Sure, but it's not a massive problem because the "cost" of legal alternatives is minimal. Most people won't risk breaking laws for small change. I have a budy who shares his home brewed Guiness.
Home brewing for your own use is perfectly legal. Selling it isn't.
Running a still without a license is illegal.
I'd wager there's a hell of a lot more still operators than there are loosey peddlers.
"And little incentive for the otherwise law abiding to enter it."
Are you suggesting if taxes were lower on cigarettes Garner would have been "law abiding"?