Response to Wholesalers Claim "States Can't Regulate Out-of-State Alcohol Shippers"
Part 3 in a 5-part series on why nobody trusts wine wholesalers
This is the 3rd of a 5-part series in this newsletter that will detail the Wine & Spirit Wholesalers of America’s (WSWA) incompetence and duplicity on the issue of direct shipment of alcohol.
Recently the Wine & Spirits Wholesalers of America (WSWA) used the occasion of an article by Alex Koral of ShipCompliant published at Wine Industry Advisor to offer, in response, their most extensive argument as to why direct-to-consumer shipping of alcohol is bad for America.
Their challenge is overcoming the reflexive revulsion on the part of the alcohol trade to any attempt by WSWA to speak to the issue of direct shipment. Thirty years of making wild and unfounded claims on the issue that never come to pass means no one takes them seriously; not producers, not retailers, not consumers and not even their members. This is a fact-based response to those wild and unfounded and unsupported claims.
WSWA Says:
STATES CAN’T REGULATE OUT-OF-STATE SHIPPERS
”Even in states where illegal shippers could get licenses and ship legally, many repeatedly fail to do so and continue to show up as illegally shipping to consumers on carrier reports. And unfortunately, states have limited resources and ways to effectively punish wrongdoers in other states. Koral’s insistence that an effective step is to “extend the ranks of businesses that can get license – and therefore accept the state’s authority over them” is not only blatantly false – it is completely self-serving. Koral’s company, SOVOS/ShipCompliant, is a tax and reporting compliance software provider for DTC shippers, and any expansion of DTC licensing increases its profitability.”
And yet they do and have for 30 years.
This kind of claim is what has folks closing their eyes and shanking their head every time the WSWA communications department comes up with the bright idea that they should make the case that consumers ought to be prevented from accessing any wine wholesalers themselves don’t distribute.
Note that WSWA’s crack communications staff can’t do any better than saying “many” unlicensed shippers fail to ship legally in states where a shipping permit could be obtained. They don’t know if it is 5 or 50 or 500 that choose to ship without a license. This kind of slipshod reasoning and dedication to accuracy typifies WSWA’s approach to public policy discussions.
But we should also point out that WSWA’s claim that states have limited resources to “effectively punish wrongdoers” makes a mockery of the single most effective method of pushing back against unlicensed alcohol shippers: The Cease & Desist Letter—a tool that has been put to very effective use by a number of states and turned a large number of unlicensed shippers into licensed shippers.
But it’s WSWA’s response to Alex Koral’s suggestion that the easiest way to turn illegal shippers into legal shippers is to create a shipping permit for out-of-state producers and retailers that tells us WSWA can’t discuss this issue in good faith. Time after time in state after state, out-of-state producers and retailers have jumped at the opportunity to pay for a state shipping license, remit taxes, and deliver up shipping reports all as a condition of holding the shipping permit. And those newly minted shippers have provided millions and millions of dollars to the states in the form of excise and sales taxes. Of course, creating shipping permits works. The evidence is the thousands upon thousands of shipping permits that have been applied for by producers and retailers and granted.
But it’s when WSWA accuses Koral, who works for SOVOS-ShipCompliance—an alcohol compliance company—of being self-serving in recommending more shipping laws be passed that likely has its own wholesaler members cringing. Who in their right mind believes that WSWA, representing the wholesalers who are bypassed with direct shipments, is making a principled case against alcohol shipments rather than making a case for protecting their members’ bottom lines? Anyone? Anyone?
In the end, WSWA’s argument that state alcohol agencies and their individual regulators and employees can’t muster the skills to oversee and regulate out-of-state shippers is simply insulting. It’s remarkable that WSWA would so casually and publicly call out regulators as idiots. This is the reason why you can add alcohol regulators to the list of producers, retailers, consumers, and even wholesalers who don’t trust WSWA and don’t believe a word they say (or write).
Read Part 1 of this series: “Response to Wholesalers' Claim "Minors Use The Internet to Obtain Alcohol"
Read Part 2 of this Series: “Response to Wholesalers’ Claim “DTC Shippers Don’t Pay Taxes”