The state has a long history of prohibition, first implemented in 1937 by the Indian National Congress government of C. Between 1937 and 2001, it was lifted briefly during 1971-74, 1981–87 and 1990-91. After 1983, TASMAC was in charge of wholesale liquor sales in the state whenever prohibition was lifted. In 2001, prohibition was lifted again and TASMAC became the wholesale monopoly for alcohol. F
or retail vending, the state auctioned off licenses for running liquor shops and bars. But this led to the formation of cartels and loss of revenue to the state. The government tried to counter this by introducing a lot system from the financial year 2001-02, where potential bidders bid for shops grouped by revenue. But the lot system could not prevent cartelisation, as bidders later withdrew in favour of others. In October 2003, the government passed an amendment to the Tamil Nadu Prohibition Act, 1937, making TASMAC the sole retail vendor of alcohol in the state. By 2004 all private outlets selling alcohol were either shut down or taken over by the company. This monopoly established by the ADMK government of J. Jayalalitha came into effect on 29 November 2003. The DMK government of M. Karunanidhi which took power in 2006, did not revise its predecessor's policy and TASMAC continues to control the alcohol industry in the state.
