Monopoly Game

A tough new bill would give wholesalers a corner on interstate-wine shipping
Illustration by Joseph Daniel Fiedler

A little déjà vu? The national beer- and liquor-wholesalers lobby in Washington is pressing a new law through Congress that would, in effect, once again close down consumer purchasing and shipping of wine between states via telephone or the Internet.

That’s what we saw a few years ago in the Michigan case on interstate-wine shipping that went to the U.S. Supreme Court. The new bill is the same old Michigan canard, but on the national level. This one, however, is even tougher.

The new bill had its first committee hearing in late September. It has elicited significant blog and Internet comment and traffic and no shortage of outrage. Once again, the wine industry and its retailers find themselves facing off against beer and liquor wholesalers.

On a wine website, Tom Wark, head of the Specialty Wine Retailers Association, described the new bill as “the most onerous consumer wine law since the passage of the 18th Amendment and the onset of Prohibition.”

In the Michigan case, which was fought by wholesalers, the existing law was successfully challenged and ended up before the U.S. Supreme Court. The state was forced to pass a new law, which was highly restrictive and, once again, written to benefit the Michigan wholesalers. But at least it has some minimal shipping allowances for consumers.

Many of us thought it would just end there. Wrong.

House bill HR 5034, also known as the Comprehensive Alcohol Regulatory Effectiveness (CARE) Act of 2010, is sponsored by Massachusetts Rep. Bill Delahunt. It purports to “support state-based alcohol regulation, to clarify evidentiary rules for alcohol matters.” In other words, increase what the states can do, which would be fine except for what else it does.

Other language in the bill allows states to sidestep the Commerce Clause of the U.S. Constitution and, in effect, re-establishes the old post-Prohibition era system of alcohol control, sale, and distribution, the so-called three-tiered system at the heart of the Michigan case, and a similar one in New York. Many states have done away with that system.

Why do the wholesalers want this? Because they’ve been weakened by several cases around the country that opened shipping to the public.

That old system, its laws, and the government agency that runs it amount to a de facto monopoly for wholesalers.

There’s a wonderful scene in the first episode of HBO’s Boardwalk Empire, in which all of the characters, gangsters, and their molls are gathered at one of those 1930s Atlantic City nightclubs of the  sort that Fred Astaire and Ginger Rogers popularized. They’re there to celebrate the arrival of Prohibition at midnight because, as soon as it hits, they’ll have a monopoly on booze, and nightclubs stand to make millions.

The clock ticks toward midnight and, as it strikes, the band plays, people cheer, champagne corks fly, and Prohibition is here! One of the lead characters raises his glass and toasts — I’m paraphrasing here — to “those wonderful stupid  [expletive] guys in Washington.”

Call this one Boardwalk II.

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