Crime and Punishment in the Wine Industry

In its fierce “determination to put an end to anti-competitive practices that hurt law-abiding businesses and prevent consumers from enjoying a wide selection of products” the TTB announced that it had levied punishment upon Napa Valley’s Modus Operandi Cellars. The crime? “Consignment sales of wine to wholesalers who were not obligated to pay for the wine until after it had been sold to retailers.”

The Punishment:

“A one day (emphasis added) suspension of its basic permit.”

I’m not suggesting that Modus Operandi should have been punished more for this violation of federal trade practices. Not at all. But I’m wondering if this ONE DAY suspension of its Federal Basic Permit (which prevents the winery from selling anything for ONE DAY) is meant to be a punishment to fit the crime or a deterrent to future violations? If it is the former, that doesn’t say much about the perceived severity of the crime. If it’s the latter, it’s not going to deter anything.

What I’m most interested in, however, is the TTB’s professed desire to “end to anti-competitive practices that…prevent consumers from enjoying a wide selection of products”. I realize that the TTB is limited by the 21st Amendment and Congressional inaction in the ways it can prevent practices that “prevent consumers from enjoying a wide selection of products.” If this weren’t the case the TTB would be constantly investigating the ways by which the three-tier system and its state mandate that producers must sell to middlemen wholesalers instead of being able to sell directly to retailers—a circumstance that does more than anything else to prevent consumers from enjoying a wide selection of products.

Moreover, the TTB is prevented from stepping in where states enact and enforce laws that prohibit out-of-state retailers from shipping wine into the state directly to consumers. Were these laws repealed, consumers would truly enjoy a “wide selection” of products.

In the end, this is all about politics, not enforcement, not safety, not taxes. Here’s what you need to remember: Any politician that says they are pro-free trade but doesn’t allow unfettered delivery of wine across state lines into their state is lying to you about their commitment to free trade. There simply is no other explanation.

And that is the real crime.


4 Responses

  1. Jacquelyn Schiewe - August 24, 2018

    Bravo, Tom

  2. Ben Brillstein - August 24, 2018

    Bravo what? Consignment sales are prohibited and it is exactly TTB’s job to control its permit holders.

    There are not known enacted or enforced state laws that in any manner regulate out-of-state retailers.

    Nether TTB or states are authorized to regulate whatever moves across state lines, nor they are authorized to regulate each other.

    Politicians are here to serve our needs. Not we are here to serve politicians.

  3. Stan Duncan - August 24, 2018

    “Politicians are here to serve our needs. Not we are here to serve politicians.”

    The ideal, but not real world.

  4. Bruce Susel - August 27, 2018

    Buy your vino from independent wineries!

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