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Three tiered system antiquated, costly to consumers and anti-free market

You have seen the fight of Tesla Motors and states wanting to force the company to pay dealers to sell their cars instead of selling cars directly to the consumer. The same can be true of the system in Florida when it comes to beer sales. The battle brewing in Tallahassee is whether to force craft brewers into what is known as the three tier system. Florida Senate Bill 1714 was read for the 1st time in the Community Affairs Committee which, as amended, would carve out an exception for brewers who produce under 10,000 kegs per year with a long list of restrictions.

Much like the cars sales model, craft brewers could be forced into a system where the craft brewer must sell their product to a distributor only to have it sold back to them as the vendor. The system also hides from consumers the additional taxes on the alcohol they are buying at their local retailer as during each stop the tax man collects.

This may seem a bit arcane, especially as it was debated in Tallahassee earlier this week when state legislators were debating whether to force craft brewers to have a distributor pick up their beer from their facility only to redeliver it to them so the craft brewers could sell it at their location at a higher price. That is the three tiered system at work.

The Libertarian view on the issue is consistent with free market principles whereas the brewer should be able to brew their beer onsite and sell it onsite without the extra time and cost of having to go through a distributor. Libertarians feel the brewer or any manufacturer of any product, including Tesla vehicles, should have the choice as to whether to utilize the benefits of going through a distributor, or going it alone selling directly to the consumer. There are benefits to going through a distributor, however forcing a company, through government force to do so, is immoral in a libertarian's eyes.

The three tiered system was put in place for anti-trust reasons, supposedly to protect the small business person, so large manufacturers could not undercut small business on price and thereby putting them out of business. Tesla is fighting this three tiered system in some states as it would cause them to raise the price of their cars and leases in those states.

Interestingly, some argue it is that three tiered model that is keeping many small brewers from growing their business while protecting the largest of brewers. Sarasota, Florida Libertarian Mikael Sandstrom perhaps sums it up best with his experience:

"I sold a beer that was brewed in Europe, as the importing agent, however, because of the heavy regulation in Florida, I found it near impossible to impact the market. This was because of the three tiered system. If I was going to sell beer, I was going to do it through a licensed distributor, in other words, mafioso tactics - if you're going to sell that beer- its going through me aka big business.

I certainly wasn't going to pay $250,000 for a distributor license and wasn't going to sell the beer directly to pubs because both will impact me financially and legally, respectively speaking. In short, Anheuser Busch gave me a 'slave contract' to sell our beer and immediately raised the price of the beer an extra 30% compared to our main competitor, Stella Artois, (also distributed by Anheuser Busch). I could ramble on for hours about the growing sense of apathy amongst the drivers of Anheuser Busch, as they weren't willing to market the beer and the president of the local distributor had the audacity to charge me an extra $1000 to include our beer in local festivals. The marketing was laid solely on me and as a result, a lot of consumers and local pubs, blamed me for the price, as if I had any choice. Once our pallets were sold, we decided to abruptly stop production, gathering anger from our producer, but we had to explain to them the results of highly regulated industries.

The three tiered system will allow competing craft beers to gain market share only if they are the distributor and the beer isn't a perceived threat to the bread and butter "domestic cheap beer." If the big beer industries have their way, all craft beer would be raised in price, thus guaranteeing this perpetuating crap beer available. It's not that the free market keeps Budweiser or Miller afloat but in actuality, its the widening profit margins the distributors have acquired by mafioso tactics in absorbing competition via three tiered system. The only sensible way to return to sound beer laws is to reduce the system to a producer-retailer system however, considering the Presidential Debate Commission is controlled by Anheuser Busch, I consider this a difficult task that we cannot ignore."

Getting back to Tesla Motors, they have a business model where they successfully sell directly to the consumer, however many states have not allowed that to happen. Most recently was the dust up between Tesla founder Elon Musk and New Jersey Governor Christie whereas Christie has not allowed the cars to be sold directly, forcing the company into the dealership model or close their doors by April 15, 2014.

A few states have also banned direct sales of electric cars, however consumers can lease the cars. It is ironic because governors of those states are all Republican and most would think would be for the free market working without the protectionist laws these governors are enforcing. Last month Christie commented in favor of the free market stating, "“We don’t have an income inequality problem, we have an opportunity problem in this country because government's trying to control the free market." Within a week of making that speech he used his New Jersey state government to control Tesla by signing off on closing Tesla's direct to consumer sales at its Springfield, New Jersey location.

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