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General Category => General Homebrew Discussion => Topic started by: paul on December 18, 2010, 05:39:40 AM

Title: US Supreme Court may consider online alcohol sales case?
Post by: paul on December 18, 2010, 05:39:40 AM
Does anyone know if the Brewer's Association is taking a position on this?

http://www.latimes.com/news/opinion/commentary/la-oe-white-online-wine-20101217,0,7042280.story

Seems like it could open up distribution for craft brewers and make it easier to get out-of-state beers for craft beer drinkers.

Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: tschmidlin on December 18, 2010, 05:51:53 AM
Quote
No other industry faces such discrimination. Wine consumers deserve a free market in wine, one in which any adult can purchase wine from wherever he or she wants.
Typical wine snobbery.  No other industry?  Ordering and shipping beer from a brewery is illegal in more places than wine.  And even if the SCOTUS votes that these laws are unconstitutional and wine may be shipped, it will not apply to beer.  My position is screw the wine industry and oenophiles unless they are willing to broaden their case to "alcohol sales" instead of "wine sales".
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: punatic on December 18, 2010, 06:16:10 AM
I believe that Article IV, Section 2 of the US Constitution makes it illegal to apply different commerce laws to those in another State.  If shipping wine is legal within a State it must be legal to have wine shipped in from another State.  

Wine, beer, sake... bouef

However, if one is required to have a license to ship/sell wine within a State, all of those who ship/sell to that State must obtain the same license.  That can be a pretty hefty burden for shippers.  50 states - 50 licenses...

Without a doubt the 3-tier system is protectionism towards beverage wholesalers, and just plain sucks if you are not a wholesaler.  There are those who (notice who, not whom) are chipping away at the 3-tier system.  Wine sales in an on premise winery tasting room for instance.

I saw Fritz Maytag rail against the 3-tier system while giving a presentation about sales and profits from his rye whiskey distillery.  He made some good points and observations.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Wheat_Brewer on December 18, 2010, 03:13:18 PM
"Such laws stifle consumer choice and keep prices artificially high. And they're a relic of Prohibition" Had to through this in there that the web wasn't around during prohibition...they missed each other by about 70 years, and prohibition was dismantled entirely before the web came around...not sure how the web and prohibition relate.

More seriously, I'm not a lawyer (but I am married to one) and I believe that under the commerce law a state has the right to enact taxes or restrictions on a product if the state is trying to protect or encourage it's own product growth.  The state of California is a perfect example where they have hundreds or thousands of wineries that they may want to protect from out of state wine companies.  Challenging a law on those grounds won't win.  If the challenge is based upon the grounds of business being stifled...I'm thinking that the court won't even hear it.  Just my opinion though. 
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Malticulous on December 18, 2010, 07:05:02 PM
States have constitutional right to the control Alcohol. Fedral judges have no say in it (not that the constitution is stopping them anymore.)
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: skyler on December 18, 2010, 07:36:09 PM
not sure how the web and prohibition relate.

When prohibition was dismantled, this system was put in its place. I think, among other reasons, it was to discourage bootlegging.

I believe that under the commerce law a state has the right to enact taxes or restrictions on a product if the state is trying to protect or encourage it's own product growth.

What you are describing is a patent violation of the commerce clause. Only the US congress (and not any state's government) may regulate interstate commerce. California can do nothing in the name of protecting its own wine industry against Oregonian or Italian wine - save for local tax breaks and licensing rules with regards to on-premises wine tasting rooms (and other such low-impact stuff).

The reason states can do ANYTHING to regulate the sale/distribution/serving laws of beer or wine or vodka between states is because state governments may provide for the health and safety of its citizens and residents. That means that, because alcohol is dangerous and unhealthy, a state may levy a special tax, require overly restrictive licenses, force sales to take place in state-run stores, limit ABV, allow certain counties to prohibit sale (dry counties), etc... This concept of alcohol as inherently dangerous and requiring regulation is pretty outdated, IMO, but it is the sole reason why beer is treated differently than soda.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Pawtucket Patriot on December 19, 2010, 07:20:00 PM
Quote from: skyler
The reason states can do ANYTHING to regulate the sale/distribution/serving laws of beer or wine or vodka between states is because state governments may provide for the health and safety of its citizens and residents. That means that, because alcohol is dangerous and unhealthy, a state may levy a special tax, require overly restrictive licenses, force sales to take place in state-run stores, limit ABV, allow certain counties to prohibit sale (dry counties), etc... This concept of alcohol as inherently dangerous and requiring regulation is pretty outdated, IMO, but it is the sole reason why beer is treated differently than soda.


Well, that and the 21st Amendment;)
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: geobrewer on December 19, 2010, 10:08:34 PM
Quote from: skyler
The reason states can do ANYTHING to regulate the sale/distribution/serving laws of beer or wine or vodka between states is because state governments may provide for the health and safety of its citizens and residents. That means that, because alcohol is dangerous and unhealthy, a state may levy a special tax, require overly restrictive licenses, force sales to take place in state-run stores, limit ABV, allow certain counties to prohibit sale (dry counties), etc... This concept of alcohol as inherently dangerous and requiring regulation is pretty outdated, IMO, but it is the sole reason why beer is treated differently than soda.


Well, that and the 21st Amendment;)

Which says in 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.

Pretty clear.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Pawtucket Patriot on December 19, 2010, 10:34:05 PM
Right, and my point was that section 2 expressly gives individual states a huge amount of discretion to regulate alcohol.  The Supreme Court has recognized as much and has acknowledged that the 21st Amendment is essentially an exception to the federal government's commerce power.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: geobrewer on December 19, 2010, 10:40:11 PM
Not sure what you're getting at, geobrewer. My point was that section 2 expressly gives individual states a huge amount of discretion to regulate alcohol.  The Supreme Court has recognized as much and has acknowledged that the 21st Amendment is essentially an exception to the federal government's commerce power.

Getting at what you just said, that's all  :)
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Pawtucket Patriot on December 19, 2010, 10:46:04 PM
D'oh!  I edited my post after I realized that :-[.

Cheers!
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: punatic on December 19, 2010, 11:23:30 PM
Right, and my point was that section 2 expressly gives individual states a huge amount of discretion to regulate alcohol.  The Supreme Court has recognized as much and has acknowledged that the 21st Amendment is essentially an exception to the federal government's commerce power.

Not true.  The 21st Amendment leaves the power to regulate intoxicating liquors, within their borders, to the States, but they must apply those laws equally to intrastate and interstate commerce.  Article 1, Sections 8 & 9 and Article IV, Section 2 still apply.



Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Pawtucket Patriot on December 19, 2010, 11:38:19 PM
Right, and my point was that section 2 expressly gives individual states a huge amount of discretion to regulate alcohol.  The Supreme Court has recognized as much and has acknowledged that the 21st Amendment is essentially an exception to the federal government's commerce power.

Not true.  The 21st Amendment leaves the power to regulate intoxicating liquors, within their borders, to the States, but they must apply those laws equally to intrastate and interstate commerce.  Article 1, Sections 8 & 9 and Article IV, Section 2 still apply.

We're saying the same thing. I should have clarified my comment by terming the commerce power as the "general" commerce power. You're correct to point out that supremacy and equal protection (as well as dormant commerce clause issues) still apply. But it's incorrect to say that what I posted is "not true."

Again, the point I was making was that state power to regulate liquor is not derived solely from states' police power. Rather, there are state and federal commerce issues involved too.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: punatic on December 20, 2010, 12:06:58 AM
Not meaning to be argumentative, but what the 21st Amendment says is the 18th Amendment is repealed, and that the 21st Amendment prohibits intoxicating liquors from being transported for delivery and use into a dry local jurisdiction. (plus some procedural language about adoption of the Amendment).

The power to regulate liquor is left to the States by the 10th Amendment.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Pawtucket Patriot on December 20, 2010, 12:46:36 AM
So your argument is essentially that transportation, importation, delivery, and use are not broad categories within which the individual states have been expressly given regulatory power?  No disrespect, but I don't think that comports with either the text of the Amendment or relevant Supreme Court jurisprudence.

Because the 21st establishes express state powers related to alcohol (which, again have been accorded pretty broad discretion by SCOTUS), the 10th Amendment is inapplicable, as it only applies to powers that have not been expressly delegated.  Also, U.S. v Darby -- which is still good law -- established a long time ago that the 10th Amendment is a truism: is only reiterates the principles of federalism already inherent in the Constitution.  In other words, there aren't many, if any, actionable issues under the 10th Amendment.

P.S. I think we have successfully derailed the topic!   :o :P

edit: food for thought -- Granholm v. Heald, 544 U.S. 460 (2005).  In this relatively recent case, the Supreme Court recognized that the 21st Amendment "grants the States virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system."

Also, let me clarify my above statements by saying that I'm not claiming the States have exclusive power to regulate alcohol.  Just that among the categories expressly mentioned in the 21st Amendment, the States have a huge amount of regulatory leeway.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Mikey on December 20, 2010, 01:51:48 AM
Why a product, that happens naturally, was ever regulated and taxed by our government is beyond my comprehension.  Not to turn this political, but things like this and the right to protect ourselves, should never be regulated by any state or federal government. We live in a free society. Once again, way too many lawyers. Enough said.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: punatic on December 20, 2010, 02:42:35 AM

P.S. I think we have successfully derailed the topic!   :o :P


Really?  Sorry if you think so.  I'm enjoying the exchange!

My partners and I have been researching internet, interstate beverage sales as part of a business plan for a commercial beverage production facility.  Visitors buy here while on vacation (stage one), reorder online from back home (stage two).  I'm trying to keep up with our legal partner. The Feds, State and County all have their hoops to jump through. That part fascinates me, but it's not my area of responsibility. Many States allow interstate sales and shipping, but the patchwork of local government regulations can drive one to drink one's own product.  We've had some great discussions after doing so.

As an engineer, systems operator, brewer, and beekeeper, process design is my responsibilty.  

But, it seems to me that Section 2 of the 21st Amendment is saying the Federal government, by repealing the 18th Amendment, is backing away from total prohibition of intoxicating liquors, leaving that authority to local jurisdictions; repeal of the 18th does not take away the power of local governments to have local prohibition. 

What part of that addresses passing different laws for local commerce versus interstate commerce? 

Aren't the Feds mostly interested in taxes when it comes to alcohol?
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Pawtucket Patriot on December 20, 2010, 03:04:33 AM
That sounds like an interesting project!

I can imagine that navigating all the local regulation can be challenging. The irony if that is that the intent of the 21st Amendment was to maintain an effective and uniform system of controlling liquor!  Go figure.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Wheat_Brewer on December 20, 2010, 03:50:20 AM
I have to apologize for not being able to do the due diligence of researching everything in as much detail as I'd like, the holidays get to be time consuming  >:(.  But why is there a difference between a brewery not in this state trucking a bunch of beer into the state, versus a company shipping the same beer to the same receiving company/person?  In this scenario I'm just trying to show that there are two different means of getting the same product to the same person.  I could understand there being some issues with ensuring legal drinking age if online ordering, but what else would make us say "no you have to drive your product to that person/company, not mail it". 

By the way this scenario assumes there are no differences between ordering online and placing a phone call.  If this assumption isn't correct please let me know. 

Thanks for helping a slow minded guy like me! 
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: punatic on December 20, 2010, 04:01:59 AM
I have to apologize for not being able to do the due diligence of researching everything in as much detail as I'd like, the holidays get to be time consuming  >:(.  But why is there a difference between a brewery not in this state trucking a bunch of beer into the state, versus a company shipping the same beer to the same receiving company/person?  In this scenario I'm just trying to show that there are two different means of getting the same product to the same person.  I could understand there being some issues with ensuring legal drinking age if online ordering, but what else would make us say "no you have to drive your product to that person/company, not mail it". 

By the way this scenario assumes there are no differences between ordering online and placing a phone call.  If this assumption isn't correct please let me know. 

Thanks for helping a slow minded guy like me! 

I think it has to do with the 3-tier system.  The truckload is being transported from the producer to a wholesaler, while the shipping company is transporting directly from the producer to the consumer. 

Protection of wholesaler and retailer (more so the wholesaler) profit..

The music industry is going through a simular transition.
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: Pawtucket Patriot on December 20, 2010, 03:12:44 PM
Punatic, I can't help but feel like we're still saying the same thing in different ways. My understanding of the Amendment is that it repealed the 18th Amendment, thereby granting back to the individual states the power to regulate importation, distribution, etc.  The regulatory authority of the states to do so before the enactment and ratification of the 18th Amendment was arguably established by the states' inherent authority to regulate commerce within their own borders as well as two federal Acts (Wilson and Webb-Kenyon). So, basically, the 21st Amendment reaffirms state regulatory authority, so long as it doesn't result in discriminatory conduct violative of the Commerce Clause. Isn't that essentially your understanding as well?

P.S. I have enjoyed the exchange. It's helped clarify the meaning of the 21st Amendment for me!
Title: Re: US Supreme Court may consider online alcohol sales case?
Post by: punatic on December 20, 2010, 06:16:10 PM
Yes, you summed it up pretty well for me too.  My understanding of the current state of things (pun intended) is that interstate wine sales to the consumer cannot be outlawed by the States if intrastate direct wine sales to the consumer (via tasting rooms for instance) are allowed.  However the interstate shipper must comply with all regulatory requirements of the local jurisdiction.  

That's the rub for shippers; the patchwork of permits and licenses needed to ship to many different places.  It will take at least one full time employee to maintain compliance if a company has more than just a few states that it ships to.  I have no doubt that beverage wholesalers work hard to encourage the red tape, to protect their tier in the local market.

Wholesalers tend to promote their largest and most popular brands, and do little to market small craft brands.  If a small craft brand is required to sell to a wholesaler who does little to promote or service the small brand to retailers, the small brand is stuck doing that work too.  The three tier system sucks for everyone but the wholesalers. A craft brand sells for $30/bottle at retail.  They are probably selling it to the wholesaler for $10/bottle.  What service is provided to the producer or consumer for that $20/bottle markup?   What purpose do wholesalers serve?  Stock rotation in the retail store?  

In my younger days I worked as a wine and liquor salesman for a wholesale house.  The regulations are onerous.