What You Must Know About the Bill To End Wine Shipping

H.R. 5034, a bill that will severely restrict your ability to access or ship fine wine, has been introduced into into the House of Representatives in Washington, DC. It must be opposed by those who enjoy fine wine, those who sell fine wine and those who support free and fair trade. It must be opposed by telling friends, family and colleagues what it will do if passed.

Here is what you need to know about H.R. 5034:

1. If passed, HR 5034 will end the direct shipment of wine in many states.

2. HR. 5034 is an alcohol wholesaler protection bill.

3. HR 5034 means state alcohol laws would no longer be subject to fundamental Constitutional principles.

4. Backers of HR 5034 claim alcohol deregulation is happening, yet they can't point to any deregulation that has occurred.

5.The purpose of HR 5034 is to assure that alcohol wholesalers (middlemen) get a cut of every bottle of wine sold in America, whether they deserve it or not.

6. Small artisan wineries across the country will lose millions of dollars in revenue if HR 5034 is passed.

7. Wine Consumers will lose access to 1000s of wines if HR 5034 is passed.

8. The market for fine wine will shrink considerably if HR 5034 is passed.

9. HR 5034 is based on the alcohol wholesaler-perpetuated lie that direct shipping of wine and winery to retailer sales leads to minors drinking wine and binge drinking. There is no evidence to support either

10. HR 5034 amounts to alcohol wholesalers declaring war on consumers, wineries, wine shops, the federal courts and free trade.



-If you are a California winery owner, contact your winery association (Wine Institute, Family Winemakers of California) and ask them to actively oppose HR 5034

-If you are a winery outside California, contact Wine America and your local winery association and tell them to actively oppose H.R. 5034.

-If you are a Wine Retailer, contact Specialty Wine Retailers Association and join their effort to open direct shipping for retailers

-If you are a consumer, join Free The Grapes and contact your congressional representative and tell them "Don't Support H.R 5034".

-Join the FACEBOOK PAGE "Stop HR5034"

11 Responses

  1. Michael Gorton, Jr. - April 19, 2010

    If this bill is passed, does this mean Wine Clubs are all but done?

  2. Tom Johnson - April 19, 2010

    Wow. Talk about overstatement.
    There’s no doubt that distributors are trying to protect an unnatural monopoly. But even given that, HR 5034 will do nothing like what you seem completely convinced it’s going to do. All it does is deliver to the states what the states already have: the Constitutional power to regulate traffic in alcohol within their borders.
    It will ban nothing, and change not a single state law — those being the laws that already govern direct shipping. It specifically acknowledges that states must treat in-state and out-of-state shipments the same — which is the entire reach of the Commerce Clause and the only principle that was decided in Granholm.
    It grants the states no new powers, and Congress is not capable within the law of excepting state laws from “fundamental Constitutional principles.” Those have always been decided by the courts.
    What’s really remarkable about HR 5024 is how little it does. It puts into statue law what has already been case law since at least Repeal, and — if you look at laws governing merchandise other than alcohol — a hundred years before that.
    There’s nothing in the proposed law that gives states powers that they don’t already have. Better that you should advise your vast audience to contact their state representatives than their federal representative. The feds have almost no power in this. Direct shipping has always been a state issue, and it will remain so until someone changes the 21st Amendment to the Constitution.

  3. Rick Boyd - April 19, 2010

    While this bill does address wine specifically it would also mean an end to the growing movement to allow for online beer sales as well. Any politician claiming to be in support of capitialist or free market principles that supports this legislation should be called out and forced to justify his support.
    The claim of NBWA that the 3 tier system prevents underage drinking are patently false and ridiculous.
    Oppose this legislation with everything you’ve got.

  4. Tom Wark - April 19, 2010

    Tom Johnson:
    If passed this bill will absolutely lead to the end of direct shipping in a number of states.
    It seeks to clarify various federal laws concerning state alcohol regulations.
    Specifically, it makes clear that it is the intent of congress that states need not show that there are non-discriminatory ways of promoting temperance, the collection of taxes or an orderly market in order for their state laws to not be found unconstitutional when they are discriminatory. We this law in place prior to Granholm, that Supreme Court decisions would have been decided 9-0 against shipping.
    If passed, this law would mean that states could pass laws that prohibit out-of-state wineries from shipping into a state while in-state wineries could continue to ship to residents. It will immediately lead to just just laws being passed in a variety of states.

  5. Tom Johnson - April 19, 2010

    The proposed law says: “However, State or territorial regulations may not facially discriminate, without justification, against out-of-state producers of alcoholic beverages in favor of in-state producers.”
    The justifications for that discrimination are listed: “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.’’
    With the exception of the distribution system — which means, as best I can tell, nothing — every one of those justifications has precedent in case law. They were considered and rejected as justification for discriminatory practices in the Granholm decision and its predecessor, Bacchus. So, in terms of allowing discrimination, this law makes absolutely no difference.
    Now, let’s suppose the intent of the law is to allow states to discriminate against out-of-state wineries. That would still be a violation of the Commerce Clause, and the courts would still presumably rule against that violation. Congress simply lacks the power to dictate to the courts whether or how to rule on fundamental Constitutional issues.
    This law is doing nothing but generating campaign contributions for politicians and billable hours for lawyers and lobbyists.

  6. Tom Wark - April 19, 2010

    Here’s what the bill says:
    “Notwithstanding that the State or territorial law may burden interstate commerce or may be inconsistent with an Act of the Congress, the State law shall be upheld unless the party challenging the State or territorial law establishes 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.”
    It would be impossible for anyone challenging a discriminatory law that the law DID NOT have an effect on Temperance, orderly market, tax collection, stopping under age drinking or maintenance of the state’s regulatory system.
    This bill changes the rules for how courts interpret the 21st amendment, the Wilson Act and the Web Kenyon act.

  7. Tom Johnson - April 19, 2010

    All of those things in the new law are already in existing law. Stating them again does nothing to alter anything.
    There is absolutely nothing in this law that creates opportunity for discrimination that doesn’t already exist, and if there were, it would still be subject to Constitutional interpretation in an area of case law that is well defined going back more than a century.
    As Justice Kennedy wrote in Granholm: “State laws violating other provisions of the Constitution are not saved by the Twenty-first Amendment.”

  8. Jonathan - April 19, 2010

    Here is my concern, one that I believe both “Toms” are overlooking.
    In the bill there is the following:
    “..the collection of alcoholic beverage taxes. . ”
    Much like has recently happened with the internet sale of tobacco products, the purpose is taxation and limiting competition with large business and its investments. In the case of tobacco, now it seems the states are getting lists of purchasers and are then back charging them for the tax. That bill, was pushed by Big Tobacco. (As an aside, the Native American brands were supposed to be excluded, but were not, causing a HUGE economic impact on them).
    This is the same. They simply want to be able to more readily tax us, the consumers. One way to do it, is to pass new legislation that, as Tom Johnson would present as his understanding “It will ban nothing, and change not a single state law..” Open your wallet Tom!
    There is enough regulation and the Commerce Clause needs no further interpretation. We have been through this before. The extra tax isn’t going to kill any of us that buy direct, but the imposition of the additional burdens in the law will certainly effect the direct shipments of wine. I see NO GOOD coming of it.

  9. Jonathan - April 19, 2010

    There is also the mention of the promotion of temperance. Well, take a look at this quote concerning President Obama’s recent signing of the PACT Act into law and preventing the distribution of tobacco through the U.S. Mail service:
    “The PACT Act will cut off a major source of tax-evading, low-cost tobacco from coming into New York and other states,” said Scott T. Santarella, President and chief executive officer of the American Lung Association in New York. “The passage of this bill is a true public health victory because higher tobacco prices will prevent more kids from beginning to smoke and encourage more people to quit.”
    Sorry if I am grandstandingor being overly emotional – I see this as Bad. Very Bad. In a lousy economy, one of the few pleasures that I have left is knowing that I will be getting a a bottle or a case from a small vintner that I would not have otherwise been able to receive, were it not for direct sales and shipping.

  10. WineHarlots - April 19, 2010

    Then it’s agreed. The bill needs to be killed. Either it’s end-run around direct shipping as Mr. Wark contends, or it’s an unnecessary superfluous law that has already been addressed, as Mr. Johnson asserts. We certainly don’t need another useless law on the books.
    The bill is in the House of Representatives Judicary Committee at this time. Here is the link for the members on the Committee. http://judiciary.house.gov/about/members.html

  11. EaglesNestWine - April 20, 2010

    Sorry – Mr. Johnson’s comments above represents damage control and seek to cloak this argument in a holy “State’s Rights” mantle, understating both the problem with and impact of this proposed legislation.
    Let’s look at this from a small producer’s perspective – CURRENT regulations ALREADY limit consumer retail and direct shipment choices. Expanding these controls only further limits consumer choice. Consider the following:
    1) The threat of underage drinking with respect to direct shipping is a specious argument for distributors – if shipping FedEx, they require adult (over 21) signature and proof thereof at delivery, many adults actually ship to their workplace to ensure quick delivery.
    2) Small and family owned wineries produce many limited release, low volume but award winning, artisan wines. No distributor would bother to carry these limited release wines. These wines could be amongst the crown jewels of a private wine collection.
    However, and since, no distributor would carry these low volume, quality wines, the consumer choice loses out under the three-tier system distribution system, and is actually prohibited if direct shipping is disallowed.
    Allowing elimination of direct shipment limits consumer choice to that on retail store shelves – products from volume producers.
    3) Small and or family owned wineries have high unit production costs (limited economies of scale – thus cannot sustain wholesale pricing). They tend to sell direct or ship direct to wine lovers to maximize their limited profits.
    As enabled and enforced by the three-tier system, distributors and restaurants demand discounted wholesale pricing that doesn’t work for small producer wineries.
    4) And a final point, direct sales/shipment wines represents a tiny percentage of a state’s overall wine sales and tax revenues.
    Why not “throw a tiny bone” to America’s small businesses and small wineries by allowing them to sell an insignificant amount of wine directly to wine lovers? Greed?
    Practically speaking, requiring a monthly or annual sales permit at several hundred dollars from each shipped state for a few or handful of cases of wine shipped to say… Massachusetts (and others) for example effectively prohibits sales (as economically non-viable for small operations) to that state’s consumers.
    Direct shipment of wine & beer is the only hope for America’s wine & beer lovers.
    Tom – please continue to fight for all wine producers (large and small) and the artisan wine producers. It’s a good fight.
    Greed is a disappointing human failing – we must resist it anytime it rears its ugly head – or we all lose. This is one of those times.

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