The Fat and Lazy Wine Distributor Full-Employment Act of 2011.
Hypocrisy of Opposition to Direct Shipping
Inter-state shipping of wine to consumers, usually called ‘direct shipping,’ is an enormous controversy in this Age of the Internet, and has been a simmering controversy for thirty years. The latest effort is a bill (HR 5034) introduced to Congress by William Delahunt (D-MA) with 139 co-sponsors. Judicial Committee hearings begin 29 September 2010. Eventually the matter will be settled by the Supreme Court. Meanwhile numerous politicians collect campaign donations from big wholesalers in many states by carrying water for them in the form of legislation against Direct Shipping. “Inter-state shipping of alcohol facilitates under-age drinking,” is their common refrain. What a crock! Air-freight shippers require an adult signature for alcohol deliveries. I’m not sure gun shipments can say the same. How many sixteen-year-olds do you know who buy alcohol by paying $30 or more for a bottle of wine, and then waiting a week or two for delivery?
U.S. Wine Laws
Let us start with the legal issue. When Prohibition ended in 1933, Congress granted to the individual states a right to regulate sale of alcohol within each of their borders. That led to a bewildering welter of different laws. Some states became ‘Control states,’ much like the Canadian provinces, where sale of alcohol was restricted to state-run stores. Pennsylvania would be an example today. The attraction is obvious: state stores generate a huge amount of income for the government. And state stores don’t have to be run by the governor’s idiot nephew. In the province of Ontario, Canada (read Toronto), the L.C.B.O. has some of the most knowledgeable wine people in the world serving a well-developed community of connoisseurs. Eastern Pennsylvania (read Bucks County and Philadelphia) by contrast, has turned the wine buying public into commuters. Some of the best retail wine stores in the world have operated for decades just across the Delaware River in various hamlets of New Jersey.
Why Direct Shipping Shouldn’t Threaten Anybody
Throughout this quagmire of different regulations and practices, one general principle is dominant, the Three-Tiered Distribution System (hereinafter ‘TTDS’). Producer (or Importer) pays a Federal excise tax upon sale of the product to an in-state Distributor (sometimes called Wholesaler). That’s tier #1. Then the Distributor pays a State excise tax upon sale of the product to a Retailer (or Restaurateur). That’s tier #2. Finally the Retailer pays a sales tax upon sale of the product to the Consumer. All three tiers pay various licensing fees.
Further Info on HR 5034
For more information on the cynical HR 5034, now pending before the U.S. Congress, see Stop HR 5034 on Facebook. Or view the Joint Letter sent recently to Congress from California’s Wine Institute, the U.S. Brewers, and the Distilled Spirits Council.