Friday, August 6, 2010

Legal Rant: Beware the Strength of Distributors!

As a huge fan of the flourishing microbrew market, the law that's skimming through Congress right now has me more than a little worried. Effectively, lobbyists for the huge alcohol distributors across the nation are attempting to put forth a law that will allow states to ban certain types of alcohol sales. Issues raised include:

  • opening the path for banning direct-to-consumer shipments of beer/wine. Many small wineries in California rely heavily on direct shipments to survive.
  • allows distributors to have more freedom in what they carry, giving them little incentive to move small batch markets like craft beer or artisan liquor. Translation: you might not be able to drink Dogfish Head ever again, unless you move to Delaware.
  • higher prices in general: the article mentions that by having to compete with direct-to-customer prices, retail outlets have been forced to lower prices.
  • States may be able to change legal requirements for alcohol. Most disturbingly, this law makes it legal for States to re-define bourbon as something other than 51% corn aged in charred new oak barrels. Or any other alcohol, for that matter.

The three tiered system has degraded such that distributors have an amazing amount of power vs producers and retailers. Even with the combined might of lobbyists from wine, beer, and liquor makers, they match maybe half the federal dollars spent in lobbying from the Distributors' lobby. The National Beer Wholesalers Association alone made direct contributions to over a third of the bill's co-sponsors within 30 days of of them agreeing to sponsor it.

The Distributors are using the argument that the right to ban alcohol sales and increase prices should be given to the states. They also argue that direct-shipped alcohol increases the risk for minors to come into possession of alcohol. I'm uncomfortable with both of these points. First, I don't think the state of Michigan has a right to dictate what state supplies my beer. They tried once in 2005 and failed. Second, I remember being 19 with a shiny new credit card and looking at web sites offering to ship small batches of expensive beer/wine to my parents' door. It was and always will be easier for minors to procure alcohol through other methods than through direct shipments. Furthermore, banning the sale of all alcohol via direct shipments in order to limit beer to 18-21 year olds is like using a shotgun to hunt a housefly.

I don't see this bill getting much traction -- it's just in the House right now and the House passes stupid, useless bills all the time. But it's noteworthy that it's gotten as far as it has.  Keep an eye on this one, folks.  If you love your craft beer and wines, this bill is completely against your interests.


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