Three-Tier and Shamelessly Bad Arguments

bad argumentsFourteen years ago in Granholm v Heald, the Supreme Court ruled that if a state allowed their own wineries to ship wine directly to their residents, they had to allow out of state wineries to do the same. This past June in Tennessee Wine vs. Thomas, SCOTUS ruled that the same principle of non-discrimination applies to retailers. If a state allows in-state retailers to ship to that state’s residents, they must allow out-of-state retailers to do so as well.

Neither ruling mandates that in-state shipments be allowed. States can outlaw them if they want but they must treat in-state and out-of-state retailers and wineries the same. Thus, states that are out of compliance face a choice—permit shipping for everyone or harm your own wineries, retailers, and consumers by outlawing shipping for everyone. As Tom Wark, who continues to do yeoman work promoting the interests of wine consumers and wineries,  wrote yesterday:

How this happens over the next several years will largely depend on who lawmakers in various states believe are their most important constituents. Should the changes in retailer DTC shipping laws address the concerns of wholesalers and retailers who fear competition from out-of-state sources? Or should lawmakers look to the interests of consumers? Depending on who’s interests are taken most seriously will determine how the discriminatory retailer DTC laws are changed to come into compliance with the Tennessee Wine decision and the U.S. Constitution.

In other words, in states where distributors have political power, their politicians may just go ahead and prohibit all direct-to-consumer shipping.

I want to emphasize Tom’s argument against this maneuver because I think it’s key to the whole debate. When Prohibition was repealed in 1933, the legal and regulatory framework that was put in place allowed states considerable leeway in regulating the sale and distribution of alcohol. The justification for these regulations was that states needed a way of encouraging the responsible use of alcohol. Health and safety was the justification then and it continues to be the reason given by distributors for wanting states to restrict out of state direct to consumer shipping. (Their real motivations are of course a different matter). Against this “health and safety” argument Tom writes:

Here is a serious rhetorical question. In a state where consumers are able open their door, greet a FedEx driver, sign for and receive a box of wine shipped from an out-of-state winery, an in-state winery and an in-state retailer, what concern for safety or health of the community justifies barring that consumer at the door from signing for a package of wine from an out-of-state retailer?

The answer of course is that there is no such concern. The issue isn’t and never was about health and safety—it was and still is about profit. Distributors lose money when wineries and retailers can ship directly to consumers cutting out the middle man. Tom’s rhetorical question nicely focuses the utter bankruptcy of arguments supporting three-tier.

It never ceases to amaze me how the thinnest of arguments can be used to justify naked self interest. It’s really quite shameless.

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