Hon. Andrew N. Ferguson, Chairman
U.S. Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Via Regulations.gov
Re: Docket No. FTC-2025-0028 (Request for Public Comment Regarding Reducing Anti-Competitive Regulatory Barriers)
Dear Chairman Ferguson:
I am writing on behalf of the American Craft Spirits Association (ACSA) in response to the President’s Executive Order 14267 Regarding Anti-competitive Regulatory Barriers and the subsequent invitation by the Federal Trade Commission (FTC) to provide comments on how federal regulations can harm competition in the American economy. Thank you for the opportunity to share our perspective, provided with the hope to improve competition within our heavily regulated industry.
The American Craft Spirits Association is the only registered national nonprofit association representing the U.S. craft spirits industry. We currently have about 700 members and our mission is to elevate and advocate for the community of craft spirits producers. The craft spirits industry, in its infancy in 2010 when fewer than 100 producers operated, has grown to over 3000 manufacturing plants throughout the US.
Craft Spirits Manufacturers Currently Operate in a Complex Federal and State Regulatory Framework
Beverage alcohol has a unique history in the United States- few other industries have been the subject of not one but two amendments to the US Constitution. The 21st Amendment, which ended Prohibition when ratified in 1933, and subsequent federal law, gives states the primary role in regulating the distribution and sale of distilled spirits within their borders. In most states this has resulted in what is commonly known as the Three-Tier System, composed of manufactures who make spirits, wholesalers who purchase spirits from manufacturers, and retailers who purchase spirits from wholesalers and sell them to consumers. State laws establish distribution and retail requirements, among other measures. In addition to creating these requirements, it is important to note currently 17 states, and even local counties, have adopted some form of a control model in which state government agencies hold monopolies on distribution and/or retail of distilled spirits.
The federal government has an important role as well. The primary federal regulator for alcohol is the Alcohol & Tobacco Tax and Trade Bureau (TTB) within the US Department of the Treasury. TTB is responsible for implementing the Federal Alcohol Administration Act, giving TTB several authorities such as issuing permits to producers, collecting excise taxes, collecting detailed monthly operations reports, enforcing regulations against anti-competitive market behavior, prescribing regulations on multiple fronts, as well as approving distilled spirits labels, and formulas before products can be sold.
Craft Distillers Need Regulatory Relief and Federal Support to Increase Market Access Opportunities
ACSA requests assistance from FTC, DOJ, and the Treasury Department to cast off the outdated one-size-fits-all federal regulatory regime that dates to the 1930s. Our current federal regulatory system was established in the 1930s, when only a handful of major distilleries existed after prohibition’s repeal. The same rules applied to all distillers, no matter their size.
Today’s industry looks vastly different. While a few dozen large distilleries produce over 90% of the spirits sold in the country today, there are thousands of small independent distillers in communities across the nation. But those small distillers, who might produce just a few hundred or thousand bottles a year, must follow all the same rules as those that belong to multi-billion dollar multinational corporations that produce oceans of spirits annually. This is a disappointing contrast to many other areas of federal regulation that apply different standards to large and small entities, recognizing the disproportionate burden that uniform regulations place on small businesses. This is a concern for both current and future regulations.
For example, TTB has proposed new rules requiring nutritional info labeling on alcoholic beverages (Docket No. TTB-2025-0002; Notice No. 237). Many of its proposed rules are based on Food and Drug and Administration (FDA) nutritional information labeling rules for food. But while FDA exempts small businesses below a certain sales threshold from its nutritional information labeling requirements due to the disproportionate burden they place on small businesses to comply with testing and labeling standards, TTB says it will not exempt small manufacturers of alcoholic beverages from its forthcoming rules.
TTB has stated that it does not believe it has the authority to promulgate regulations based on the size of the regulated entity, though many other federal agencies do so. FTC should advise TTB on its ability to regulate small businesses differently from large ones so this and other future regulations don’t further damage the competitiveness of small manufacturers.
State Regulations Effectively Exclude Craft Distillers from Most Markets
ACSA asks FTC and DOJ to use its influence as it has in the past to encourage states to improve market access for craft beverage manufacturers. Policies improving state-to-state market access must be consistent with the US Constitution’s Commerce Clause as well as FTC’s previous positions concluding that direct-to-consumer shipping of wine helps consumers by reducing prices and increasing selection of products.
Up to 90% of all craft spirits sales occur within the distillery’s home state. Where state law allows, much of that volume is sold through distillery tasting rooms rather than distributed through the three-tier system. And it’s not for lack of trying. Our craft distillery members report that their biggest frustration and hardest issue to tackle is finding distributors to carry their products.
Nearly all states legally require distilled spirits to be distributed by wholesalers, expressly forbidding sale of spirits directly from manufacturers to retailers or to consumers. But significant consolidation has taken place at the wholesale tier nationwide. The Shanken Impact Newsletter recently reported the top ten wholesalers now account for close to 82% of all spirits sales in the US while the top two account for over 50% of the market (Shanken April 2025).
American Craft Spirits Association PO Box 470 Oakton, VA 22124
This reduces manufacturer’s choices while putting more and more market share into the hands of the largest distributors, who prioritize large international suppliers at the expense of domestic craft producers. The same exclusionary dynamic plays out in many control states, where government-operated wholesaler-retailers have no competitive incentive to offer an array of interesting craft products, instead maximizing profit by focusing on fewer, high-volume products.
The requirement to sell via the consolidating wholesale tier, together with the current lack of options to sell products directly to consumers and retailers is the major regulatory barrier facing small manufacturers. In addition to harming craft spirits manufacturers, this regulatory regime also harms consumers, who are prevented from accessing thousands of craft spirits brands across the country.
Current Regulatory Landscape Harms Innovation: A Hallmark of the American Craft Spirits Industry A whole new wave of American innovation and manufacturing is waiting to be unleashed. All that is required to unleash it is to reduce or remove the state and federal regulations damming it up.
Small business is the engine of American innovation and international competitiveness. This is as true of the spirits industry, as of technology and other industries. However, unlike businesses in other industries where startups can form in garages and hustle for buyers, government regulations force small spirits businesses to sell their product to entities who often do not want their product (i.e., large distributors) and prohibit small spirits businesses from selling their product to those who do (local consumers and retailers). These primarily state but also federal regulatory obstacles to market access prevent small American spirits businesses from bringing their innovations to market where they can be scaled to compete in an international spirits marketplace dominated by foreign conglomerates.
Small craft distillers are also a generator of American manufacturing jobs, employing American workers in small manufacturing plants distributed in rural, suburban, and urban communities across the country. American entrepreneurs are not starting craft spirits manufacturing businesses because of some government incentive program. They are starting these businesses and creating these manufacturing jobs because they have passion, vision, and belief they can make something that will mean something to their customers and make a difference to their communities.
FTC and DOJ Should Encourage States to Enact Market Access Reforms including Direct Shipping for Spirits
ACSA has been working to advance policies at the state level to create regulatory frameworks to improve market access opportunities for craft distillers including permitting direct-to-consumer (DtC) shipping for spirits, which is a win for distillers, consumers and other industry partners.
Currently, only 10 states and the District of Columbia allow shipping spirits directly to consumers. Compare that to the 48 states that have enacted laws permitting direct-to-consumer wine shipments. The 2003 FTC Report, Possible Anticompetitive Barriers to Ecommerce: Wine, concluded that state bans on interstate shipping “represent the single largest regulatory barrier to expanded e-commerce in wine” and “consumers could reap significant benefits if they had the option of purchasing wine online from out-of-state sources and having shipped directly to them.” The same can be said for distilled spirits. We note that FTC has weighed in on state proposals to open up states to direct shipping for wine and would welcome federal support in doing the same for spirits.
American Craft Spirits Association PO Box 470 Oakton, VA 22124
Short of nationwide distribution reform at the state-level or unwinding wholesaler consolidation, enabling direct-to-consumer shipping is the simplest way to get regulations out of craft distillers’ path to growth.,
Market Access Reforms Should be Consistent with the Commerce Clause in the US Constitution
Currently there are several legal actions challenging state laws that provide benefits to in-state producers versus out-of-state small businesses. While we recognize states have an important role in developing policy for craft distillers, it is vital market access reforms are consistent with the Commerce Clause in the US Constitution.
Notably, the Supreme Court has ruled in several cases including the landmark ruling in Granholm v. Heald that state policies discriminating against out of state producers and erecting other barriers to create a national marketplace are not consistent with the Commerce Clause. In the 1949 case H.P. Hood & Sons Inc. v. Du Mond, the Court commented “Our system fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the certainty that he will have free access to every market in the Nation..Likewise, every consumer may look to the free competition from every producing area in the Nation to protect him from exploitation by any. Such was the vision of the Founders; such has been the doctrine of this Court which has given it reality.” We encourage FTC and DOJ to provide guidance to states that policies be consistent with the Commerce Clause in the US Constitution.
Thank you for considering our comments. We look forward to working with the FTC and DOJ Anticompetitive Task Force to improve market access opportunities and reduce anti-competitive barriers facing America’s craft distilleries. Without FTC and DOJ action, consumers will have limited choices and more distilleries will begin to close rather than open.
Sincerely,
Margie A.S. Lehrman
Chief Executive Officer
American Craft Spirits Association
