Dear Supreme Court: Please End All Inter-State Wine Shipping
It appears that the newish president and CEO of the Wine & Spirit Wholesalers of America (WSWA) Michelle Korsmo, has read the playbook and ingested the kool-aid. In a recent letter to the editor of the Washington Post, Ms. Korsmo explains that “Sometimes, local residents would like the party selling liquor to have a vested interest in the local community to ensure regulatory oversight and responsible sales. And we believe that a state’s residents have every right, through the legislative process, to express this.”
The imbiber of kool-aid is attempting to piggyback on the Washington Posts own dubious interpretation of the meaning of recent oral arguments at the Supreme Court in the case of Blair v Tennessee. In its opinion piece, the Post gets the motivations behind the case incorrect as well as incorrectly poo-poos the theory that the 21st Amendment did not overrule that other part of the constitution at issue in this important case: The Commerce Clause.
But back to the Kool-aid drinker. What’s important to note is that it is the view of Ms. Korsmo and the WSWA that a state is well within its rights when it passes legislation meant entirely to protect in-state businesses from competition and to discriminate against out-of-state business. This doesn’t sound like what Ms. Korsmo is saying in her letter to the editor, but trust me, that’s exactly what she means. In fact, WSWA’s amicus brief in the Blair v Tennessee Supreme Court case made the argument that the court ought to REVERSE its 2005 decision in Granholm v Heald that did away with individual state laws that barred out-of-state wineries from shipping to consumers while allowing their in-state wineries to ship:
“As the circuit split addressed in this case illustrates, Granholm and Bacchus have created confusion as to the interplay between the Twenty-first Amendment and the Commerce Clause. Should the Court be inclined to reconsider those decisions, Justice Brandeis’s unanimous opinion in Young’s Market provides not only a more administrable rule for lower courts to apply but also the best evidence of the original meaning of Section 2.”
Let me translate that: ‘DEAR SUPREME COURT: WE’D LIKE YOU TO PUT AN END TO ALL DIRECT TO CONSUMER SHIPPING.”
In her letter to the Washington Post, Ms. Korsmo would have us all believe that it is the “state’s residents” who really, really think it’s important that their laws discriminate against interstate commerce. But that’s not the case at all and she knows this. The entire raison d’etre of WSWA is to protect its middleman members from any and all competition by gaming a regulatory system to their benefit. And whenever WSWA officials speak outside the safe confines of press releases or letters to the editor, this fact emerges fairly quickly. It’s the reason why you almost NEVER see folks like Ms. Korsmo actually agree to take questions from anyone other than her PR Manager. You never see WSWA folks engage in debate. The reason is simple. They always end up looking like craven rent seekers. I remember being on a panel with a member of WSWA talking about the three-tier system at an event way back in 2010. It was ugly. REALLY ugly.
Michelle Korsmo will sing only what her sponsors play, so she is excused.
Your Brief of 81 Wine Consumers is so full of inexcusable crazy-ass statements that we’re all shocked.
Consumers can’t buy from retailers in other states because retailers are required to be residents was the craziest-ass statement ever!
Asking Supreme Court to allow a retailer obtain 50 licenses to sell booze to consumers in his own State is just a top masterpiece. (Michelle Korsmo and WSWA nervously smoke on the sidelines)
NOT the Granholm and Bacchus have created confusion, but complete incompetence of certain authors and publicists, including these and those whom authors of Brief of 81 Wine Consumers refer to.
To make Michelle Korsmo shut up, first her sponsors must be kicked out from lobby. Authors of Brief of 81 Wine Consumers must burn with shame after writing such garbage.
Faugh!
When prohibition ended, they just used the cartels who were already experts in distributing alcohol illegally, since they had the most experience. All state alcohol distributors trace back to these roots, there is old money, power, and influence there, and they will fight tooth and nail to keep it. And when there is money and power they will always win. You can express the truth online that this is nothing but glorified legal racketeering all you want, but nothing will be done about it. Retailers who don’t pay the cartels lose. Consumers lose. They only way they can really be hurt is if enough consumers simply boycott alcohol until direct shipping is allowed. And that’s never going to happen.
Although the content is interesting the reporting (and name calling) really makes me not to want to read any more of your writings.
Stan, you are correct that some states deferred to the existing cartels. But other states were interested in having a true alternative to the mafia. To entice and induce otherwise lawful but scared businesses to challenge the mafia, those states gave strong legal incentives to work, including the ability to franchise the contractual relations. I specialize in representing wineries and vineyards, and when I tell other lawyers about franchise laws, their jaws hit the floor. Decades later, it’s a mess.
I doubt that Michelle Korsmo or anyone from WSWA will read this blog, but one of the original meanings of the Section 2 was not to allow these cartels (WSWA patrons) to retail (sell to consumers).
There is nothing dubious in WP interpretation either. Granholm decision was clear enough that States can prohibit sales to consumers from unauthorized to retail industry members inside of their borders. There will be no discrimination against similarly situated out-or-state businesses.
For example if law in Indiana prohibits their wholesalers to sell at retail then there is no discrimination against California wine wholesalers whom law in California allows to retail.
There is nothing wrong if a State prohibits its in-state producers to retail, because producers’ solely business is to produce. Allowing producers to retail creates the precedent where retailers will want to produce because they can’t find wholesale distributor for product they want to sell, and so on…
I always thought the way through this mess was to take a page from the Real Estate industry- give wholesalers in each state the 1st right of refusal to sell any product in that state. If no existing wholesaler chooses to sell an item or brand, then the producer or importer would be allowed to sell direct to retail, restaurants, or consumers.
If that occured, the power would then be in the hands of the producer/importer to assign a wholesaler at their discretion, if desired, at a future time.
That would give full market access to the small, rare items consumers are often searching for (but can’t find), provide a pathway to build partnerships with retail and restaurants that “get it”, and still provide a reason for wholesalers to exist (handling the larger volume items that they make more money on anyway, delivering to every account).
I have ideas on how it could be executed well, but that’s the basis of a true solution.
JP,
Giving wholesalers the right of first refusal would likely lead to the SGWS and RNDC’s of the world taking on everything offered in order to keep the brands away from their competitors and keeping the brand from direct shipping. After a while you end up with a bunch of pissed off suppliers because the only attention their brands receive is when the wholesaler performs their monthly inventory. Yes, the wholesalers are delivering the high volume brands to all of their customers, but they are also following the edicts of the powerful suppliers who “turn on the lights”. The small producers, if they turn on any lights at all, turn on a nightlight in a bathroom somewhere in the bowels of the warehouse.
“21st Amendment, Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”
It says “in violation of the laws thereof”, not, “in violation in laws thereof, with the exception of the commerce clause.”
I think liquor should be treated like Cheerios or anything else, but the constitution says otherwise. The constitution isn’t what we want it to be. It is what it is. The 21st Amendment was written long after the commerce clause. It was poorly written, with the influence of hypocritical 1930’s senators who “never touched the stuff” as they would drink like fishes. But in the end, trying to reinterpret what it explicitly says by dancing around terminology puts sentiment over words. It makes the entire constitution a meaningless charade.
Jack,
Interesting perspective. You are essentially saying that the 21st Amendment allows states to pass and protect any law pertaining to alcohol. So let’s test your theory;
Could a state pass a law saying, “Retail Wine Store Permits in (name the state) may not be issued to women or African Americans”.
Would that pass muster under the 21st Amerndment in your view?
And if not, where is the line drawn in terms of the kinds of state laws that the 21st Amendment immunizes from constitutional scrutiny?
Tom…
Tom,
I think if your argument wasn’t specious it would be a good one. The interstate commerce clause has been broadly interpreted. Too broad in many cases (see Wickard vs Filburn, FDR era). I personally think that CA interrupts interstate commerce with its own diesel emissions requirements, etc.
The argument isn’t whether a black woman can hold a permit. Its’ whether states have sole discretion over their alcohol related laws, which the 21st Amendment specifically addresses. And yes, being a late addition to the constitution it overrides interstate commerce provisions. It couldn’t have been passed as expeditiously as it was in the 30’s without that provision.
Is it terrible that Boss Hogg in Hazzard County has such a say in alcohol law? Yes it is. Can we take mushrooms and hallucinate a reinterpretation of the 21st Amendment? Yes we can, but in the end it’s a hallucination.
In the end I think we can blame those meddling old Victorian battle axes who supported the Volstead Act to begin with. I think a few of them are still alive in Marin County nursing homes.
Jack,
All the Section 2 of 21st Amendment reads between the lines:
The transportation or importation into any State, Territory, or Possession of the United States for delivery or use therein of intoxicating liquors, without violation of the laws thereof, is hereby permitted.
Nothing else you can pull out from this plain English text which from 1913 to 2000 did not even have any enforcement at all.