However, consumption based taxes (direct or indirect) also disproportionately proscribe lower income people from engaging in such activities. Tax a carton of cigarettes? Worthless if I can just hit the Rez or hop to another town that doesn’t tax. Screwed if you don’t have that kind of mobility. There’s a disturbingly classist nature to them, which gets all the more concerning when it involves fundamental rights - if only the rich can afford to own a gun, get an abortion, speak freely, for example.
Additionally, vice taxes at some high point are effectively prohibition. Make alcohol too expensive (directly/indirectly) and bootlegging becomes more popular, with its attendant health risks, crime, etc. Make cocaine too expensive and meth gets more popular. Sell untaxed cigarettes and witness how laws are only enforced with an implicit threat of violence that may become explicit (ask Eric Garner).
Tough job, controlling societies.
But like many things that are opined on on HN, it's a little more complex than what you wrote, in that they were also trying to prevent tied houses (1) and vertical integration wherein brewers would basically tie into every local bar, creating a local monopoly.
Washington State got rid of the common three tier (2) system in 2012, and it seems to have lead to higher prices. (3)
The options we have for alcoholic consumption might not exist without these sort of regulations.
To be clear I'm not an expert on liquor laws and their economic impacts, but my point is that it seems like there is a complex interplay wherein regulation, enforcement, and power relationships between companies can affect availability and pricing in complex and sometimes counterintuitive ways.
And that's not even getting into smaller regulatory policies that I don't know enough about to even throw out an opinion on. Unlike food, alcohol distributors aren't isn't pay for play slotting fees for shelf placement, and many states require distributors to post and hold prices for 30 days, for example.
1 https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_dis... 2 https://en.wikipedia.org/wiki/Tied_house 3 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4608622/