Why State Regulators Require Fingerprints, Personal Questionaires, And Detailed Financial Information Before They Will Issue Alcohol Beverage Licenses

The alcohol beverage business is one of the most heavily regulated industries in America. A wide variety of enterprises engage in the retail sale of alcohol beverages, including hotels, restaurants, bars, nightclubs, golf courses, fraternal organizations, private clubs, gas stations, convenience stores, amusement parks, public sports arenas, theaters, dance halls, museums, and universities. Yet, they all have one thing in common: from the smallest mom & pop grocery store to the largest publicly-held hotel chain, each business must be licensed properly by the appropriate governmental agency before it can sell alcohol.

Alcohol licensing is especially complex. For one thing, every state in America has its own laws and regulations governing the production, marketing, sale, and consumption of alcohol within its borders. Consequently, the licensing process in Alabama is different from the licensing process in Wyoming.

To complicate matters further, alcohol regulators will not issue a license until the applicant has been investigated thoroughly. The investigatory process usually requires that each individual applicant seeking an alcohol license must be fingerprinted, and must execute a notarized affidavit that provides extensive information about the applicant's personal history, finances, and moral character. For applicants other than individuals (e.g. a corporation), most states require fingerprints and personal questionnaires from each of the applicant's officers, directors, and shareholders.

Why Do State Governments Impose These Burdensome Requirements, Even On Senior Executives For Established, Legitimate Corporations?

THE ANSWER comes from the history of alcohol in America. In the early years of the American Republic, the retail alcohol trade was conducted in taverns and inns. Vendors were independent of one another, and were never organized to promote alcohol sales on a collective basis. After the Civil War, however, industrialization and large investors appeared on the scene to foster expansion within the alcohol industry. During the last half of the Nineteenth Century, many inns and taverns were replaced by saloons, reflecting a shift in emphasis; the business of selling alcohol superseded the business of selling food and hospitality. Competition became fierce among the large producers, and the independent retailer virtually disappeared from the American marketplace by the late 1800s; in his place was the notorious "tied-house."

Under...