The Battle Over Booze

Within minutes of my first report about House Bill HR 5034, I got phone calls from people with opinions about whether wine, beer and liquor should be direct shipped to consumers across the country. I have also been told that some in Congress who once supported this bill have now reconsidered, especially as smaller wineries, distilleries and breweries began to weigh-in.

First we should all understand that this bill will not prevent direct shipping, however, it will give states much more power to regulate direct shipping and control alcohol policy. So along with states supporting HR 5034, are alcohol wholesalers and in some cases liquor and grocery stores. States say they should be able to control their boundaries and what comes in and out...at the same time, they want to tax what is being shipped into their areas. Wholesalers also claim unfair competition since they have to pay taxes and direct shippers do not.

According to Craig Wolf of the Wine and Spirits Wholesalers of America who supports the bill, "The legislation very simply would not change one state law. It does not overturn any direct shipping laws. The laws on the books today in 38 states that allow for direct shipping would be just as valid the day after this legislation's passed as it is today. What it does though is it gives states the power to make alcohol policy and not have it constantly challenged in the courts."

Smaller wineries, breweries, distilleries and direct shipping companies are adamantly opposed to any increased regulation. They argue that big wholesalers have massive control of the market and have been pressured by larger producers to squeeze-out the small guys. Direct shipping allows them to compete and reach consumers that most likely would not be able to purchase their products.

Cameron Hughes from Cameron Hughes Wine "This is all about choice, right? And the bill that is proposed takes away consumer choice. It's an anti-choice amendment, it's an anti-constitutional amendment that attempts to do an end-around, to allow the states to put up these petty barriers to entry."

Tim Bucher CEO Tasting Room.com agrees, "HR 5034 would dramatically hinder us as well as the majority of the 7,000 wineries in the United States that tend to be on the smaller side."

This debate has been a heated one over the course of the last 10 years, as smaller brands in all categories exploded in numbers and popularity. Then 5 years ago, the Supreme Court's landmark 'Granholm decision' ruled that state alcohol distribution laws cannot discriminate between in-and-out of state wineries. Add to it the Constitution's 21st Amendment, which gives states control over alcohol sales. above the commerce clause, which forbids restrictions on interstate trade.

At this point...as a measure of full disclosure....I must admit, I have some considerable background in this issue. I grew up in the grocery industry and my brother now owns and runs the family grocery stores in the Napa Valley and my parents own a winery that I have been involved in for more than 10 years. So I see and know both sides very well and their is an argument for both. It will be interesting to see how this plays out with the new Congress next year. What do you think about this?