When the Fetal Position Is All That's Left
New data points to the end of arguments against interstate alcohol shipping
It’s enough to force a defender of the indefensible into the fetal position.
Over the course of the past 25 years, as interstate shipment of alcohol has been a political issue, wholesalers, numerous retailers and others that oppose the shipment of wine from wineries and retailers to consumers, have made two key arguments to support their opposition.
Interstate Shipment of Wine Will Lead to Minors Obtaining Alcohol
Interstate Shipment of Wine From Out-of-State Wineries and Retailers Will Cost Wholesalers and Retailers Jobs.
I don’t know what to make of the fact that on the same day (last Wednesday) two pieces of data were made available that rebutted both these contentions. How does that happen?
First, let’s discuss underage access to alcohol via interstate shipment of alcohol. It bears acknowledging that as far back as 2005, when the Supreme Court issued its decision in the Granholm v Heald wine shipping case that ruled discrimination against out-of-state wine shippers was unconstitutional, the Court noted that claims that minors would obtain wine via shipment were largely unfounded and unsupported:
”The States provide little evidence that the purchase of wine over the Internet by minors is a problem. Indeed, there is some evidence to the contrary. A recent study by the staff of the FTC found that the 26 States currently allowing direct shipments report no problems with minors’ increased access to wine….Even were we to credit the States’ largely unsupported claim that direct shipping of wine increases the risk of underage drinking, this would not justify regulations limiting only out-of-state direct shipments. As the wineries point out, minors are just as likely to order wine from in-state producers as from out-of-state ones.”
Nevertheless, the claim that interstate shipment threatens the health and safety of those darned minors continues to this day when retailer wine shipping bills or when distiller or beer shipping bills are discussed. And these claims are taken very seriously by lawmakers for the simple reason that appearing not to care about underage drinking doesn’t look good on a resume on election day.
Last Wednesday, the R Street Institute, a non-partisan think tank focused on free trade, issued a white paper that examined the question of whether liberalized wine shipping laws have led to an increase in minors’ consumption of alcohol. What their study of underage drinking and wine shipping found is fairly definitive.
“States that allowed DtC wine shipments in 2003 and in 2019 showed an average drop of 44.3 percent in the underage drinking rate. States that did not allow DtC wine shipments in 2003 and still did not in 2019 showed an average drop of 43 percent. In other words, underage drinking rates declined a few percentage points more in states that have continuously allowed DtC wine shipments over the past few decades versus ones that have continuously prohibited it. This is not to suggest that DtC wine shipments necessarily reduce underage drinking, but, at the very least, it does suggest that DtC wine shipments have not led to an increase in underage drinking rates.”
The R Street Institute was able to come to this conclusion by measuring minors’ consumption of alcohol using state-by-state data from the long-running Centers for Disease Control and Prevention’s Youth Risk Behavior Surveillance System (YRBSS) survey and layering it over state-by-state changes in wine shipping laws.
This is an important white paper and an important finding. What I can guarantee is that it will be used profitably in lawsuits challenging state laws that discriminate against out-of-state wine retailers by banning their shipments of wine while allowing shipments of wine from their own in-state retailers. The findings will be used specifically by me when I am asked to provide written expert testimony in these cases. That testimony will then be used in the legal briefs where the case is argued. It is often argued (incorrectly I think) by states that if health and safety are at stake, a state’s discriminatory laws may be upheld as constitutional. This recent study confirms what we have always said: There is no evidence that wine shipments impact the health and safety of minors.
But what about the loss of jobs due to wine shipments?
Also last Wednesday, SOVOS-ShipCompliant, a leading provider of compliance services for alcohol shippers, released an article concerning the state of legislation in New York and California that, if passed, would allow the interstate shipment of spirits to consumers in those states. In that article one Brian Facquet, president of the New York State Distillers Guild provides this tidbit:
“Data from the U.S. Bureau of Labor Statistics shows that since 2005 (when Granholm v. Heald allowed the wine DtC market to flourish) New York wholesalers had a 53% increase in jobs. Retailers added more than 3,600 jobs for an increase of 38%.”
This data that Mr. Facquet has accumulated confirms what I and many others have been noting for some time, that direct shipment has in no way whatsoever harmed retailers or wholesalers. This data too will be used in the service of future and ongoing litigation and legislation.
In the face of these sorts of data, it is impossible to oppose with a straight face alcohol shipping on the grounds that it harms jobs or minors. You either are forced to ignore the data, fingers-in-ears, “la la la la la” all the way retreat to the corner and mumble loudly, “three-tier system….three-tier system…three-tier system” while balling up in the fetal position and rocking back and forth.