CARE Enough to Screw Over Wine Consumers


Last month Rep. Jason Chaffetz (R-Utah) introduced the latest version of the Community Alcohol Regulatory Effectiveness (CARE) Act, which is aimed at bolstering the ability of state governments to obstruct interstate commerce in alcoholic beverages. The CARE Act is a response to the 2005 Supreme Court ruling that said states may not prohibit out-of-state wineries from shipping directly to consumers if they allow in-state wineries to do so. Chaffetz's bill (PDF) says such policies should be upheld if "the challenged law advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives."

This language is less sweeping than last year's version of the bill, which said a discriminatory law "shall be accorded a strong presumption of validity" that can be overcome only if the party challenging it "demonstrates by clear and convincing evidence that the law has no effect on the promotion of temperance, the establishment or maintenance of orderly alcoholic beverage markets, the collection of alcoholic beverage taxes, the structure of the state alcoholic beverage distribution system, or the restriction of access to alcoholic beverages by those under the legal drinking age." Since "the structure of the state alcoholic beverage system" (as well as regulators' idea of "orderly alcoholic beverage markets") includes legally privileged wholesalers who resist any attempt to let consumers avoid them, this standard would have given an automatic pass to almost any limit on direct shipments. It is less clear what "a legitimate local purpose" is, although it may amount to much the same thing. In a New York Times op-ed piece published today, wine blogger David White cites the CARE Act as an example of alcohol wholesalers' political influence:

Together, the nation's two largest wholesalers—Southern Wine & Spirits and Republic National Distributing Company—have revenues of about $13 billion.

A chunk of that cash is funneled to lawmakers. The National Beer Wholesalers Association maintains the nation's third-largest political action committee, and since 2000, it has donated $15.4 million to candidates for federal office — about $5 million more than the A.F.L.-C.I.O donated in that time.

In the past decade, it spent $5.6 million on lobbying Congress; the Wine and Spirit Wholesalers of America spent $9.3 million.

The expenditures make sense. The wholesaling industry's survival depends on maintaining today's highly regulated system. It is estimated that because of wholesalers, consumers pay 18 percent to 25 percent more at retail than they otherwise would.

More on the CARE Act here and here. More on the anti-competitive efforts of alcohol wholesalers here.