For Whom the CARE Act Cares
Unless you flew to New Zealand for the 2010 harvest and are just now returning, you already know about House Resolution 5034, the so-called CARE act that would take really good care of alcohol wholesalers at the expense of producers. The innocently named bill, introduced by Rep. Bill Delahunt (D-Mass.), was written on behalf of the National Beer Wholesalers Association. The Wine & Spirits Wholesalers of America actively support it, too.
The sly acronym comes from the bill’s short title: the Comprehensive Alcohol Regulatory Effectiveness Act of 2010. HR 5034 is a jaw-dropping power grab that could limit wineries’ access to customers, reduce their profit margins, create huge new legal bills for them and their associations, and potentially launch a host of other negative consequences. We think it’s a bad idea and urge everyone in the wine-producing and retailing tiers to speak out against it.
One easy way for winery and vineyard owners, their staffs, supporters and community members to show their opposition is to go to freethegrapes.org and use the simple tools for drafting e-mails and letters to members of Congress. Many wine producers already have channels of communication with their representatives, and this is the time to use them.
It’s also important for every regional or local winery organization to get involved and join the big producer organizations to publicly oppose the legislation. All of the following and more have already lined up in opposition:
• Wine Institute
• Family Winemakers of California
• Washington Wine Institute
• Oregon Winegrowers Association
• Free the Grapes
• Specialty Wine Retailers Association
• Beer Institute
• Brewers Association
• Distilled Spirits Council of the United States
• Kentucky Distillers Association
But this impressive roster doesn’t guarantee that the legislation won’t become law. “There is potential for it to pass,” said Steve Gross, director of state relations for Wine Institute, speaking at the ShipCompliant Users Conference in June. He estimated that as many as 120 representatives will be co-signers of the bill by the time you read this. HR 5034 seemed likely to get a hearing in the House Judiciary Committee by July 15, although unlikely to get out of the House any time this year for consideration by the Senate.
The wording of the bill states its intent as: “To support state-based alcohol regulation, to clarify evidentiary rules for alcohol matters, to ensure the collection of all alcohol taxes, and for other purposes.” It sounds reasonable at first glance, but many in the wine industry view it as an attempt to roll back the important 2005 Supreme Court decision of Granholm vs. Heald, which ruled that state alcohol laws don’t trump the Constitution’s stand against state regulations that discriminate against interstate trade.
Thanks to that decision, a majority of states now have legislation allowing out-of-state wine producers the same rights as in-state wineries to ship direct to residents, as long as they get permits, pay fees and so on. Gross said that 83% of the U.S. population is now accessible to wineries by direct shipments. HR 5034 would not literally overturn Gran- holm. In fact some of its supporters are saying it enshrines Granholm in legislation, but that is just a diversionary tactic to win it support.
HR 5034 would not automatically shut down direct-shipping states—at least not at first. It would, however, be very far-reaching and give the states (and their powerful wholesaler lobbies) the equivalent of bulletproof vests to protect them from any further changes desired by alcohol producers. One of its most dramatic effects would be to put the legal burden of proof on anyone challenging state liquor laws, which is not the case now.
Evan Lawson, an attorney with vast experience in alcohol regulation, and who includes wholesalers as clients, said at the ShipCompliant conference that wholesalers understood long ago that the direct-shipping movement is an effort to grab their profit margin and give it to someone else, namely the producers. HR 5034 would restore the idea of alcohol being under local political control and thus make it easier for wholesalers—who are loyal and generous supporters of politicians—to manage.
Political clout is precisely the weapon that wineries need to wield right now. It’s important for all of us in the wine industry to raise our voices, write or call our representatives in Congress, and stop HR 5034 from advancing.