$90 Million—The Cost to Defend the Three Tier System

Why do wine and beer wholesalers deliver up more campaign contributions than all wineries, distillers, brewers and retailers combined?

Are the middlemen wholesalers more generous? Do they have money to burn? Do they have more to lose in the arena of politics? I think clearly the answer is, Yes. But most importantly is the issue of what they have to lose.

Below is a list of total contributions to state (not federal) candidates and state ballot initiatives for the past decade. Again, these are the totals given to state candidates. It’s at the state level where most of the action (political and regulatory) happens, not in Washington, DC.

Year Wholesalers Wineries Distillers Brewers Retailers Total
2002 $11,048,281 $4,299,753 $3,518,172 $531,637 $19,397,843
2004 $11,137,050 $3,835,473 $4,802,401 $537,370 $20,312,294
2006 $19,426,154 $3,983,516 $3,669,310 $1,334,336 $28,413,316
2008 $12,321,689 $3,667,620 $3,414,865 $661,880 $20,066,054
2010 $22,664,027 $3,004,541 $4,557,816 $2,532,316 $32,758,700
2012 $13,146,454 $2,607,803 $3,368,866 $1,045,700 $20,168,823
Total $89,743,655 $21,398,706 $23,331,430 $6,643,239 $141,117,030

 

In the past decade, the Middlemen have given nearly $90 million to politicians and to ballot initiative campaigns. The vast majority of their donations to go incumbents. But what stands out here is just how much the Middlemen contributions dwarf those of all other members of the industry—brewers, wineries, distillers and retailers.

The primary goal of this largess is to keep the mandatory wholesaler rule in place. That’s the regulation in place in most states that require producers to only sell to wholesalers and the related rule that retailers and restaurants only buy their inventory form wholesalers, not from producers or their peers. Keep in mind, despite the fact that in most states producers and retailers are REQUIRED to do business with wholesalers, wholesalers are NOT REQUIRED to do business with producers or retailers.

Wouldn’t you spend whatever it takes to defend this kind of rigged game?

If you are interested in the $13 million figure that wholesalers spent in state-based elections in 2012, the breakdown of how much was spent by state is below:

TX $2,853,316
IL $1,761,702
CA $1,010,445
NY $922,877
FL $761,169
OH $624,819
NC $586,038
IN $451,505
MI $450,189
GA $431,021
OR $369,189
TN $354,018
WI $329,080
WA $299,958
MA $218,955
PA $180,180
SC $177,053
MO $174,357
NV $169,300
OK $109,866
KS $102,897
WV $70,300
MD $68,505
IA $64,750
AR $57,124
KY $54,950
NH $50,100
AL $49,500
NM $48,035
RI $39,050
NE $36,801
ID $32,786
AZ $31,373
UT $23,050
MT $22,060
DE $19,675
CO $19,450
VT $18,400
VA $15,900
ND $13,200
NJ $12,900
MN $12,030
ME $11,531
LA $10,250
MS $10,000
CT $8,850
SD $7,250
AK $500
HA $200

 

All figures were taken from “Follow The Money: The National Institute on Money in State Politics: http://www.followthemoney.org

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7 Responses

  1. Brian St. Pierre - November 5, 2013

    What do you suppose accounts for the spike in 2006? Were more states trying to pass direct-shipping legislation, or something similar? It would be interesting to see a breakdown there, and walk it back. . .

  2. Tom Wark - November 5, 2013

    Hi Brian,

    In 2006 there was a ballot initiative in Massachusetts that, if successful, would have allowed food stores to sell wine. Wholesalers dropped about $4 million into the effort to stop that. That’s about $4million more than they normally give in an election cycle in Massachusetts. The Wholesalers won.

  3. Jim K - November 5, 2013

    Tom,

    now you have the opportunity to get into the distribution game at the ground floor. There is talk about using the three tier system for legalized pot sales.
    Your opportunity is to outline the “correct” or “consumer friendly” structure for sales of a substance that I will assume you would agree may need to or will be controlled by state and local goverments. Is the proper way to allow sales of legalized marijuana the same as, say, laundry detergent? Or is there a compelling, rational, need for the state or local goverments to control that sale?

    Curious as to how Tom Wark would structure this new (and possibly hugely profitable) industry segment.

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