I wrote recently about HR5034, a bill being discussed in Congress that would allow states to prohibit the shipping of alcohol outside of the distributors. This is a bill that could be devastating for many small wineries (as well as being terrible for consumers). It would mean that you could purchase things like guns, knives, cigarettes, prescription drugs and pornography from out of state, but not wine.

Around 100 Representatives have signed up to support the bill. The current list includes: Bobby Bright [D-AL2] Harry Mitchell [D-AZ5] Edward Pastor [D-AZ4] Bob Filner [D-CA51] Gary Miller [R-CA42] Laura Richardson [D-CA37] Vern Buchanan [R-FL13] Ted Deutch [D-FL19] Lincoln Diaz-Balart [R-FL21] Mario Diaz-Balart [R-FL25] Alcee Hastings [D-FL23] Connie Mack [R-FL14] John Mica [R-FL7] Bill Posey [R-FL15] Adam Putnam [R-FL12] Thomas Rooney [R-FL16] Clifford Stearns [R-FL6] Debbie Wasserman Schultz [D-FL20] John Barrow [D-GA12] Paul Broun [R-GA10] David Scott [D-GA13] Lynn Westmoreland [R-GA3] Bruce Braley [D-IA1] Michael Simpson [R-ID2] Danny Davis [D-IL7] Bill Foster [D-IL14] Phil Hare [D-IL17] Jesse Jackson [D-IL2] Mike Quigley [D-IL5] Bobby Rush [D-IL1] Aaron Schock [R-IL18] André Carson [D-IN7] Joe Donnelly [D-IN2] Brad Ellsworth [D-IN8] Peter Visclosky [D-IN1] Michael Capuano [D-MA8] Frank Kratovil [D-MD1] John Dingell [D-MI15] Dale Kildee [D-MI5] Thaddeus McCotter [R-MI11] Gary Peters [D-MI9] Mark Schauer [D-MI7] Timothy Walz [D-MN1] Travis Childers [D-MS1] Gene Taylor [D-MS4] Bennie Thompson [D-MS2] Dennis Rehberg [R-MT] Howard Coble [R-NC6] Walter Jones [R-NC3] Patrick McHenry [R-NC10] Heath Shuler [D-NC11] Earl Pomeroy [D-ND] Paul Hodes [D-NH2] Robert Andrews Rush Holt [D-NJ12] Frank LoBiondo [R-NJ2] Frank Pallone [D-NJ6] William Pascrell [D-NJ8] Harry Teague [D-NM2] Shelley Berkley [D-NV1] Timothy Bishop [D-NY1] Michael McMahon [D-NY13] Edolphus Towns [D-NY10] Steve Driehaus [D-OH1] Timothy Ryan [D-OH17] Zachary Space [D-OH18] Betty Sutton [D-OH13] Charles Wilson [D-OH6] Robert Brady [D-PA1] Christopher Carney [D-PA10] Chaka Fattah [D-PA2] Patrick Murphy [D-PA8] Tim Murphy [R-PA18] William Shuster [R-PA9] Glenn Thompson [R-PA5] Henry Brown [R-SC1] Addison Wilson [R-SC2] Stephanie Herseth Sandlin [D-SD] Lincoln Davis [D-TN4] Henry Cuellar [D-TX28] Charles Gonzalez [D-TX20] Raymond Green [D-TX29] Rubén Hinojosa [D-TX15] Eddie Johnson [D-TX30] Randy Neugebauer [R-TX19] Solomon Ortiz [D-TX27] Ted Poe [R-TX2] Silvestre Reyes [D-TX16] Ciro Rodriguez [D-TX23] Lamar Smith [R-TX21] William Thornberry [R-TX13] Jason Chaffetz [R-UT3] Gerald Connolly [D-VA11] Glenn Nye [D-VA2] Ronald Kind [D-WI3] Shelley Capito [R-WV2] Alan Mollohan [D-WV1] Cynthia Lummis [R-WY]

You can view them on a Google Map at http://tinyurl.com/StopHR5034

The good news is that despite all this support there is wide opposition in Congress, including from Speaker Nancy Pelosi (who herself owns a vineyard and understands very well the implications of this bill); additionally there is so far no support for it in the Senate, so overall it would appear unlikely to succeed.

However if you haven't already written to your Representative then please do so. HR5034 is bad for wineries, customers and business generally; it's only good for the wholesalers who want to protect their monopoly.

Keep up to date on the campaign at http://www.stophr5034.org/ or on Facebook at http://www.facebook.com/STOPHR5034

Share |

If you haven't read about HR 5034, also known as the Comprehensive Alcohol Regulatory Effectiveness (CARE) Act of 2010, you should. It's a bill that would have a profound impact on consumers and wineries, leading to increased prices and winery closures. Although there is widespread opposition to the bill it's also gaining support.

I'm not a lawyer nor do I play one on TV, and I didn't sleep at a Holiday inn last night. So I urge you to get the facts and make your own minds up, but here is my understanding.

The problem goes back to the repeal of Prohibition and the passing of the 21st amendment. Unlike most legal stuff it was brief and plainly worded. It says:

• Section 1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed.
• Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

Following this, various states set up alcohol distribution systems that were either owned by or regulated by the states. The 3 tier system was born: producers sold to wholesalers, wholesalers sold to retailers, retailers sold to customers and everyone got to make a profit (except the customer). For a long time nobody really cared too much; there was relief that prohibition was over and most people purchased their beer, wine and spirits from their local stores. Since the distributors controlled the flow of alcohol they got to become rich and powerful, and effectively stifled competition by merging and lobbying.

The recent winery boom began to challenge this. Small wineries like to interact directly with their customers; the profit margins are higher and the customer establishes a connection that goes beyond mere brand loyalty. If there's a problem with the wine due to flaws or bad shipping the winery can deal with it personally. It's good for the winery and the customer.

But not the wholesaler. They see this as a challenge. Despite the fact that it's a tiny fraction of the overall market, it's their market and they want to keep that fraction. The problem eventually reached the Supreme Court in the case of Granholm V Heald which effectively said that the 21st amendment did not give a state the right to treat wineries within the state differently from those based in other states.

HR 5034 (which was drafted by the National Beer Wholesalers' Association, or NAMBLA) would effectively overturn the Granholm V Heald ruling, granting each state the right to regulate alcohol however they see fit, regardless of the commerce clause. It also amends the 1890 Wilson act, which states "that all fermented, distilled or other intoxicating liquors or liquids transported into any state or territory" are subject to the same rules as alcohol produced within the state. This would greatly strengthen the wholesalers' position and allow the states to prevent wineries from shipping to customers.

Laws designed to limit alcohol shipping are often claimed to have the aim of preventing minors from accessing alcohol. But how many minors buy alcohol over the internet? HR 5034 would allow states to make it illegal for wineries and retailers to ship alcohol to adults. Meanwhile firearms collectors and dealers are still allowed to ship guns. Tobacco retailers can ship cigarettes and cigars. Pharmaceutical companies can ship prescription drugs. Does that make sense? You could buy a Smith and Wesson, but not a Smith-Madrone? Viagra but not Varner? Montecristos but not Montallegro?

HR 5034 is a terrible bill that would be disastrous for small wineries such as those in the Santa Cruz Mountains, but don't just take my word for it. Rep Mike Thompson (D-CA), co-chairman of the Congressional Wine Caucus says it would "devastate California’s and other states’ wine industries, stunt economic growth, and harm consumers by allowing discriminatory law and regulation to be passed and go unchallenged."

What can you do? Write to your Representative, asking them to oppose the bill.
Free The Grapes has a Write Your Congressperson web page that lets you do this automatically.
Send a fax to the office of the House Subcommittee on Courts and Competition Policy at (202) 225-3673.
Become a fan of the STOPHR5034 page on Facebook

What's your view on HR 5034? Have you heard back from your Congressperson on whether they will oppose it? Let me know in the comments.

Share |