Cocktail Legalese: 5 Liquor Law Terms You Should Know

Chris Waits on Flickr

I've been thinking quite a bit these days about stupid, antiquated liquor laws, particularly in places like Chicago, where it's illegal to lower the price of alcohol during happy hour. I'll have more on that in the weeks to come, but it turns out that the world of booze laws, both outdated and otherwise, has a language all its own. Today we'll share a little glossary, defining some terms that will help you understand the laws on the books (whether or not you agree that happy hour should be a crime.)

On Premise

An establishment in which liquor is meant to be consumed on site. Examples include bars, restaurants, hotels, casinos, etc. Think pints of beer for here, not bottles to-go.

Off Premise

An establishment in which liquor is meant to be consumed off site. Liquor stores are the obvious example here, but if a state allows groceries and drug stores to sell booze, those are also off-premise establishments.

Three-Tier System

Seth Anderson on Flickr

After the repeal of Prohibition, the 21st Amendment left it up to individual states to control and regulate alcohol sales within the state. Most states operate under a license system, in which producers, distributors, and retailers apply for state licenses to sell alcohol. This is now known as a three-tier system, separating production, distribution, and retail.

Companies are prohibited from owning all three tiers. That is, a company cannot generally produce alcohol, distribute it, and also sell it at retail. Some exceptions exist—for example, brewpubs can produce beer and sell it for consumption on site, and in some states, brewpubs can also offer growlers for consumption off site. Wineries in some states can sell directly to the consumer, via retail stores on the site of the winery.

Regulations vary in regards to ways in which the tiers can cooperate with one another. In some states, for example, it's okay for a brand ambassador or marketing representative to bring sample bottles of a new spirit to a bar for the bartenders to experiment and mix with. In other jurisdictions, that's prohibited.

What this means for producers—distillers, brewers, wineries, importers—is that they need to establish distributor partnerships in each state in order to bring products to market. They also need to seek licensing in each state for their products and approvals for their labels. This is one reason smaller brands are often available in only a few states. (Production capacity, of course, also plays a major role here.)

Producers also generally provide distributors with exclusive access to their products in certain geographic regions. So for example, products from Bacardi will be available from only one distributor. This way, distributors aren't competing to sell the same Bacardi products.

This means that retail managers must do business with multiple distributors in order to stock their shelves. One distributor might sell you Beefeater and another Tanqueray, and if you want both gins on your shelf, you need to deal with both.

Alcoholic Beverage Control State

TexasBobbi on Flickr

This term refers to a state that holds a governmental monopoly over the distribution and, sometimes, the retailing of wine, beer, and spirits. I said earlier that most states operate under a license system. However, 18 states operate as beverage control states, in which the state runs the wholesaling of spirits and in some cases beer and wine.

Many different permutations exist: some states allow private wholesaling of beer, for example. Some states allow wine and beer to be sold in groceries and convenience stores, whereas state-run stores sell spirits. Some states don't operate any retail stores at all; they only run the distribution. Still other states contract out retailing to private businesses, and take a commission on sales.

Wet / Dry / Damp / Moist

One implication of the 21st Amendment, repealing National Prohibition, is that it left the states with the freedom to enact their own sets of laws surrounding alcohol sales. A wet jurisdiction allows the sale of alcohol; a dry one does not. In some jurisdictions, in fact, being dry means you can't even possess alcohol legally. That is, you can't buy it in another town and transport it home to your own town. (I believe that was one of Dante's Circles of Hell.)

Entire states may choose to be dry, if they want; however, at present, no state in the country is entirely dry. (Mississippi was the last dry state; it finally passed its own repeal law in 1966.)

Three states (Kansas, Mississippi, and Tennessee) are dry by default; what that means is that every country is by default dry, and if the residents want to allow the sale of alcohol, they must take the initiative to authorize it in their county.

Just as entire states may choose to be dry, entire states may also choose to be wet. Seventeen states prohibit any community or county in the state from enacting dry laws.

Wet and dry are pretty clear-cut, but what does it mean to be "damp" or "moist"? In Alaska, a damp village allows you to possess alcohol, but not to buy it. In Kentucky, a moist county is officially a dry county in which certain communities have allowed the retail sale of alcohol. The term is also used informally to describe a formerly dry county that has relaxed certain restrictions on alcohol sales. For example, it may still be illegal to run a liquor store in the county, but restaurants might be permitted serve alcohol to adults.

Any more terms related to liquor laws that you've been wondering about? Let us know in the comments and we'll take a crack at 'em.