System Overview

The Three-Tier System: Overview

Since the passage of the 21st Amendment to the United States Constitution repealed Prohibition and granted each state the right to control the importation, distribution, and use of alcoholic beverages within its borders, Texas has relied upon the three-tier alcohol distribution system to ensure alcohol is distributed and consumed safely in our state.

To learn more, visit our complete historical perspective explaining how the three-tier system was established and how it has evolved since the 1930s.

How the System Works

The responsibilities and legal requirements of each tier of the three-tier system are laid out clearly in the Texas Alcoholic Beverage Code, which is regulated by the Texas Alcoholic Beverage Commission and enforced by Texas law officers.

The current three-tier system works as follows: tier-one alcoholic beverage producers or manufacturers from all over the world sell their products to tier-two Texas-based licensed beverage distributors and wholesalers who sell only to tier-three properly licensed retailers, who in turn sell alcoholic beverages to customers over the age of 21 in areas where alcohol sales are allowed and only after the proper collection of taxes.

A graphic representation of Texas’ three-tier system is available for download from our Issue Paper section. This illustration details the safeguards, as well as the flow of funds to federal, state and local governments at each level of the alcohol distribution process. Also, visit our section following the lifecycle of a bottle as it moves through the three tiers to the Texas customer.