Clowning Around With Wine

Whole Today, on Capital Hill, we saw what millions of dollars in campaign donations and lobbying buys: Your own congressional hearing to consider creating a exemption from competiton and an exemption from having to adhere to the Constitution.

I swear this is not a joke. But from some of the clownish proposals and Clowns that testified on behalf of these suggestions you'd have thought that the Clowns had rushed Capital Hill.

Today in the Sub-Committee on Courts and Competition, of House of Representatives a hearing was held on "Legal Issues To Consider State Alcohol Regulations". The hearing was held at the behest of the National Beer Wholesalers Association and supported by the Wine & Spirit Wholesalers Association. 

The Beer wholesalers are floating legislation that would do the following;

-Exempt States from being sued on the basis of violating the commerce clause with discriminatory laws

-Exempt States from being sued for anti-trust violations.

The Beer Wholesalers and wine wholesalers want congress to pass laws that exempt the states from these kinds of lawsuits. They say it is necessary because without it, we will see deregulation of the alcohol industry and that will lead to bedlam; the kind of bedlam that they claim now exists in the UK where alcohol is less regulated than here.

One of the funniest parts of the hearing was when the wholesalers own expert on the dire consequences of deregulation stated she didn't think there was any similarity between the UK and the U.S. where alcohol deregulation was concerned. They couldn't even get their own expert to agree with that outrageous claim.

Still, let's just be clear what would happen if the beer and wine wholesalers got there way. They would immediately begin lobbying in the various states to repeal any laws that allow out of state wineries and retailers from shipping wine to consumers. And they'd be successful. And even though they'd continue to allow in-state wineries and retailers to ship wine to their residents, there would be no recourse to the courts and the U.S. Constitution that says clearly that it's the FEDS that regulate interstate commerce.

So, while the hearings turned out to be pretty silly and a complete disaster for the wholesalers, it's important to keep in mind their ultimate goal: change the rules in the middle of the game so that they can operate with no competition.

No members of the wine or retail industry showed up to testify, largely, it is believed, because there was no good reason to give these hearings or the wholesalers' request for a bailout from competition, the dignity of a response or any oxygen for the idea that an appearance would produce. However, Representatives Mike Thompson and George Radanovich offered biting and compelling testimony in which they labeled the wholesaler's proposal exactly what it was: Protection for them and screwage for everyone else including consumers.

Most of the speakers, regardless of their position, comported themselves fairly well. The only whack job who showed up was Nida Samona, the Chairperson of the Michigan Liquor Control Commission. I almost felt sorry for her when she claimed the state of Michigan was losing tax revenue by issuing permits and collecting tax revenue on wineries that shipped to Michigan—where before they never collected tax revenue. I really wanted to hear about the math that brought her to that conclusion. Of course, she came to the hearing equipped with no evidence for any of the bizarre charges she made. No surprise there. Her actions and statements on wine shipping are rarely coherent.

Even worse was when she admitted that she and her agency couldn't handle the task of efficiently regulating direct shippers, while her colleagues in alcohol regulation around the country seem to be handling direct shipping regulations just fine. Why you would testify in front of a congressional committee that you are incompetent is beyond me.

Want more Info?

Written statements of all those testifying
Statement by Specialty Wine Retailers Concerning the Hearings
Statement by Wine Wholesalers Concerning the Hearings

The hearings themselves I do not believe will lead to the outcome desired by the wholesalers who instigated them. But what is important to know is that it takes remarkable amounts of political power to get a congressional hearing to consider your own, special interest proposals—especially when you are asking that congress remove state regulations from judicial oversight by exempting states from being sued. The fact that the beer wholesalers, who are altogether opposed to consumer choice or free trade, are able to accomplish this is still a little frightening.


23 Responses

  1. Bob R. - March 19, 2010

    I read the written submission from one of the wholesaler’s spokespersons, Craig Wolf. I thought it defied logic. The thrust seemed to be that the 3-tier system was the only thing that has prevented the US from degenerating into the binge drinking that plagues the UK. Even assuming their is a binge drinking problem in the UK (there may very well be), what does the method of distribution have to do with it? For example, France has a far looser distribution system than the UK, and I don’t know of any binge drinking problem there. If anything, French alcohol consumption is going down.

  2. Mark's Wine Clubs - March 19, 2010

    It’s a bit depressing to realize that the wholesalers and distributors have enough power to even get a hearing like this. Makes organizations like California Family Winemakers even more important as time goes by.
    Bob-I don’t see how distribution could have any affect on binge drinking? Isn’t binge drinking more of an issue with culture etc?
    To me, distribution is a referendum on how seriously we take things like the constitution, right to choose for ourselves and yes even the commerce statute.
    Should my wine club really not be allowed to ship wine from Washington to customers in that state because we’re based in California? Does that make sense to anyone?

  3. 1WineDude - March 19, 2010

    Never mind that the UK could fit comfortably into Texas with some room to spare.
    This development fills me with sadness at how much work has to be done.
    Keep up the fight, Tom!!!

  4. WineWeb - March 19, 2010

    I was amazed at Nida Samona’s statement about Internet sites popping up to sell alcohol, then disappearing before the state could find them. She made it sound like a widespread problem, but I’d bet she couldn’t cite two examples.
    Too bad the chairman’s comments about the empty chair made it sound like the wine industry didn’t care to show up.

  5. Ted H. - March 19, 2010

    Agreed that that Michigan lady was a whack job. I like when she called the results of allowing direct wine shipments “crippling”. Very dramatic.
    She also kept insisting there was some great need to make sure the wine sold in her state was safe. Is there an epidemic of unsafe beverages that the state needs to protect its citizens from? Does the state currently inspect in-state products for “safety”?
    The price angle confused me. Specifically, he idea that direct shipments would lead to cheap alcohol and therefore a nation of raging alcoholics. Last time I checked that $1.25 40oz of Old English at 7-11 got there via a beer wholesaler.

  6. Bill McIver - March 19, 2010

    monopolies don’t die easily or gracefully.

  7. Jo Diaz - March 19, 2010

    Very excellent writing, Tom.

  8. Kathy - March 19, 2010

    Tom, glad you are back on track on this.
    Question: how many bloggers were at the hearing in DC?

  9. Richard Beaudin - March 19, 2010

    That’s all we need today … stories of more incompetence:-) … enjoyed the read Tom

  10. Blake Gray - March 19, 2010

    Stay on this, Tom. You are doing the world a great public service.
    This post is exactly what I mean when I told you recently the best blog posts were better than the best print stories. Where did I see this story in print? Exactly nowhere. The wire service picked up the wholesalers’ press release and ran it verbatim.
    Not to get too apocalyptic on a Friday afternoon, but when the press stops paying attention, powerful corporate groups like beer wholesalers can slide these kind of laws through Congress.
    I also want to praise Mike Thompson for standing up to them, which is not an easy thing to do for a politician, as the film “Beer Wars” pointed out.

  11. EaglesNestWine - March 19, 2010

    Again great job spreading the news Tom. Even if it’s bad.
    Just when you thought it couldn’t possibly get any stupider on Capitol Hill – it does.
    Send in the Clowns – Send in the Clowns!!!

  12. Tom Wark - March 19, 2010

    Kathy: No bloggers as far as I know.
    Blake: Thank you. You are right that most of the press ignored it. That might be ok because it’s highly unlikely that they would bring the kind of skepticism to the their coverage that is necessary.
    When I pitch this story to the press I’m told it’s too complicated or no one cares. And of course that is a correct view of it. It is complex and very few folks care. The problem then is that one like me is forced to engage in hyperbole to get attention for the issue. And while I’m not adverse to going that route, I really prefer not to.

  13. Thomas Pellechia - March 20, 2010

    Tom: aren’t there any wine or life style magazines interested in such stories?
    If not, that’s a disgrace.

  14. El Jefe - March 20, 2010

    Let’s suppose for a moment that states wanted to pass a sedition act to restrict free speech. So, Congress passes a law exempting states from being sued for violations of the 1st Amendment. Can anyone imagine a situation more unconstitutional? And why would creating the same situation for the Commerce Clause be any different? Mind boggling.

  15. Tom Johnson - March 20, 2010

    Every now and then Congress tries to pass laws saying certain actions taken by Congress are not reviewable by the courts. Every time one of those laws passes — which is seldom — the courts strike the law down. Everyone in Congress knows this.
    So why do they keep proposing laws like this? To placate constituents of one sort or another who demand action. The easiest thing to do is to propose big, reach-for-the-brass-ring laws that will never get out of committee. The constituents come to Capitol Hill, get their pictures taken testifying before Congress, and feel like they’re getting the attention they deserve. The representative gets to say hey, I tried.
    This really isn’t worth the attention. It’s an aspect of governance that so lacks meaning most legislative bodies segregate this kind of theatrical crap into specific days so it doesn’t distract anyone from serious business.

  16. renaissance costume - March 21, 2010

    Power of money.. With a big company like, i think they can do almost everything.. Sad. 🙁

  17. John Kelly - March 22, 2010

    More political kabuki – i suppose the WSWA needs to feel like it is getting its money’s worth. Good on Mike Thompson. I don’t side with George Radanovch’s politics but he is one of us and did well – it’s too bad he’s retiring. The press may not have run with this story, but it was on Twitter all day, so at least some citizens were paying attention.

  18. renaissance dresses - May 4, 2010

    I totally agree to what Bob said.. 🙂

  19. I Need Money Desperately - May 18, 2010

    I was amazed at Nida Samona’s statement about Internet sites popping up to sell alcohol, then disappearing before the state could find them. She made it sound like a widespread problem, but I’d bet she couldn’t cite two examples. – Oh yes. Clowns and more clowns. Sigh.

  20. Travis - June 27, 2010

    Can anybody cite an example of something previously controlled by the commerce clause, being subsequently given an “exemption”? I was under the impression that once the Feds controlled something via the commerce clause, they never gave up that control.
    Let me know if I’m mistaken about this.

  21. Winstrol - September 29, 2010

    May be people who admitted it have drunk too much wine

  22. security - December 21, 2010

    I agree with your observation. Ironically, they couldn’t even get their own expert to agree with that outrageous claim.

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