H.R. 5034: The Lies, The Facts, The Fictions With so much at stake for America's alcohol wholesalers and their protected monopoly status that props up unearned profits, it's no surprise they would swing for the fences with all their state-granted political power and attempt to pass H.R. 5034 . This bill, currently in Congress, would give wholesaler lobbyists the means to turn back the clock on consumer access to wine, lead to the passage of laws that override federal regulations on alcohol, kill jobs and business that focus on artisan production of wine, beer and spirits, punish and dismantle small specialty wine retailers that serve the consumers that wholesalers won't and override the critical Constitutional principle of a single American economic union...all for the sake of protecting wholesaler profits by giving them unprecedented control and influence over the entire American alcohol industry. But what is truly remarkable (and likely a result of the wholesalers' hubris stemming from 75 years of being granted government welfare) is their willingness to misrepresent facts, ignore the truth, and mislead in their defense of H.R. 5034. The recently launched www.hr5034.org website is the creation of the National Beer Wholesalers Association and and appears to be the repository all the misrepresentation, ignorance and misleading ideas supporters of H.R. 5034 could possibly muster. For the sake of context and setting the record straight, this post address many of the misrepresentations and misleading claims made at the middlemen's disingenuous new website. On their homepage ( http://www.hr5034.org/ ) "Today’s system balances competition with public safety to ensure that consumers can enjoy alcohol without suffering the negative effects of an unregulated marketplace" Is there really any competition when the state-based regulatory system the wholesalers love so much require that producers of alcohol use a wholesaler to bring their goods to market, meaning that without use of a wholesaler a producer cannot enter a state's market? It also means that wholesalers get to decide what consumers drink, not consumers. "Unfortunately the effective state-based regulatory system in the U.S. is under attack. Over the past 10 years,more than 25 states have faced challenges in federal courts to their authority to regulate alcohol and their ability to maintain a licensed system of alcohol controls." The only challenges to the state-based alcohol regulatory system are those that discriminate against interstate commerce for protectionist reasons. Even in the wake of successful suits that challenged the protectionist laws that wholesalers originally pushed, the state retained extraordinarily broad authority to maintain a robust system of alcohol controls. ON THE "LEARN MORE" PAGE ( http://www.hr5034.org/learn-more ) "Litigation against the states brought by those wishing to deregulate alcohol for their own economic interests is of great concern to state alcohol regulators, state attorneys general, public health advocates and many others."When the economic interests of producers, retailers and consumers are horsewhipped by states doing the bidding of wholesales who receive more government protection and welfare from the state than any other industry in america, you might expect them to fight back. As for those that have "concern", let's recall that it's only a tiny fraction of state alcohol regulators, that there is no formal support from state attorneys general, only a mere handful of public health advocates, a selection of recipients of campaign contributions from wholesalers and wholesalers themselves that support H.R. 5034 . "According to a recent national poll conducted by the Center for Alcohol Policy, 79% of respondents support the right of individual states to set their own laws and regulations surrounding the sale of alcohol and 87% agree that state and local laws regarding alcohol regulations should be decided by lawmakers and citizens, not by judges." I'm shocked, shocked i say, that the "center for alcohol policy" is an arm of the national beer wholesalers association and that it would conduct a poll that finds results supporting those that funded the poll. Does it get any more illegitimate? On the "Fact v. Fiction page ( http://www.hr5034.org/fact-vs-fiction ) "FACT: This bill does not address direct shipping or any specific state alcohol law. It does not preempt a state law that allows direct shipping. It does not mandate a direct shipping law where there currently is not one. The bill does PROTECT a state’s wine shipping law if someone were to challenge it in court by providing the shipping law with the same presumption of validity granted other state alcohol laws."Disingenuous in the extreme. And what's worse, the wholesalers knew this when they wrote this. H.R. 5034 gives states the ability to pass laws unchallengeable in court that would discriminate against out-of-state wine shippers. And we know such laws would be introduced into various states since wholesalers have seen to it that such laws have been introduced into state legislatures for the past 20 years. In fact, H.R. 5034 would allow states to pass laws that make consumers receipt of a wine by in-state shippers legal while making receipt of a wine by out-of-state shippers punishable to a greater degree than rape, home invasion or selling cocaine to children. "Fact: Protection of a state’s power to regulate alcohol is not an “industry food fight.” "food fight" may be the wrong word. Better to call the introduction of H.R. 5034 what it is: an attack on the entire alcohol industry and consumers for the sake of protecting wholesaler profits. It's no coincidence that brewers large and small, wineries, spirit producers and importers, retailers, wine education organizations, wine consumers and free trade organizations all oppose H.R. 5034. "This bill does not amend or alter the Federal Alcohol Administration Act (FAA Act) which provides federal guidelines in many of these areas" No it doesn't "amend" the faa act. It overrides it entirely. To quote from H.R. 5034: "not withstanding that the state or territorial law may burden interstate commerce or an act of congress, the state law shall be upheld..." This claim by the wholesalers that H.R. 5034 "does not amend" federal regulations on alcohol is a straight up misrepresentation. It's like saying "i didn't kick the dog, but rather his ribs fell on to my boot". "It is the intent of this language to make clear the congressional support for the holding in Granholm-prohibiting state laws that allow an in-state winery to do something a similarly situated out-of-state winery cannot do. Language that bars facial discrimination is included in the bill to codify this prohibition" I have great faith in the wholesalers' ability to mislead. But this goes beyond even my expectation. The intent of H.R. 5034 is precisely to overturn the granholm v. Heald supreme court decision that did away with protectionist state alcohol laws. More importantly, the very language of H.R. 5034 gives states the explicit right to discriminate against out-of-state wine shippers. All the state needs to do is offer the feeblest of justifications. Read for yourself: "state or territorial regulations may not facially discriminate, without justification, against out-of-state producers of alcoholic beverages in favor of in-state producers." one of those "justifications", the bill states, is maintenance of the "structure of the state alcoholic beverage distribution system." in other words, discrimination is ok as long as the discrimination is written into the state's alcohol beverage distribution laws. Furthermore, note that wine retailers are not even covered by this duplicitous language on "justification". The state needs no justification to discriminate against out-of-state retailers. "Over half the states have been sued challenging their alcohol laws. The lawsuits have attacked items such as commonsense safeguards that require a face-to-face transaction (needed for I.D. checks) to buy alcohol" In fact, face-to-face transactions are not needed for I.D checks. We know this because states have written laws that have gone unchallenged that require I.D. Checks to be made at the point of delivery of the wine. "Unelected judges should not set alcohol policy; this responsibility rightly rests with individual state legislatures, as guaranteed under the 21st Amendment to the U.S. Constitution." Judges never have set policy. State legislatures always have. This is the big lie the wholesalers tell. Judges merely tell the state when they have reached beyond what the 21st Amendment allows. After that, the state legislatures, in every state where litigation has affected badly crafted laws, went about legislating a fix. Surely the wholesalers don't mean to say that state alcohol laws should in no way be required to abide by the principles in the u.S. Constitution. What next, will the wholesalers argue the 21st amendment give the states the right to prohibit women from buying alcohol? Will they argue that state laws banning African-Americans from being distributors is legal under the 21st Amendment? "State laws that raise concerns can and should be addressed in the state legislature." Lucky for Americans it wasn't this attitude that ruled the day when jim crow laws were in place. The wholesalers would have argued that the racist "separate but equal" philosophy had no business being litigated and that we should wait for the legislatures that enacted the racist laws to overturn them with new laws. We have courts precisely to adjudicate concerns with the fairness and constitutionality of state laws. But of course, wholesalers know this. They to have brought states to court over alcohol distribution laws they didn't think were fair or constitutional. It appears that wholesalers don't like the courts involved when the decision don't go their way. The hypocrisy, misleading notions and disinformation being featured at the wholesalers website supporting H.R. 5034 is staggering. However, they do the right thing when they invite readers to sign up for emails that will deliver "the latest developments". I urge all readers to sign up for those emails . In the mean time, please checkout the website that spurred the wholesalers to launch their own: http://www.stophr5034.org. It is published by the Specialty Wine Retailers Association and upon reading through it, you should find yourself feeling much cleaner and less soiled than after wading through the misrepresentations of the new wholesaler-sponsored website on H.R. 5034. > Comments Scott said... Too bad there's not a way to shout louder than all caps. Maybe try more exclamation points.... July 16, 2010 at 06:13 AM Judd Wallenbrock said... Tom -- thanks so much for keeping us all up to date and informed regarding this silly...but very real threat...not only to our industry but to our basic rights as consumers. July 16, 2010 at 08:14 AM Tom Wark said... Scott: Thanks for the tips. Judd: my pleasure! July 16, 2010 at 09:42 AM Bill Sprow said... Get rid of thewe beer and wine distributor associations, ie make them illegal, and you would really be showing a free market work in progress. If I as a resident of Ohio want to purchase a bottle of Californis wine on line and have it shipped to me in Ohio without interference from anyone else. July 16, 2010 at 10:41 AM Austin SEO said... Interesting!, Wholesalers issue.Thanks for sharing your link. I enjoyed reading your post. July 17, 2010 at 12:35 PM JohnLopresti said... Thought I would post a link with a cute title related to the post. NB: the article is in a trade journal available by online subscription $ only. http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202463630848&Alcohol_bill_means_happy_hour_for_lobbyists July 19, 2010 at 08:53 AM Steve said... Tom: Thanks for this passionate polemic, a foreceful and sorely needed rebuttal to a bogus bill. July 19, 2010 at 09:10 AM Tom said... Seems like some old geezers are filling their pockets with some major greenbacks getting this bill passed through. Its a blatant anti-competition bill that will crush the uniqness of the alchohol/wine industry, kinda like Wal Mart moving into a town and crushing the boutique shops. Since I live in Texas Ill have to resort to buying O'Douls and Welchs grape juice after the Baptists take control of the law in the State legislature. Dont even get me started on the still enacted Blue Laws of this state (cant buy liqour on Sundays)... July 19, 2010 at 09:12 AM r said... Wow! I am speechless. I will not even waste my time rebutting you point by point because you do not have a clue in many instances what you are talking about. You do have a few valid points but they too may be predicated on false premise, I do not claim to be the all knowing expert. By using the same sensational BS Tactics you rail against, instead of a balanced and fair assessment you render the entirety of your rant incredible. In short the wine has to go from point A to B in some way. Do you work for FedEx? It sounds like you would prefer you government welfare to go there instead? Wholesalers compete against each other... perhaps you forgot. They do not operate monopolies. In Oregon for instance there are about 60 wholesalers competing for partnerships on both the supply and the demand side, hardly the ideal monopoly situation. In most cases where state laws allow shipping you can get a bottle of wine shipped from the winery of your choice. A very important point to remember: While large "commercial wineries" (Factory wine producers) may have the ability to market their own wine, smaller growers whom you seem to be so concerned about do not have the proper infrastructure to allow wine sales on line in many cases, let alone having their own transportation infrastructure. They are experts at farming and producing wine, which is what they likely prefer to do in most cases. July 27, 2010 at 09:08 PM alean said... wine facts are really good http://www.facts-about-wine.info/ arunrob@gmail.com October 13, 2010 at 12:39 PM crystal ortizz said... Quite informative blog.My friends would definitely appreciate knowing these facts. As being a student such blogs help me a lot.It is rather interesting for me to read this blog. Thanks for it. I like such topics and anything that is connected to this matter. I definitely want to read more on that blog soon. December 06, 2010 at 05:11 AM dissertation writing service said... This is my Good luck that I found your post which is according to my search and topic, I think you are a great blogger, thanks for helping me outta my problem.. December 07, 2010 at 12:22 AM