Stop H.R. 5034 and a New Dark Age for Wine Consumers and Retailers


The very recent introduction of H.R. 5034 into the House of Representatives is no less a bad dream for wine drinkers and retailers than a resurrection of the Berlin Wall would be for East Germans or a rekindling of Mao’s Cultural Revolution might represent for China’s citizens.  The bill essentially awards blanket validity to State laws, without insisting on the State to maintain responsibility for proving the absence of potentially less restrictive, alternative solutions than an otherwise more discriminatory or restrictive piece of legislation.  All the burden of proof is shifted to a challenger of such restrictive laws.  While it is unclear whether this bill will make it out of committee to a full vote (Tyler Colman thinks there is a strong chance) ,  or whether companion legislation will appear in the Senate, it must be stopped in its tracks and I will explain why in a moment.  You can easily help in two ways by (1) writing to your Senators and House Representatives by using this really simple letter writing software that Free the Grapes hosts here and (2) by sending a contribution to Tom Wark who runs the Specialty Wine Retailers Association.

Now, here is why it is important to me and to you.  I live in Massachusetts.   There are some progressive things about  living here like same sex marriage, mandatory health insurance, and an ability to elect a Republican Senator under pressure.  There are also a few really troublesome aspects of residency including cobwebbed cultural overtones dating back to the Pilgrims, suffocating tax laws, and restrictive interstate alcohol commerce regulation.

I can not buy small production wines that are not inventoried by the tightly controlled and monopolistic liquor distribution system in Massachusetts.  Many small out-of-state wineries rely on their mailing lists and direct-to-consumer channel for moving lots of wine.  Consumers in my state, and in a handful of other states, can not participate and there are no legal ways to get the wine delivered to our doors!  While there is a hint of recognition in the bill for out-of-state “producers”, with guns blazing at out-of-state sellers, the passage of H.R. 5034 threatens to open up restrictions like this in more states since the states will hold all the cards despite Granholm v. Heald’s progress towards equal rights for out-of-state producers.

Where there is a will there is a way, and there are several high-cost, “loophole” shipping alternatives like All Ways Cool that will pick up your order from the winery in California or Washington or wherever, warehouse it and consolidate it with future orders, and charge  you a handsome shipping and handling cost to get it to your door, often representing a 25-50% per-bottle cost premium.  Another option for recovering your consumer freedom is shipping to friends and family in other states and have them re-ship to you, also adding cost, risk of wine damage, and paradoxically, resulting in lost tax revenue to Massachusetts.

The restrictions on out-of-state producers are only half the problem which spreads from there to out-of-state retailers.  There are some retailers that take risks and ship into our state.  But, serious players refrain.  Along with hundreds of regular eye candy email wine promotions, I also get NY retailer Daniel Posner‘s frequent mailings on values for really amazing wine that is often not distributed in MA, and just last month I asked if he shipped here.  He does not and will not, understandably afraid of the risks, and I am now cut off to him as a customer.  A few months ago I tasted a really fine desert wine from Sicily while attending a NY wine event.  Upon returning home, I called three MA retailers I do business with but none could find a distribution source in the state.  So, my choices are to “smuggle” some into the “free State of Massachusetts” or go without.

This ongoing violation of rights, including the introduction of H.R. 5034, is fallout from the consistent effort to insure  states’ rights to manage and legislate their own sale of alcohol.   Imagine the auto industry operating like this, and the only authorized points of purchase were auto lots supplied by state-licensed auto wholesalers that only brought auto brands into the state with favorable economics for their business.  And, imagine that you could not buy Toyota or Mercedes and the only way to do that would be to shop in a neighboring state where they have an unregulated distribution system, buy it there, pay the sales tax there and not to your home state, and then register the car at an out-of-state second home, family, or friend’s address.  Granted that cars are not alcohol, but the basic violations of free consumer markets and open capitalism in this fictitious comparison are identical.

My state recently hinted at the abolishment of its lock-down on consumer choice with introduction of  House No. 317 and MA Senate No. 176, but things were slowed by delivery truck licensing hurdles and emerging opposition that is threatening the out-of-state purchase and shipping of wine, a legal product, that is enjoyed by US citizens in 37 states and a denied right to consumers in 13  states; and potentially more if H.R. 5034 passes.  You can read all about the political agenda here since MA wine blogger and local wine politics chronicler, Robert Dwyer, stays on top of this issue pretty well. The fundamental threat has also been concisely outlined in a recent communication I received from Tom Wark and the SWRA:

Most significantly, H.R. 5034 would allow states to erect discriminatory shipping laws that favor in-state over out-of-state wine shippers without the burden imposed by the 2005 Granholm v. Heald Supreme Court decision of showing that there were no other less discriminatory ways of achieving the states goals of temperance, an orderly market, or tax collection.

In essence, H.R. 5034 overturns the Granholm v. Heald decisions and makes it nearly impossible to successfully challenge discriminatory legislation at the state level.

Basically, if a State wants to restrict out of state wine shipments directly to its consumers, H.R. 5034 would smooth the way.   It would serve to further lock down states that are already living with Dark Age restrictions, like my home state, and would open things up for other states to deprive consumers at the behest of large political contributors with a stake in the distribution and wholesale business. This bill is being supported by the National Beer Wholesaler’s Association:

“It’s encouraging that Congress has taken an interest in addressing issues related to alcohol deregulation and the problems resulting from continuing litigation against the states,” said National Beer Wholesalers Association President Craig Purser.

and the Wine & Spirits Wholesalers Association:

“WSWA applauds Representative Bill Delahunt (D-Mass.) for sponsoring, and Mike Quigley (D-Ill.), Howard Coble (R-N.C.) and Jason Chaffetz (R-Utah) for co-sponsoring, H.R. 5034 which seeks to reaffirm and protect the primary authority of the states under the 21st Amendment to the Constitution to regulate alcoholic beverages, and which recognizes that alcohol is different from other consumer products – and, as such, should be treated differently.

Any surprise?  To help stop this flagrant and bold move by the wholesalers that will benefit financially from the passage of H.R. 5034, at the expense of consumer freedom and open markets, write to  your state representatives today, support Tom Wark’s efforts, and join the more than 7,000 people here at Facebook that are taking a stand to keep wine available to those that want it.