HR 5034 – A threat to Florida Wine Sales?

On April 15th, at the urging of the National Beer Wholesalers Association, members of the U.S. Congress introduced House of Representatives 5034, titled the Comprehensive Alcohol Regulatory Effectiveness Act of 2010, or the "CARE Act." Sponsors are Rep. Bill Delehunt (D) MA; Rep. Howard Coble (R) NC; Rep. Mike Quigley (D) IL; Rep. Jason Chaffetz (R) UT.

This is yet another bill (albeit now on a national level) that is being introduced under the guise of promoting temperance and restricting the access to alcoholic beverages by those under the legal drinking age, while in reality seeking to protect the rights of wholesalers and restricting the rights of consumers to be able to purchase the wines of their choice, and not the choice of the distributors.

The proposed bill would effectively allow the 21st Amendment (in which individual states, not the federal government, have the primary authority to regulate alcoholic beverage sales) to trump the Constitution’s Interstate Commerce Clause, granting states immunity to litigation based on discriminatory alcohol distribution laws. The Interstate Commerce Clause essentially states that there can be no discrimination in the way that out-of-state business is treated relative to an in-state business. If an in-state winery is allowed to ship to consumers in that state, the out-of-state winery should be afforded the same right to ship to those consumers. Under HR 5034, states could legally discriminate against out-of-state wineries, even ban out-of-state shipping, and that ban could be upheld, when challenged, if the state can show, in even a slight way, that the ban will contribute positively to 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.”

The main reason the wholesalers are pushing this bill is to keep litigation out of federal courts, where the U.S. Constitution is king, so laws regarding winery volume limits, production caps, and the ability of retailers to ship are decided at the state legislature level. However, where there is currently an avenue to pursue litigation of a law perceived to be unconstitutional, the proposed bill would render the state laws essentially above challenge. If the bill passes, consumers will be limited to locally-produced wine, plus whatever the wholesalers choose to buy. Unfortunately, wholesalers tend to buy very large-production wines—the type they can buy by the pallet, rather than the case. Both the consumer and the small and mid-size wineries will suffer as a result.

Several people testifying in favor of the bill before Congress alleged that increased deregulation of the alcohol industry would lead to rampant alcohol abuse and underage drinking. Further another “expert” lamented the "alcohol epidemic" that has befallen the United Kingdom due to deregulation of its alcohol industry, testifying that as the U.K. deregulated alcohol between 1980 and 2007, "numerous nightlife centers sprung up… these centers became scenes of drunken debauchery, with people spilling out at closing time vomiting, urinating, and passing out."

I am no expert, but I think that happens throughout the US (and the rest of the world for that matter) in establishments called bars and nightclubs that, if my memory serves, are supplied by wholesalers, not through direct shipping.

Michael Alberty, proprietor of Storyteller Wine Company in Portland, Oregon puts it best – “The beer and wine wholesalers of America realize now that most federal judges understand the interstate commerce clause and how it relates to states who want to draw up discriminatory alcohol shipping statutes. Hence the need for HR 5034. You have to take the smart people out of the debate in order to win with stupid arguments. Nice try, but it ain't going to work.”

Currently, 37 states and the District of Columbia have laws allowing direct shipping. It is unlikely that these states will introduce new legislation to reverse their position if HR 5304 is passed. Several states are considering direct shipping legislation, including Maryland, Massachusetts, and New Jersey. These states could decide to not allow direct-to-consumer shipping. In the few states that still don’t have a direct shipping law on the books, like Florida, we might see direct shipping banned under this proposed law.

For the past few years I have supported, through letter writing and through campaign contributions, those legislators in the state of Florida who supported direct-to-consumer shipping for Florida residents, and who also sought to block the severely restrictive bills backed by wine and beer wholesalers.

While this bill has just been introduced and has not yet made it out of committee, now is the time to act. Please contact your Congressional representatives (both in the House and the Senate) and urge them to vote NO on HR5034.