I'm not sure how things would work out in the present; from a historical perspective, turning the screws on drink seems to have had ill-side effects (such as the rise of organized crime). How could they be less regulated yet not be susceptible to corruption by organized crime? The only way I can see added regulation is via higher taxes (which seem to be quite high already, but I suppose more is okay).

Drink and smoke have age, seller, purity, potency, health warnings, advert restrictions, etc. All deserved, but I'm wondering what else they could be madated to do before making the enterprise lucrative to circuvention (org crime).