Illinois Wine Distributors Want to Throw Wine Retailers in Jail

Posted by Tom Wark on Jun 2, 2015

On February 18, in front of the Chairman and Commissioners of  Illinois Liquor Control Commission (ILCC), as well as in front of the ILCC’s Acting Director, attorney Sam Vinson representing the Wine & Spirit Distributors of Illinois testified that “incarceration of one or two illegal (wine) shippers would send a strong message to other shippers that Illinois is serious about stopping illegal shipments.”

Yes, a wholesaler attorney wants to see out-of-state wine shippers (wineries, retailers and consumes who ship to themselves) thrown in jail for the crime of obtaining have shipped into the state wines that the wholesalers could not provide to local consumers.

I’m to too concerned about this. It wouldn’t be the first time a wholesaler representative said something bat shit stupid.

No, what I’m more interested in is a claim the same attorney made a little earlier in his testimony. Specifically that, “an average of $50 in state tax revenue is lost for every shipment of alcohol.”

This claim seems to assume one of two things…or possibly both.

Assumption #1. Those consumers that procure wine outside the state and arrange to have it shipped to them in Illinois could have purchased the same wines locally.  But instead they chose to buy outside the state and wait many days for the wine to arrive, risk damage to the wine while in transit, and pay the cost of shipping.

As I said before, Wholesalers say many bat shit crazy things. No one buys wine out-of-state, pays the often huge shipping costs, risks damage to the wine while in transit and waits days for the wine if they could just purchase the wine at their local wine shop. Here’s what Mr. Vinson is not admitting. The reason people buy wine out-of-state and either have it shipped to them or arrange the shipping themselves is because wholesalers are unable or unwilling to make available to the market the wines consumers want.

Assumption #2: Deterred from obtaining the wine they can’t find in state from out-of-state sources, wine consumers will spend the same amount they planned to spend out-of-state on entirely different wine in state. (In other words, wine consumers just have money burning a whole in their pocket.)

This must be what the incarceration-crazy lawyer assumes when he believes that money spent out-of-state would be spent in state if out-of-state sources were cut off. It’s a fairly interesting economic theory. He is arguing that high-end wine buyers (and that is who buys wine from out-of-state sources) will spend their money on wines that are not of their first choice, since we know they went out-of-state to buy because wholesalers did not provide the wines they want to in state sources. More importantly, it’s the wholesalers telling the best wine consumers they have, “you’ll buy the wines we want you to buy and you’ll like it.”

There is a very, very simple solution to the perceived problem of the state not getting in on the tax revenue they think they are losing when consumers buy from out-of-state wine retailers: Simply license out-of-state wine retailers the same way they state licenses out-of-state wineries. Out of state retailers would be happy to pay the state sales tax under a licensing scheme just like out-of-state wineries do now.

The state of Illinois could have done this back in 2007 when they passed their direct shipping law that stripped consumers of their long-held right to buy from both out-of-state wineries an retailers and instead only licensed out-of-state wineries to ship into the state.

In fact, I sat in front of lawmakers in Springfield, Illinois back then and told them they should support the amendment to include out-of-state retailers among those that Illinois consumers could purchase wine from. I told them if they don’t, consumers, not able to get what they want in state or from licensed wineries, will happily go to out-of-state sources to purchase the wines they want that are not available in-state.

The amendment to allow consumers to also buy from out-of-state retailers didn’t pass. In fact, just days before the vote on the amendment, anonymous faxes arrive in every Illinois lawmaker’s office asking why the sponsor of the amendment wanted Illinois’ children to get drunk and kill themselves on easily imported wine. The delivery of anonymous communications to Illinois lawmakers is illegal. But gosh, we don’t know who sent them. I wonder if the Wine & Spirit Distributors of Illinois know who sent them.

Now, of course, the Wine & Spirit Distributors of Illinois want to put out-of-state wine store owners in their jails. They want to lock them up and throw away the key. I wonder if they’d support a change in the law that would assure the state got its $50 in taxes per shipment by amending the direct shipping law to allow the consumers they are not serving to get the wine they want from licensed out-of-state retailers.

I’m doubting it.

I’m doubting it because every time wholesalers like the Wine & Spirit Distributors of Illinois oppose direct shipment from out-of-state retailers, they display not only how lazy they are, but how much they fear competition. They also display their disregard for the end consumer. More importantly, when they make the case that lost state tax revenue is their concern, they demonstrate their willingness to deceive members of the Illinois Liquor Control Commission.