Beer Buys Busted

Protecting alcohol monopolies

Since 2005, when the Supreme Court decision Granholm v. Heald cleared the way for wineries to ship their products directly to consumers across state borders, the National Beer Wholesalers Association has been getting increasingly nervous about protecting its distribution monopoly. Citing the threat of drunk driving and underage drinking, it persuaded Rep. Bill Delahunt (D-Mass.) to introduce a bill aimed at maintaining barriers to interstate commerce in alcoholic beverages.

The bill would give states immunity against lawsuits challenging monopolies on alcohol distribution and reaffirm the states' special authority to regulate the industry, a power granted by the Prohibition-ending 21st Amendment. In Granholm v. Heald, the Supreme Court ruled that the Commerce Clause imposes limits on that authority, forbidding protectionist rules that favor local businesses over competitors from other states.

At a quiet subcommittee hearing in March, alcohol wholesalers and their pet state regulators painted a menacing picture of "an alcohol epidemic" allegedly caused by deregulation. They drew inapt comparisons between the large-scale deregulation of alcohol sales over several decades in the U.K. and the relatively minor incursions on their wholesale monopoly in the U.S. In her testimony, Nida Samona of the Michigan Liquor Control Commission cited Supreme Court Justice Robert Jackson's 1941 comment that "liquor is a lawlessness unto itself "—and then she gave away the game. "Because of their potential for abuse, and their importance as a source of tax revenue," she said, "alcoholic beverages must be highly regulated." She also noted that litigation is "expensive and uncertain."