Alcohol

Stuck in the Middle by You

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In a new report (PDF), the Specialty Wine Retailers Association (SWRA) notes that liquor wholesalers have been throwing money at state legislators in a largely successful effort to maintain their government-enforced monopolies on the distribution of alcoholic beverages. Those privileges were threatened by a 2005 Supreme Court decision overturning state laws that prohibited out-of-state vintners from shipping wine directly to consumers while allowing in-state wineries to do so. The Court found that such laws violated the Commerce Clause by erecting discriminatory trade barriers. Since then the wholesalers have been urging state legislatures to comply with the ruling not by opening up their markets but by imposing uniform bans on direct shipping. According to the SWRA (whose members want the freedom to buy directly from wineries), those lobbying efforts have been accompanied by a total of $50 million in donations to state political campaigns, an amount that "dwarfs that of any other sector of the American alcohol industry as well as numerous other groups." In Texas, for example, "alcohol wholesaler political contributions were greater than the political contributions of all gambling and casino interests, retail interests, food interests and all business services…combined." This generosity, says the SWRA, "coincides with the enactment of alcohol wholesaler-supported policies in nearly every state that protect the wholesaler." Examples:

• Between 2000 and 2006 Illinois alcohol wholesalers contributed $5,731,776 to political campaigns. In 2007 the Illinois Legislature passed a law that protected in-state alcohol wholesalers by prohibiting Illinois consumers from continuing to buy wine from out-of-state retailers. Wholesalers also convinced the Illinois legislature to force large Illinois wineries to sell only to state wholesalers, rather than direct to retailers has they had been able to do.

• Between 2000 and 2006 Texas alcohol wholesalers contributed $6,976,104 to state political campaigns. The Texas Legislature has passed prohibitions on out-of-state retailers shipping to Texans and limitations on in-state retailers shipping to Texans, both moves protective of and supported by state alcohol wholesalers.

• Between 2000 and 2006 California alcohol wholesalers contributed $4,296,304 to state political campaigns. In 2005 California passed legislation protecting wholesalers from competition by prohibiting Californians from purchasing wine from out-of-state retailers, policy California wholesalers pushed for.

• Between 2000 and 2006 Michigan wine wholesalers contributed $2,099,319 to state political campaigns. In 2005 the Michigan legislature passed a wholesaler-supported law that protected in-state wholesalers from competition by prohibiting Michigan consumers from purchasing wine from out-of-state retailers.

• Between 2000 and 2006 Virginia alcohol wholesalers contributed $2,580,161 to state political campaigns. The Virginia General Assembly passed a wholesaler-supported law prohibiting Virginia wineries from continuing to sell wine directly to retailers and forcing them to sell their wine to wholesalers. 

[Thanks to The Wine Commonsewer for the tip.]

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  1. But it’s for the children! We all know that Skippy would rather order a $30 merlot by mail from California than give his 21 yr. old brother $15 to buy a case of beer. And all Skippy’s friends would rather savor the nose of violets and leather than pound down another 12oz of Coors Lite.

  2. This is, no doubt, the darker side of federalism.

  3. Many parents receive boxes marked “WINE” from FedEx and then hand it over to their teenage children without asking questions.

  4. I knew Michigan would get mentioned. Wholesale alcolic beverage distribution here is an annual scandal. It never gets fixed. The folks in Lansing would commit Seppaku over this if they had any shame.

  5. This is, no doubt, the darker side of federalism.

    Not really. This is the dark side of government regulated distribution channels.

  6. This is, no doubt, the darker side of federalism.

    It’s basically the opposite. State alcohol control was a compromise to end Prohibition.

  7. I have actually seen the distributor lobby at work here in NJ. They have been selling this to law enforcement agencies by claiming that state laws requiring liquor sales through wholesalers prevents underage drinking. But in NJ, the wholesalers have added to their proposed law a provision granting additional money for — you guessed it — local law enforcement agencies to “enforce” the law. And just guess how local law enforcement agencies have responded.

  8. Not really. This is the dark side of government regulated distribution channels.

    Go here for evidence.

  9. I can’t get Bell’s beer in Chicago anymore because of these motherf*ckers, or more precisely, because Larry Bell is a businessman with integrity.

  10. Imagine if you will, a world where you could only buy a desktop computer from a state-licensed retails stored which was requied to buy the computer from a state-licensed wholesaler. Imagine committing a crime for ordering a Dell online had having it shipped across state lines.

  11. I will claim that my poor typing skills are the result of being dead.

  12. Submitted for our approval: Rod is still dead.

  13. And Rod, your last name is Serling, not Sterling.

  14. The Texas part is no surprise. The wholesalers have a lock on the Lege. It has some interesting effects on the retail end, as well.

    But then again, the Texas Alcoholic Beverage Comission once sent agents into bars to arrest people for being drunk in public. Inside bars. They only backed down after the resulting public outcry included statements like “Die in a fire.”

  15. I can’t get Bell’s beer in Chicago anymore because of these motherf*ckers, or more precisely, because Larry Bell is a businessman with integrity.

    Eric, have you seen his Kalamazoo brand on the shelves lately? I haven’t, though I haven’t looked very hard.

  16. But McCain/Feingold and all CFR should be repealed because we would never see such blatent purchasing of governmental power at the federal level.

  17. Serling got the TV show, I got a crappy AM morning show.

  18. But this is, by standard libertarian dogma, free speech. Imagine a world where political contributions were illegal. Sen. McCain, the Washington Post, the New York Times wish we were there. I guess we have to agree with Herbert Hoover: “The trouble with capitalism is capitalists. They’re too goddamn greedy.”

  19. Imagine a world where political contributions were illegal. Sen. McCain, the Washington Post, the New York Times wish we were there.

    Oooh yes. MSM orgasms whenever McCain Feingold is mentioned. I’d wonder why except I’m smarter than a speeding locomotive. Or something.

  20. But this is, by standard libertarian dogma, free speech.

    Exactly the reason why small government is an untenable fantasy: the money will find its way to the people in power, whether it’s against the law or not, as long as those people have the power to distort markets. But very few people seem to “get” this.

  21. Many parents receive boxes marked “WINE”

    Ah, ‘wee-NAY’! It must be Italian!

  22. But this is, by standard libertarian dogma, free speech. Imagine a world where political contributions were illegal.

    I’ll type slowly for you Alan, so you can catch all the words.

    Political Contributions are not the problems.

    Government Regulations that provide competitive advantage (nearing monopoly advantage) for one set of business interests over another are the problem.

    Political Contributions intended to sway the development of Government Regulations border on graft. That is a major problem.

  23. It is a little bit disingenious of Reason to whine about the campaign contributions of the wholesalers. It is a free country and they are free to give political contributions just like everyone else. Yes, this is terrible law. Yes it is nothing but a payout to a special interest group. But, the mere fact that the wholesalers are exercising their 1st Amendment Rights by throwing their cash around is not relevent. What is relevent is how stupid and ludacris these laws are.

  24. You have to get the timing down so that Fed-Ex delivers the expensive wine just as the box wine runs out. Tricky, but worth while.

    Jacob, thanks for the shout out.

  25. John, I think it’s more like an illustration of the Money Talks, Bullshit Walks political principle. I don’t think Reason takes a position that campaign contributions per se are evil.

    Since then the wholesalers have been urging state legislatures to comply with the ruling not by opening up their markets but by imposing uniform bans on direct shipping

    All hail the God of Equality. There were many, including some at Reason, who predicted that this would be the result of the Supreme Court ruling.

  26. “All hail the God of Equality. There were many, including some at Reason, who predicted that this would be the result of the Supreme Court ruling.”

    I thought so to. The problem is that I am not sure how that is illegal under the commerce clause. I am not sure how the Supreme Court could have gone any farther than it did. The sollution is for Congress to occupy the field of internstate sales and ban this kind of garbabe. But, I am not sure they can do that under the 21st? or whatever amendment it was repealed prohibition. It just sucks.

  27. John, technically nobody is completely shut out of the markets, therefore there’s no violation of the Commerce Clause. The 21st amedment allows interstate regulation at the state level, so most states regulate as far as they can get away with because there’s money in that thar regulatin’.

  28. so most states regulate as far as they can get away with because there’s money in that thar regulatin’

    Absolutely. Even absent the 21st Amendment, I don’t see how this is any different than laws that prohibit the direct sales of cars or require a real estate license. As long as you don’t discriminate against out of staters you are good to go. State regulation of commerce and the amount of money leeched from the economy by people like Real Estate Agents, Car Dealers, funeral homes and liquer distributers is one of the least reported and most outragous bits of corruption in the country.

  29. FYI: You can still get wined shipped to you in Texas. (I had some delivered before Christmas). The law forbidding it is currently under injunction.

    I have no idea as to the merits of the case.

  30. The elite’s government FEARS you!!!!!!

    Their fear is manifested in the laws they pass. Here is a law banning what MANY of the Founders wrote is a RIGHT of citizens when a government no longer represents them:

    Section 2385. Advocating overthrow of Government

    Whoever knowingly or willfully advocates, abets, advises, or
    teaches the duty, necessity, desirability, or propriety of
    overthrowing or destroying the government of the United States or
    the government of any State, Territory, District or Possession
    thereof, or the government of any political subdivision therein, by
    force or violence, or by the assassination of any officer of any
    such government; or
    Whoever, with intent to cause the overthrow or destruction of any
    such government, prints, publishes, edits, issues, circulates,
    sells, distributes, or publicly displays any written or printed
    matter advocating, advising, or teaching the duty, necessity,
    desirability, or propriety of overthrowing or destroying any
    government in the United States by force or violence, or attempts
    to do so; or
    Whoever organizes or helps or attempts to organize any society,
    group, or assembly of persons who teach, advocate, or encourage the
    overthrow or destruction of any such government by force or
    violence; or becomes or is a member of, or affiliates with, any
    such society, group, or assembly of persons, knowing the purposes
    thereof –
    Shall be fined under this title or imprisoned not more than
    twenty years, or both, and shall be ineligible for employment by
    the United States or any department or agency thereof, for the five
    years next following his conviction.
    If two or more persons conspire to commit any offense named in
    this section, each shall be fined under this title or imprisoned
    not more than twenty years, or both, and shall be ineligible for
    employment by the United States or any department or agency
    thereof, for the five years next following his conviction.
    As used in this section, the terms ”organizes” and
    ”organize”, with respect to any society, group, or assembly of
    persons, include the recruiting of new members, the forming of new
    units, and the regrouping or expansion of existing clubs, classes,
    and other units of such society, group, or assembly of persons.

    The federal government is allowing MILLIONS of illegals to invade our country who are causing immense economic harm to America’s working poor. Corporate America is becoming increasingly more powerful and influential. Yet, according to the government of for and by the elites YOU, a citizen, have to accept whatever the government does with NO recourse other than voting…… and there is sufficient proof that shows to me voting is worthless since the entrenched power structure ensures that the emplaced elite class can not be removed.

    Several Founders specifically wrote of the people’s right to abolish a government when it no longer represents them.

    We are forced to live under an elite’s TYRANNY!!!!!!!!!!!!!!!

  31. “John, technically nobody is completely shut out of the markets, therefore there’s no violation of the Commerce Clause. The 21st amedment allows interstate regulation at the state level, so most states regulate as far as they can get away with because there’s money in that thar regulatin’.”

    The issue is that the commerce clause and many of the actions take under the broad grant of the second paragraph of the 21st amendment come into conflict.

    The Supreme court stated quite clearly that a state may regulate the sales and distribution of alcohol nearly any way it wants…so long as it treats in-state and out-of-state entities equally. That means if in-state wineries can ship to citizens, then out-of-state must also be able to. If in-state wine stores can ship to their neighbors in the state, then out-of-state wine stores must be able to also.

    The problem for consumers is that the enormous influence purchased by state alcohol wholesalers-to the tune of $50 Million over six years-has resulted in state lawmakers claiming, “The supreme court decision ONLY applied to wineries…not to retailers…we can ban out of state retailers and still let our in state retailers ship.

    That’s a bit like saying Brown V. Board of Education applied to little African-American Girls, but you can still discriminate against Hispanics. That’s the kind of crazy interpretations many lawmakers are willing to buy into in exchange for their annual infusions of cash from alcohol wholesalers.

    Tom Wark
    Executive Director
    Specialty Wine Retailers Association

  32. You people all rock and roll! I really enjoyed reading the thread. Kudos to the Libertarians among you. I can’t believe how FARKED up this country is with what really is corruption.

    JLRW

  33. add this to the list…

    http://www.akronnewsnow.com/blogs/NickOnWine/itemdetail.asp?ID=6022

    “The State of Ohio has botched the wine laws again! Beginning October 1st, it will be no longer be legal for Ohioans to purchase wine shipped in from out of state from any winery producing more than 150,000 gallons a year or approximately 63,000 cases. That eliminated at least 100 California wineries from direct shipping to consumers in Ohio. “

  34. Tom Wark
    Executive Director
    Specialty Wine Retailers Association

    go fark yourself

  35. Tom Wark
    Executive Director
    Specialty Wine Retailers Association

    Now THERE’S an unbiased opinion source!!!!

  36. “Tom Wark
    Executive Director
    Specialty Wine Retailers Association

    Now THERE’S an unbiased opinion source!!!!”

    It’s unlikely anyone will confuse me with being unbiased, so well done in recognizing that.

    However, if by pointing out my stake in this matter you want to suggest that my analysis of the Granholm decision and the impact of campaign contributions on alcohol policy is off mark then it might be interesting to see how you actually come to that conclusion. I’m always willing to listen, read and discuss with good intentions.

    So, have at it. But if all you’ve got is a mind to point out that I have irons in the fire, I really think that should have gone without saying.

    I look forward to your breakdown of my analysis.

    Tom Wark
    Specialty Wine Retailers Association

  37. But then again, the Texas Alcoholic Beverage Comission once sent agents into bars to arrest people for being drunk in public. Inside bars. They only backed down after the resulting public outcry included statements like “Die in a fire.”

    Ahhh. The understated approach. One of the things I really appreciate about that state.

    I can’t tell you what a hellhole I thought Texas was, growing up there. Then I moved to California, and later Virginia and Alabama. All those places are even worse is one way or another. Alabama may be worse in every way.

    New Mexico is mostly better. I’d like to get back there, someday.

  38. I have no idea as to the merits of the case.

    The merits of the case are simple. If you can order wine online and have it shipped to you without John Law getting his panties in a bunch, then you are right on. If not, then we have what is called an interference in the market by government.

  39. farker and obbop, WTF is wrong with you?

    Do you believe in free markets or are you just chota heads?

  40. I guess I am more fortunate than the usual alcoholic. I don’t have to worry about which vintner is cheating who. For years I have simply stolen booze when I was thirsty. From the local supermarket, the package store, and even from my senile neighbor, who always leaves her back door unlocked. I walk into her house, take what I want and then leave. She is a great neighbor.

  41. sorry, not much sympathy from me here. I’m from Alberta Canada, where the wine stores were recently privatized. Guess who controls the distribution and variety of products? The Government. Can you special order? Yes. Is there any guarantee you can get it in Canada? No. Will you be taxed out the wazoo?
    Most definitely ! We have 1, count ’em, 1 distributor for the entire province, which leads to shortages of product on shelves . How much money does the province make from booze? At least a billion dollars. How about beer in supermarkets/quicky-marts? Where do you think you are, the US? Next thing, you’ll be asking for buses that run past 10:30 pm

    J B

  42. it’s wine…. who really cares ?? real men drink beer !!

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