In no other industry could you pass a law requiring a seller to be paid within 30 days, while leaving the product they bought upstream with no timely-payment requirement at all. Yet that’s exactly the arrangement the three-tier system protects: a wholesaler sells to a retailer, who is legally required to pay within 30 days — but the wholesaler faces no equivalent statutory duty to pay the supplier. When a wholesaler goes bankrupt, it has often already collected on product it never paid for. The retailer’s payment obligation runs on schedule; the wholesaler’s doesn’t. That’s not regulation. It’s legalized theft, dressed up as market structure.

The RNDC bankruptcy put a number on just how bad this can get. The nation’s second-largest wholesaler — a business whose model was shielded by state law and should have guaranteed it durability — still managed to run itself into the ground. The most staggering figure in the filing was the $93.92 million RNDC owes Proximo, an unsecured claim that will likely pay out at pennies on the dollar. That kind of loss doesn’t stay contained to a balance sheet: it costs jobs, kills bonuses, and dries up the capital suppliers need to invest and grow.

RNDC isn’t an outlier, and Proximo isn’t the only supplier left holding the bag. Smaller suppliers face the same exposure every day, on a smaller scale but with far less ability to absorb it. I can’t speak to what went on inside RNDC specifically, but I’ve seen enough wholesaler bankruptcies play out for other small suppliers to know the pattern is structural, not incidental — and that the system needs to change.

The imbalance is worst for suppliers who already struggle to secure distribution. Where the law effectively mandates going through a wholesaler, a supplier has little choice but to do business with whoever will take them on — even a wholesaler who gets paid promptly by retailers but pays suppliers on its own timeline, if at all. Both sides of the political aisle have let this system flourish, to the industry’s detriment.

It’s time for the political class to look hard at what it built. Two changes would go a long way: first, open up more avenues for direct-to-consumer shipping and self-distribution. Second, apply the same rule to everyone — if the law is going to impose 30-day payment mandates, that obligation shouldn’t stop at one tier. What’s good for the goose is good for the gander.

Instead, the trend is running the other way. In California, a bill that would have extended DTC shipping rights to distillers was killed by special-interest groups, including the wholesaler lobby — one more example of an industry already under strain being denied a lifeline by its own legislature.

RNDC’s number is what caught everyone’s attention, and it should have. But more suppliers down the line are likely to fail because of wholesaler practices that get far less scrutiny. This ought to be a reckoning for the industry — proof that the policies the political class built produce exactly the outcomes you’d expect: businesses failing while the unscrupulous get paid first. Instead of progress, California shows the instinct is to double down — rolling back rights and market access rather than expanding them. It’s hard to see how anyone but a legislature captured by special interests could justify treating more of the same as the cure for what it caused.

Maybe the reckoning isn’t for the industry at all. Maybe it’s for the political class. It’s time they took notice and started replacing favoritism with a system applied fairly and evenly across every tier. Don’t hold your breath. $93.92 million doesn’t lie — but there won’t be shouting from the rooftops. More likely, there will be a quiet backroom deal to keep the game running exactly as it always has.