TASMAC was established in 1983 by then Chief Minister M.G.Ramachandran[2] The state has a long history of prohibition, first implemented partially in 1937 by the Indian National Congress government of C. Rajagopalachari.

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.

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.

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.

The company organisation is divided territorially into five regions- Chennai, Coimbatore, Madurai, Trichy and Salem each under a regional manager.

[8][9][10][11][12][13][14] The reorganisation of retail alcohol trade in the state has brought record revenues for the government allowing it to increase spending on welfare schemes.

[3][4][6][15][16] The monopoly trade has led to widespread irregularities like adulteration, corruption, overpricing and black marketing in the retail outlets.

It has also led to increased complaints about disturbances created by drunk patrons from residents in areas where the retail outlets are situated.

Besides the tax revenue, the company also makes money by selling annual licenses to run bars in its retail outlets.