Protectionism

Alcohol Wholesalers: We Must Protect Our Profits the Public

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In 2005 the U.S. Supreme Court overturned alcohol shipment rules that discriminate against out-of-state wineries, saying they amount to unconstitutional trade barriers. If a state lets local wineries ship their products directly to consumers, the Court said, it has to let out-of-state wineries do so as well. Six years later, according to a tally by the Wine Institute, 37 states allow direct shipments from wineries regardless of where they are located, nine ban all direct shipments, and four (Arkansas, Kentucky, Massachusetts, and Pennsylvania) continue to discriminate against wineries in other states. But when it comes to direct shipments by out-of-state retailers (including wine-of-the-month clubs and online auctions), the picture is much different: Thirty-seven states ban such transactions, insisting that the wine go through government-appointed wholesalers, who vigorously resist any regulatory changes that would cut into their artificial profits. Wine blogger David White notes that legislators in Maryland, one of the states that bans all direct-to-consumer wine shipments, are considering a bill that would legalize direct sales by out-of-state retailers as well as wineries. The bill has broad support, with 83 co-sponsors (out of 141 members) in the state House and 32 co-sponsors (out of 47 members) in the state Senate. But White warns that the politically influential wholesalers may yet block full liberalization:

One possible compromise would keep in place the Maryland laws that prohibit residents from ordering wine from Internet retailers, joining wine-of-the-month clubs and taking part in out-of-state wine auctions….

State officials argue that online sales—from wineries and retailers—enable minors to buy booze. Teenagers are certainly resourceful when it comes to obtaining liquor, but it's unlikely that they'd be willing to jump through all the hoops required to purchase wine online. For starters, they'd need a credit card and the ability to make it through the numerous age verification services used to thwart underage purchasing. They'd then need to be home when the wine is delivered while making sure their parents were not. They'd also have to sign for the wine, convincing a FedEx or UPS employee that they're over 21.

Most important, they'd need money. Many California cult wines cost $50 or more a bottle. Auctioned wines are even more expensive.

State officials also contend that online sales enable retailers and wineries to "dodge state taxes." This, too, is absurd. Maryland manages to collect sales taxes on just about every other retail product without the help of wholesalers.

The truth is that these laws have their roots in Prohibition, and they remain in place only because of well-financed special-interest groups.

It's a familiar theme in alcohol regulation: Rules ostensibly aimed at promoting public health and safety create vested interests that resist change even when the official rationale no longer seems persuasive. Public employee unions fight liquor store privatization, liquor stores try to stop supermarkets from selling beer and wine, and convenience stores complain that bars are illegally horning in on light beer sales. One of my favorite examples is South Carolina's itty-bitty bottle requirement, which mandated that all liquor in bars and restaurants be served from the 50-milliliter containers you see on airplanes and in hotel mini-bars. The restriction, which was enacted by constitutional amendment in 1973, was meant to discourage strong cocktails. But it accomplished exactly the opposite, since South Carolina bartenders were required to use 1.7 ounces of liquor per drink, compared to the 1 or 1.25 ounces that became typical in other states. By the time the rule was repealed in 2004, its opponents included Mothers Against Drunk Driving and the South Carolina Baptist Convention. Its main supporters were mini-bottle wholesalers and retailers.

More on the battle between alcohol wholesalers and out-of-state retailers here.

NEXT: College Drunk Driving Deaths Vastly Exaggerated, Study FInds

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  1. Maryland manages to collect sales taxes on just about every other retail product without the help of wholesalers.>/i>

    “If you can dream it, we can tax it.”

  2. For example, our tax on effed-up tags is $0.06/instance.

  3. I wasn’t a wine drinker, so I didn’t protest when they came for the wine distributors….

  4. I am amazed that there are only 13 states that allow shipments by wine-o-the-month clubs, and even more amazed that Texas is one of them.

    I get a case every quarter from WSJWine, and I like it. A lot. How the bluenoses with which Texas is so richly endowed let this one get away, I have no idea.

  5. I license to wholesale booze is a license to print money — and some of that money that finds it’s way into the coffers of election campaigns.

    1. Another good reason for public financing of elections.

    2. A license to print money?! I am outraged!

  6. The “kids will order wine on line” thing is so dumb. I mean, how hard is it to find someone’s older brother to pick you up a bottle of vodka at the liquor store?

    1. Thinking back on my youth, kids either drink beer or mix liquor with sweet drinks. No kid drinks the kind of wine that you would buy online.

      1. What he said. I don’t know of any kids that would drink wine. Beer seems to be the drink of choice with the younger set (that and pot).

    2. I promised to teach my under-age nephew how to make mead, but he hasn’t taken me up on the offer yet.

      1. It blew my mind to find out that all you need to make alcohol is basically sugar and yeast. One of those things I wish I had known before I turned 21.

        1. Agree. If convicts can make it in a toilet from oranges and jello and hide it from the guards, certainly a 17-year-old could make it behind the garage and hide it from Mom.

          1. I made the offer in front of his mother (my sister-in-law).

          2. I friend of mine has a no-fail recipe designed for newbie brewers that actually uses bread yeast. You can walk into any grocery store in American and walk out with the indgredients to make 6 gallons of on orange-based wine that is relatively palatable at about 6 weeks.

            1. Six weeks is too long when you want to get Mary Jane Cheerleader tipsy on Friday night and try to bang her, dude.

              1. Planning is essential. If you gots decent-tasting free booze tucked away already, where do you think Mary Jane Cheerleader is going to spend her Friday nights?

            2. For anyone that would like to help corrupt the youth, the keyword search would be “ancient orange mead” which leads to many copies of this recipe which is also at GotMead.

              http://www.gotmead.com/index.p…..ipe_id=118

            3. Ingredients:
              5 gallons 100% apple juice (No preservatives except Ascorbic Acid/Vitamin C)
              2 pounds corn sugar
              1 packet dry red wine yeast (a couple teaspoons of bread yeast will also work, but the wine yeast will work better)

              Any homebrew shop will have the wine yeast. It will cost less than $2.

              Dissolve the sugar in the apple juice by dumping out half of the bottle into your fermenting bucket, then pouring some sugar in the half-full bottle and shaking it up. After the sugar and juice is mixed and in the bucket, dump the yeast in there and loosely set the lid on top. Wait 4 weeks or until it is totally clear, whichever comes last.

              Then, throw it in bottles and enjoy immediately. It will get better with age.

              It clocks in at around 9% alcohol, so watch yourself when you drink it.

        2. http://www.youtube.com/watch?v=pyCPhIjmk-s

          …the found this other old hippy…he bought them some brew…

        3. I once had a nieghbor that made wine from tomatoes. If it will ferment, you can make an alcoholic drink from it.

      2. I wanted to make homemade ginger ale while I was in high school. I had to get the grolsch-style bottles for it off of craigslist b/c I wasn’t old enough to buy beer from a store of homebrew supplies from teh internetz.

        1. Damn. Change the “of” before “homebrew” to “or”.

    3. Exactly. What kids are going to satisfy their urge to get f’ed up by ordering a case of Opus One?

      1. Fucking yuppie brats can get high-priced booze without resorting to buying it online.

      2. If I caught a kid ordering a case of Vincent Arroyo Winemakers Reserve Cabernet (’07 was clearly the best) I would be sure to admonish him and then confiscate the hooch…for the children of course.

        Seriously, if my kid did that I would be so proud.

        Plus all comments about home made above i agree with too.

  7. “State officials argue that online sales?from wineries and retailers?enable minors to buy booze.”

    And I am certain that these good State officials were able to support their assertion with actual evidence of teens going hog wild on quality mail-order wines in those states in which mail-order retailing is legal.

    Hell…here in NJ my 13 year old daughter and her friends get their shipments of $100-per-bottle pinot noir every week!

  8. When I was in college, I was one of those dreaded Teenagers Who Bought Liquor. Let me tell you, I had absolutely no trouble obtaining whatever sort of alcohol I wanted. I never tried to buy it online because (even though it would be “legal”ish) it wasn’t as easy as simply hading a couple of twenties to someone I knew who was over 21 or who had a fake.

    If I was better at bullshitting I probably could have done it myself, because even after I turned 21 I never experienced myself or anyone else get carded anywhere for a large sale. If I stop in and buy a six pack, sure I get carded. But if I go to the cashier with a few bottles of liquor and 3 mixed 12 packs, I don’t get carded. My friend who had a fake never got carded when he bought 10 cases of Key Light at a time.

    So as a notice to all the concern troll statist assclowns: college students will crawl on their hands and knees through broken glass to get their fix. They will find ways around your rules because they are smarter then you are (as every generation is smarter then the previous one). Any attempt to stop them will simply exacerbate the problem.

  9. I just want to buy alcohol on Sunday.

  10. All you other states need to adopt PA’s great fix–wine vending machines in grocery stores that require you to take a breathalyzer test and show your ID to a Liquore Control Board clerk monitoring you over a live TV link.

    Because that’s much preferable to actually letting grocery stores sell wine from the shelves.

    1. But then it wouldn’t be a state employee making the call, and we all know non-state employees are Not To Be Trusted.

      1. Exactly. If you aren’t civil service, in a union, and paying into a defined benefits pension plan, you clearly aren’t qualified to card a pimply teen.

  11. Fuck the tier system, mixed drink and alcohol content or volume regulations, and all that shit. Taxes, interstate trade laws, and bar closing times.

    Revenuers deserve nothing but resistance.

    1. The Revenoo?

      Why didn’t you say?

  12. It’s a familiar theme in alcohol regulation: Rules ostensibly aimed at promoting public health and safety create vested interests that resist change even when the official rationale no longer seems persuasive.

  13. Isn’t John McCain living on the money that his father in law made in one of these rent-seeking liquor rackets?

    -jcr

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