I am visiting the Web site of Rosenblum Cellars, a winery in Alameda, California. Because I live in New York, I have just made the owner, Kent Rosenblum, commit a crime.
New York’s Alcoholic Beverage Control Law, you see, makes it illegal "to send or cause to be sent into the state any...order form, invitation to order, price list, or publication of any kind containing an advertisement or a solicitation of any order for any alcoholic beverages." Since Rosenblum’s site touts his wines, offers a price list, and gives purchase instructions, it seems to run afoul of this ban.
The law gives Web surfers in New York an odd sort of power. Until I looked at his site, Rosenblum was in the clear. But once I called it up, he was guilty of a misdemeanor.
Rosenblum probably needn’t worry about getting arrested the next time he visits New York. The main point of the advertising ban is to prevent interstate wine sales, and Rosenblum does not ship wine to New York--or to the 29 other states that prohibit out-of-state vintners from selling directly to their residents.
"If you live in a non-cooperating state," Rosenblum Cellars advises visitors to its site, "we may still be able to get special order wines to you through one of our licensed distributors. Call the winery for details." Or you could come to Alameda.
This is not exactly the convenience we’ve come to expect from e-commerce. That’s because the restrictions on interstate wine sales were not designed with consumers in mind.
These laws protect the interests of the wholesalers who are licensed by each state to distribute alcoholic beverages. Wholesalers get a cut of 18 to 25 percent when they sell wine to retailers; they get nothing when vintners sell directly to consumers.
Under a wholesaler-controlled distribution system, most out-of-state wines are difficult or impossible to get. Of the 1,600 or so wineries in the United States, about 50 are represented in the typical retail outlet. For small wineries trying to build a market in other states, and for consumers eager to obtain their products, the only viable alternative is direct sales.
Two wineries and three consumers recently filed a federal lawsuit challenging New York’s attempt to foreclose that option. Represented by the Institute for Justice, a libertarian public interest law firm, the plaintiffs argue that the state’s restrictions on wine sales and advertising are unconstitutional.
"When the framers created the U.S. Constitution," notes Clint Bolick, the institute’s litigation director, "one of their primary goals was to do away with state restrictions that impeded free trade among the states." The Commerce Clause, which gives Congress the sole authority "to regulate commerce...among the several States," reflects that goal.
Defenders of the wine restrictions note that the 21st Amendment, which repealed Prohibition, granted the states special powers over the alcohol trade. But Bolick and his colleagues argue that New York’s law cannot be justified under the 21st Amendment because it is not aimed at encouraging temperance.
Since the state allows direct sales to consumers by New York wineries, its protectionist motives are pretty clear. "States may...regulate alcohol," says Bolick. "They may even prohibit its use. What they may not do is discriminate against out-of-state producers."
The distinction between New York and out-of-state wineries also undermines the claim that the state is trying to prevent sales to minors. The idea that teenagers who want a quick buzz commonly search the Internet for a nice Chardonnay was never very plausible. In any event, that concern can be addressed by requiring proof of age upon delivery.
In addition to the Commerce Clause, New York’s law violates the First Amendment. To judge by its sweeping terms, the Institute for Justice notes, the state’s advertising ban applies to the Internet, and it "even forbids speech inviting New York residents to out-of-state wineries where they may lawfully taste and purchase the products."
The lawsuit also cites the 14th Amendment, which says states may not "abridge the privileges or immunities" of U.S. citizens. Among other things, the clause was meant to protect the right to pursue a livelihood.
That right includes the freedom to engage in voluntary, mutually beneficial exchange. It does not include the freedom to prevent others from doing so.
Liquor wholesalers have chosen the latter course. Any state that assists them is siding with those who prefer underhanded coercion to honest competition.