1. Understanding the Regulatory System for Alcohol Beverages: Three Tier & Tied House Evil Responsible Retailing Forum Las Vegas, March 11, 2004 Mitchell Rubin Florida Beer Wholesalers Association

2. Why should you care about Three Tier & Tied House Evil? Pricing Gifts & loans allow artificially reduced prices Promotion Gifts & loans pay for promotions that vendor would not otherwise provide Financially Responsible Vendors Gifts & loans support vendors who would not otherwise be financially viable Pricing Gifts & loans allow artificially reduced prices Promotion Gifts & loans pay for promotions that vendor would not otherwise provide Financially Responsible Vendors Gifts & loans support vendors who would not otherwise be financially viable

3. Two Systems of Regulation Control Model License Model 18 control states 32 competitive states

4. Control Model State Owned Retail Outlets Beauracracy Fewer Outlets No Entrepreneurial Opportunities No Competition – State Monopoly Increase State Revenue by Raising Prices, Not Taxes State Owned Retail Outlets Beauracracy Fewer Outlets No Entrepreneurial Opportunities No Competition – State Monopoly Increase State Revenue by Raising Prices, Not Taxes

5. License Model Retailer consumer Manufacturer Distributor Protecting consumers by promoting fair competition

6. License Models Regulatory Mechanisms State Criminal Laws: DUI, Underage Possession Licensing – Good Character Local Control of Zoning, Hours of Operation, & Adult Entertainment State Taxes & Fees Three Tier & Tied House Evil State Criminal Laws: DUI, Underage Possession Licensing – Good Character Local Control of Zoning, Hours of Operation, & Adult Entertainment State Taxes & Fees Three Tier & Tied House Evil

7. Tied House Evil Prohibitions Similar to Anti-trust laws promoting a level playing field among retailers and preventing the elimination of competition and over promotion of alcohol by prohibiting:

8. Tied House Evil Prohibitions Include: Purchasing shelf space Purchasing exclusivity Furnishing equipment Indebting retailer Discriminatory promotional practices or pricing; must price post discounts! Purchasing shelf space Purchasing exclusivity Furnishing equipment Indebting retailer Discriminatory promotional practices or pricing; must price post discounts!

9. Tied House Evil Exceptions & Conditions Include: Durable specialty advertising items (neons)may be loaned In-store servicing, shelf sets & schematics Point of sale displays Hats, t-shirts to consumers New product samples Durable specialty advertising items (neons)may be loaned In-store servicing, shelf sets & schematics Point of sale displays Hats, t-shirts to consumers New product samples

10. Tied House Evil Prohibitions Include: Beer lists (spirits & wine permitted) Hats, shirts, cork screws Insurance or Indemnity Agreements Draft & dispensing equipment (cleaning & minor parts permitted) Consignment, credit, product damaged by retailer Beer lists (spirits & wine permitted) Hats, shirts, cork screws Insurance or Indemnity Agreements Draft & dispensing equipment (cleaning & minor parts permitted) Consignment, credit, product damaged by retailer

11. Tied House Evil Prohibitions Include: Outdoor Signs (Given or Sold by Distributor/Manufacturer or Displayed by Vendor) One brand neon per window only! Cups, coasters at cost Off-premise beer tastings Cooperative advertising Outdoor Signs (Given or Sold by Distributor/Manufacturer or Displayed by Vendor) One brand neon per window only! Cups, coasters at cost Off-premise beer tastings Cooperative advertising

12. License Model & Tied House Evil Competition Among Retailers Leads to Overly Aggressive Pricing & Promotions Requires Sound Regulatory System & Enforcement Less Control Over Product than Control Model Offers Competition Among Retailers Leads to Overly Aggressive Pricing & Promotions Requires Sound Regulatory System & Enforcement Less Control Over Product than Control Model Offers

13. Why should you care about Three Tier & Tied House Evil? Pricing Gifts & loans allow artificially reduced prices Promotion Gifts & loans pay for promotions that vendor would not otherwise provide Financially Responsible Vendors Gifts & loans support vendors who would not otherwise be financially viable Pricing Gifts & loans allow artificially reduced prices Promotion Gifts & loans pay for promotions that vendor would not otherwise provide Financially Responsible Vendors Gifts & loans support vendors who would not otherwise be financially viable