California winemakers stand to gain a lot if the U.S. Supreme
Court sides with them in three appeal cases challenging how
individual states regulate their alcohol sales involving libations
made in other states.
California winemakers stand to gain a lot if the U.S. Supreme Court sides with them in three appeal cases challenging how individual states regulate their alcohol sales involving libations made in other states.
Approximately 22 states, including Florida and New York, only allow alcohol produced out of state to be sold by distributors to retail outlets. They also prevent out-of-state alcohol sales directly to the consumer over the phone and Internet. The practice has forced many local, smaller wineries to give up on reaching consumers in other states, because the interstate laws vary from place to place and, as one winemaker said, it is sometimes easier to send wine to other countries than to other states.
It’s not an argument to challenge individual states’ right to regulate alcohol sales – only a plea that both in-state and out-of-state producers are treated the same by individual state laws. When prohibition was ended, states’ right to regulate alcohol was included in the 21st Amendment as a compromise to get the states on board for ratification. It was in no way ever intended to impede the federal government’s control over interstate commerce.
However, that is exactly what some of these protectionist systems do. They make it impossible for local wineries, like the ones find throughout California, to sell their wines in other states including the large, wine-loving Florida and New York markets. Meanwhile, a shrinking number of distributors are reaping the benefits of a controlled market monopoly through doing little more than transporting the product from one place to another.
Caught in the middle of the struggle are small producers like many of the local wineries found throughout our region. The current system of regulation by these 22 states really only protects the middleman – the distributors who are the only ones allowed to sell wine in these states. Ultimately, that hurts the consumer who can only choose the brand carried by distributors in their states and they must also pay the distributor’s mark-up.
According to the Benson’s advocacy group, the number of wines available in the last 40 years has increased from 300 wineries to over 3,000, but the largest 50 wineries account for 87 percent of the country’s production.
During that same time span, the number of wholesale distributors has shrunk from 11,000 to about 500.
With the nation’s economy still in turmoil, individual states should not build artificial trade barriers around themselves to protect their in-state businesses and distributors. In this day and age, consumers should be given the freedom of choice and every opportunity to buy products made in the U.S.
No one is suggesting states relinquish their ability to create their own alcohol laws, only that in-state and out-of-state producers are treated the same. The U.S. Supreme Court is expected to issue its ruling on the appeals by June, hopefully it will give local wineries a reason to raise a glass and celebrate.
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