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Tom J

The Maryland law does not allow for consumers to receive wine shipments from out of state retailers.

Is that the solution?

I see you now.

After Granholm, the vast majority of state “leveled up” and let shipping happen. Those places it didn’t happen was where there was no real local winery industry.

The same will be the case with retailers if there is ever a Granholm like result. In those states where there are retail shippers who want to stay retail shippers, you will see a leveling up, not a leveling down. For example: NY, IL, NY, CA, WA, MO, etc..

You write: “The dirty little secret of the direct shipping wars is that it’s not about you and me buying a bottle or two of wine over the Internet. It’s about retailers dealing directly with producers.”

This issue has nothing to do with the case that I and SWRA is making vis a vis. retailer shipping. You are referring to “self distribution” by wineries. It is already fairly well understood that if in-state wineries can sell direct to in-state retailers, then out of state must be able to also. We’ve had a number of federal court decisions determining this already. A retailer supreme court decision has nothing to do with this.

You write:
“Maryland is the solution to direct shipping. Lawsuits and legislation at the federal level are a waste of time.”

There would be very limited direct shipping in America without federal lawsuits, particularly Granholm. Granholm was the key that allowed most consumers to buy from domestic producers. Your recommendation that unconstitutional laws not be met with the exact tool invented to address them (federal lawsuits) makes no sense. Why not use the specific tool meant to deal with a specific problem?

On the other hand, I think your digest of my position is incomplete, indicating perhaps that I’m not as clear a writer as I had imagined. So:

I don’t believe that Mr. Wark or his organization are claiming a Constitutional right to sell wherever they want wherever they want. They claim, instead, that laws must not discriminate between in-state and out-of-state vendors. The Commerce Clause forbids that.

Here’s the problem: while the object of suing based on discrimination is to get states to treat out-of-state retailers the same as in-state retailers, the likely outcome is that states will change their laws to treat in-state retailers like out-of-state retailers. That is,rather than allowing everyone to deliver alcoholic beverages by common carrier, they will allow no one to deliver. While this may be an advance of the abstraction “justice,” from a consumer perspective it is not an improvement.

The remedy to that less-than-marvelous result is to petition state governments to liberalize shipping laws. One of my key points is that this argument ultimately ends up in the states anyway, so why don’t we quit dicking around with the Feds and just go where we’re going to end up anyway?

The next argument against me is, I think, that state governments are controlled by alcohol distributors. That’s cynical, but probably also true, at least as far as it goes. There are two other anti-open-markets constituencies as well: neo-prohibitionists and regulators. The neo-prohibitionists want alcohol to be more expensive and more difficult to get, and the regulators want an orderly and easily monitored marketplace. (And they are, according to longstanding case law, entitled to that as one of the legitimate purposes of the 21st Amendment.)

When the court rules discriminatory laws unconstitutional, that coalition of diverse interests swings into action and — hey presto! — the laws get tightened in a non-discriminatory way.

Which brings me to Maryland, my model of how direct shipping laws can be liberalized. Maryland is about to pass laws allowing direct shipping for consumers. The changes are possible because of a compromise that neutralizes the anti-shipping coalition.

The dirty little secret of the direct shipping wars is that it’s not about you and me buying a bottle or two of wine over the Internet. It’s about retailers dealing directly with producers. Once direct shipping in its absolute form is allowed, the biggest brands will deal directly with the biggest retailers, cutting out the distributors entirely. Why wouldn’t they? Walmart has huge distribution warehouses is the SF Bay area, and they could load palettes of KJ Chardonnay onto their train cars right alongside all those racks of menswear from Indonesia. Buying direct would save Walmart a bundle and give them the ability to sell the wine at a heavy discount.

The distributors hate that because it eliminates most of their revenue; the neo-prohibitionists hate it because it means Kendall-Jackson Chardonnay will be lots cheaper; the regulators hate it because it makes auditing and policing the system incredibly hard. (Harder still when thousands of retailers all over the country are suddenly selling in all 50 states.)

Maryland’s law limits the amount of alcohol an individual can direct-ship. The 18-case annual limit is more than enough for the vast majority of wine collectors and drinkers, but not enough to be a threat to distributors, neo-prohibitionists or regulators. The beer distributors are(reluctantly)in favor of the law, and other distribution lobbies are staying more-or-less on the sidelines. They don’t particularly like it, but it doesn’t threaten their business. The neo-prohibitionists don’t care because it doesn’t decrease prices. The regulators don’t mind because they continue to be able to efficiently police those areas of the alcohol trade that are the established purview of the 21st Amendment — an orderly market, collection of taxes, promotion of temperance.

Maryland is the model, and I’ll bet you right now that Mr. Wark — who is paid to represent the interests of retailers, not consumers — finds the limits on personal importation a vast, intolerable injustice, because retailers are cut out of the deal. In the abstract, he’s absolutely right. We should all be able to buy and sell whatever we want.

But I don’t live in the abstract; I live in the real world. Completely unfettered I probably wouldn’t order more than a few cases a year anyway, so I’d cut this deal in a second and celebrate the dawn of a new era of consumer choice. It isn’t perfect; political results almost never are. But it’s a huge improvement.

Maryland is the solution to direct shipping. Lawsuits and legislation at the federal level are a waste of time.

Politics is the art of the possible, and I simply do not believe that the wide-open, national market Wark envisions is possible. So maybe we ought to put our energy into something that will make the system better, even if it doesn’t make it perfect.

I am making a causal argument: some wholesalers make outsized profits because the legal environment in which they work often offers protections against competition. They then take those profits and help fund the political life of legislators who, in turn, maintain the status quo in the industry. (Take a look at a donor list here.) HR 1161 would prevent challenging these laws.

By contrast, what you suggest lacks causality: an increasing number of wine consumers will one day in the distant future change the legal structure simply by drinking more; they will then rejoice in the free flow of wine across state lines and general Bacchanalia. This omits a convincing causal argument. Do you care to flesh that out? In my argument, rising wine consumption lines the pockets of wholesalers to an ever-greater degree who then have more funds at the disposal of protecting their narrow political interest.

Have a good weekend.

Seems kinda absurd don’t ya think?

While HR 1161 may have no bearing on your life, because you live in Kentucky, please do not pass along your guided misbeliefs onto those of us that are attempting to make a difference in how wine and spirits are sold in this country.

I am not interested in fighting this battle 50+ times. It may indeed happen, but if I can cut it off at the pass, or at least attempt to, I am going to try.

My time is precious.

With all due respect, your commentary is much better served on a site for wholesalers, attempting to strip consumers their rights as wine consumers.

How many different ways can you say that you do not care about HR 1161? I think you have said so 10 times already. I get it. Dr Vino gets it. Tom Wark gets it.

The impact of this bill, if passed, will be a change in the political landscape that will require a change of political strategy. Passage of the bill would forestall much of the legal action Mr. Wark prefers — and which has not, as I’ve said, proved all that beneficial to open markets anyway. Instead, it will force advocates of open markets to work at the state level, which is what they need to do anyway.

So I continue to believe that HR 1161 is largely irrelevant. This is a battle between special interest groups that has little or no effect on the vast majority of wine consumers.

I think that you actually agree with me more.

Tom Johnson is insisting that HR 1161 is a waste of time and we should let it pass and take up 50 separate battles in the state legislature.

While HR 1161, directly does not do “anything,” it clearly has plans to make things worse for wineries, retailers AND CONSUMERS. Otherwise, why is this bill being written by the wholesalers? Why, when the Utah AG spoke before Congress, was his entire verbiage, written by the wholesalers?

If it looks like a duck, and quacks like a duck…

My 2 cents? Tom Johnson is right. Passage of HR1161 on its own wouldn’t change anything. Not immeidately, anyway. But looking beyond the bill becoming law and the predictability of what’s to follow doesn’t even require cynicism. If federal intervention at the state level can be pre-empted by natonal legislation, THEN it’ll make waging the battle to restrict interstate shipping not only easier, but more permanent and less expensive.

Why else would this group be working so hard to keep things the same?

So I’m pretty sure that Congress passing a law that reaffirms that status quo isn’t going to be a universe-changing event. It may not be good for your particular special interest, and it may be morally outrageous, but keeping things the same constitutes, in the real world, a not-particularly-big change. Again, my contention has been been that 1161 is not consequential.

It’s also important to note that the law specifically exempts direct-from-producer sales. meaning laws can’t give unfair advantage to in-state producers. I know that doesn’t help Mr. Wark’s particular special interest — retailers — but it is the direct channel of most concern to consumers.

And Daniel, that you do not see how it’s possible for people to band together to get legislation passed leads me to believe to believe that you were deprived of Schoolhouse Rock when you were young.

It’s easier to change the law at the state than the federal level. A couple of hundred activists can put an issue on the agenda. If wine lovers cared about direct shipping enough to do something about it the laws would change. But wine lovers, for all of out bitching, don’t care.

I have an acquaintance in the state legislature, and I asked her once how many letters and calls she receives about direct shipping. She explained that after nearly a decade in elected office she had never received a single letter.

Change that, and you can change the law. HR 1161 doesn’t alter that equation even a little.

Can I go home now? Wark gets paid to do this kind of thing — I’m sure he bills it under “social media outreach.” But I have to do it in my spare time, and I’m supposed to be using that to write on my own blog.