Alcohol Wholesalers Are Responsible for Wine Shipping Lawsuits

A recent comment by the head of the Wine & Spirit Wholesalers Association got me thinking about an important question: Who is responsible for all the lawsuits that supporters of H.R. 5034 claim is the reason for this legislation?

In a recent Los Angeles Times article concerning the impact of H.R. 5034, a bill that would allow states to pass any and all discriminatory legislation concerning alcohol, Craig Wolf, the president of the Wine & Spirit Wholesalers of America, stated the following:

"[By introducing H.R. 5034] distributors were simply trying to protect states' rights to regulate alcohol."

What gives Craig Wolf and the wholesalers the idea that they are responsible for protecting state laws on Alcohol? Well, it turns out it's not just Mr. Craig who believes he is the protector of the state.

In the same article, Mr. Paul Pisano, General Counsel of the National Beer Wholesalers Association, explained this way why his organization wrote and introduced H.R. 5034:

"It's the cumulative effect of all these lawsuits, and the
confusion. We're asking to make sure that states
aren't having their hands tied when they're trying to defend their
alcohol laws."

What Mr. Pisano doesn't say is that wholesalers have been responsible for these lawsuits that they say tie the hands of states.

When Mr. Pisano or Mr. Craig argue that we need to protect the state laws from challenges in court, he doesn't mention that Glazer's Wholesale of Texas sued the state of Kansas arguing that Constitution's Commerce Clause made the state's residency requirement for wholesalers unconstitutional?

Neither Mr. Craig or Mr. Pisano ever note that Southern Wine & Spirits, the largest wholesaler in America, also used a Commerce Clause argument to sue the state of Texas to allow them to operate in that state by overturning a state law saying distributors had to be Texas citizens?

One can be sure that if H.R. 5034 ever gets a hearing in the House Judiciary and when the wholesalers start going on and on about how all these lawsuits by wineries and retailers must be stopped in order to protect the states and their alcohol laws, it will be noted publicly that wholesalers actually LIKE lawsuits, when the outcome suits them.

The fact of the matter is that the wholesalers are themselves the responsible parties for all the lawsuits that have gone forward up to and including the Granholm Supreme Court case as well a subsequent lawsuits.

Back in the 1990s and early 00s, had the wholesalers simply got on board and supported the commonsense reforms to the wine distribution system advocated by consumers, wineries and retailers that would have allowed consumers to have wine shipped to them from out-of-state wineries and wine merchants, it's likely that changes in the laws would have flown through state legislatures, that consumers would have been provided access to the explosion of new domestic wines and newly imported wines hitting the market and, most of all, that there would have been no lawsuits for the states to defend.

Instead, wholesalers used their enormous powers in the state legislatures to twist arms and whisper in lawmakers' and regulators' ears incendiary claims about disasters coming from direct shipping. This led directly to the the passage of unconstitutional laws that discriminated against out of state wineries and retailers and that resulted in lawsuits.

We know now that the direct sale of wine makes no dent in wholesalers' profits. It amounts to no more than 2% of the marketplace. We know that when retailers ship wine across state lines it is wine they procured first from wholesalers. And we know that minors have not been able to use direct shipping to affect any significant increase in their ability to obtain alcohol, as the wholesalers claimed it would.

It has been wholesalers who are purely responsible for the lawsuits they now decry are hampering the states ability to regulate alcohol sales by their stubborn, self-serving and anti-competitive efforts to prevent any reforms from coming to the 75 year-old three tier system.

However, it should again be noted that when it suits them, wholesalers are happy to try to reform the three-tier system via lawsuits.

Make no mistake. The Wine and Spirit Wholesalers of America, the National Beer Wholesalers of America and their members across the country are not the defenders of states and their alcohol laws. They are demonstrably the reason why all the lawsuits have been filed and why the states have been forced to spend citizens tax dollars defending them.

-For recent commentary on H.R. 5034 see:

1. The WSWA Wants to Revoke Your Right to Freely Purchase the Wines You Want
The Wine Cellar Insider

2. HR 5034: An Attempt to Legalize State Discrimination in Alcohol Markets
Newcomb Law Group

3. Bill Uncorks Brawl Over Interstate Sale of Wine
Los Angeles Times



2 Responses

  1. Wineguy999 - August 7, 2010

    The Emperor has no clothes. The (mostly) plonk that the big boys make their long green off of is safe. People aren’t lining up to have KJ shipped in. I’m sure it’s safe to say that at least 60% of direct shipping is of wines that aren’t distributed locally anyway. There’s the bitter irony.

  2. Jeff - August 8, 2010

    On the news in Chicago they had a very short piece about the bill.
    Emphasis on very short. Overall it was fairly pro-consumer/producer though.

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