceed established or set quotas, but that has happened in Indiana – most notably when Walgreens Co. requested an unprecedented number of licenses from the state to expand alcohol sales in its Indiana stores.


Are package liquor stores restricted on the types of items that can be sold?

Yes, by state law package stores can only sell 10 different types of items. Unlike other retailers who sell alcohol – groceries, drugstores or gas stations – the stock and inventory is strictly limited and strictly controlled by state authorities.


What controls for the responsible sale of alcohol do liquor stores have in place that other retailers do not – such as grocery stores?

Package stores operate much differently than other retailers when selling alcohol. Due to the limited nature of store inventory, alcohol is more strictly controlled than in a grocery store by state law. Package store clerks are licensed by the state, require training for licensure, and must be 21 years of age or older to sell alcohol. Grocery stores, for example, can hire clerks that are not 21. Even though adults are required to scan or sell alcoholic products, those stores are not subject to the same requirements as package stores.


What is responsible retailing?

Package store owners believe that alcohol should be sold in a controlled sales environment and so does the state of Indiana. Even package store employees – the clerks who conduct the customer transactions – must be trained and certified in responsible alcohol sales. All package store clerks are licensed by the Indiana Alcohol & Tobacco Commission. Since alcohol can be easily abused, it should be sold as a controlled product in the strictest sales environment.


What responsible retailing practices does IABR promote with its members?

IABR has worked with many state officials, including more recently Indiana Attorney General Greg Zoeller and Sen. Jim Merritt to promote good public policy such as Indiana’s Lifeline law. The association has also been among the first in the nation to question the safety of energy drinks as the FDA began scrutinizing content of those mass marketed beverages. While our members are not public health experts, we often work closely with community advocates and have members serve on their non-profit boards to keep the dialogue positive and forward thinking.


Why does the association support strict controls on alcohol?

Because of the way Indiana law dictates how our stores must operate. We work within a framework that legislators created for a single type of business to operate. Package stores represent regulated entities that sell a regulated product – and that framework has been in place for decades. With any change to alcohol law and regulations, we’re always a strong advocate for our members.

Does the state enforce violations equally at all retailers since package stores primarily sell hard liquor, beer and wine and just a few related products?

Not exactly. Unlike other retailers, package stores come under additional probable cause scrutiny because state excise officers are given additional leeway to check on potential violations. That means that package stores are more intensely scrutinized by officials than other retailers. Since package stores are limited by law to selling alcohol and alcohol-related products, the law is much more severe when it comes to package stores. Penalties can include loss of business and livelihood. If a grocery store is cited, it can simply discontinue selling its alcohol stock – thereby staying open for business. That doesn’t hold true for a package store.


What is the most common misconception about package stores?

There’s a general belief that package stores are a throwback to the Prohibition era. That’s not true. Package stores grew out of Prohibition reforms as state’s explored ways to control and regulate the sale of alcohol. The majority of Indiana package store owners are independent, multi-generational family owned businesses. Our members remain committed to ensuring that alcohol is sold and consumed responsibly in conformity all Indiana laws. Even in a strict regulatory environment that mandates how we managed our businesses, we have competed successfully in the marketplace for decades and adjusted to the demands of our consumers.


Isn’t it inconsistent for a membership association that sells alcohol to also oppose the deregulation of alcohol sales?

Not at all. It’s easy to reduce alcohol policy issues to a 30-second soundbite as we see over and over again, but the broader debate relates to distribution, public health and saturation in a retail marketplace. No state has a public policy of making beverage alcohol as widely and as cheaply available as possible so that more will be sold and consumed. Even Congress put the sentiment into law in the nation’s Underage Drinking Act by recognizing that “alcohol is a unique product and should be regulated differently than other products.”
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