H.R. 5034

Admittedly, while researching H.R. 5034, I began feeling quite befuddled, bored--even a little dim—as I struggled to make sense of the excessive verbiage involved in political documents.

The bill’s less-than-overt implications cloud its significance and make its consequences quite tedious to figure out. But H.R. 5034 is important to know about, as it threatens the financial health of most small to medium-sized wineries in California by cutting off most of their direct sales.

In an attempt to get more support against H.R. 5034, I will try to break the bill down by lifting some meaning out of the massive piles of jargon.

Where H.R. 5034 came from:

The National Beer Wholesalers Association (NBWA) and the Wine & Spirit Wholesalers Association (WSWA) conceived H.R. 5034. These associations have been at odds with wineries since the dawning of time (well, since anyone can really remember, anyway), because wineries benefit from and do a great job of selling directly to consumers. And wholesalers resent that.

Many really good, really small wineries don’t need a wholesaler—most of them have strong followings of fans across the country that demand their wines before they even have a chance to sell them to stores. Likewise, by sending the wines directly to consumers, the wineries can afford to keep prices relatively inexpensive—something many already struggle to do.

It should be no surprise, then, that the NBWA and WSWA suddenly have developed a strong interest in tightening alcohol-shipping laws that promise to help make society safer and sounder: The bill’s acronym, CARE, for the Comprehensive Alcohol Regulatory Effectiveness Act, euphemizes their ulterior (greedy) motives.

This bill appeals to congress in a surprisingly lingering post-Prohibition aftershock. It also appeals to congress because, while only one state (California) represents the interests of hundreds of wineries, almost all of the other states represent more wholesalers that wineries or breweries.

The Wine Spectator has quoted California representative Mike Thompson saying, “There’s only a few of us who represent wine country, and there’s only a couple who represent distilleries,” Thompson said, “but every member of Congress has two, three, four, five, maybe six distributors [in their district].”

And like all other successful political things in the world today, the bill has money behind it: For one, Warren Buffet recently bought Georgia wholesaler, Empire Distributors. For another, according to the Wine Spectator, the WSWA and NBWA have spent $11.55 million on their campaigning in the past four years.

In fact, Fermantation: The Daily Wine Blog has compiled a nice list detailing the amount of campaign money each of the bill's congressional sponsors has received from the NBWA here.

Good question #1: Why do they claim we need stricter laws?

Answer: The associations claim they are behind the bill to put alcohol regulation in the hands of the states, keep interstate lawsuits to a minimum, and ensure that taxes are collected properly (hence, “CARE”).

Good question #2: Have there been enough problems with the current system to warrant a bill like H.R. 5034?

Answer: Not really. The already highly-regulated alcohol shipping system has been running pretty smoothly. With quite strict procedures and plenty of required permits on the part of wineries, it’s far from an anarchic free-for-all, with rampant 12-year-olds having bottles of Sea Smoke delivered to their front doors, ducking taxes while they’re at it.

What H.R. 5034 would literally do:

Currently, the Commerce Clause, which keeps states from restricting interstate trade, trumps the 21st Amendment, which grants each state the right to make its own alcohol laws. The bill was born out of this contradiction and, if passed, would allow the 21st Amendment precedence over the Commerce Clause.

This would give each state the power to enact its own alcohol shipping regulation laws, allowing states to discriminate against one another.

For example, when a state (let’s say, Nebraska) is given the power to decide whether it will allow a winery (from California) ship a case to a loyal customer (a Nebraskan), for which that customer would pay taxes to California, or instead force the customer to visit a Nebraskan wine shop to purchase wine and thus pay taxes to Nebraska, the state’s decision would be a no-brainer.

That was a long sentence. But the point is that giving Nebraska that power would benefit the wholesalers, as wineries would have to go through a third party to put their wines in Nebraskan stores.

What H.R. 5034 would consequently do:

H.R. 5034 would put a lot of wineries out of business.

One of the hand-full of things I hear over and over again while interviewing winemakers is that turning a profit in the wine industry already presents a marvelous struggle.

The Wine Institute found that 1% of wine sales involves direct-to-consumer shipping. It may sound insignificant, but that 1% translates to 2.6 million cases. Most importantly, small wineries’ sales made up more than half of that number, with 1.8 million cases. Yikes.

Obviously, H.R. 5034 would affect consumers, too. Everyone would end up paying higher prices for wines as wineries struggle to stay afloat and wholesalers ensure they make money.

On the other end, consumers nationwide would lose access to tens of thousands of wines.

What’s going on right now and what we can do to stop it:

A large number of wine and distillery associations have issued statements opposing H.R. 5034:

The California Wine Institute: “[The bill] is merely a smoke screen for a power grab by beer wholesalers that would instead stunt competition, reverse years of long-established judicial precedent, and severely limit consumer choice.”

The American Wine Society (the oldest American wine education institution) is “against any legislation that would limit our member’s access by forcing them to purchase only wines that someone else chooses to make available.”

Believe it or not, there are a few California congress members who sponsor H.R. 5034, including Representatives Bob Filner, Gary G. Miller, and Laura Richardson. Even if your local representative opposes the bill, it never hurts to write them to put an extra pinch of passion into the fight.

Likewise, spread the news. Let people know. CARE is the kind of stealthy bill that can easily sneak beneath public consciousness; but CARE doesn’t care about wine and fine alcohol, the vitality of small businesses, or the integrity of the constitution. It cares about money that you will never see.

But if you enjoy any of the above, I recommend at least joining the Facebook group.

Here are some additional resources so that you don't have to take my word for it: (This site offers a pre-written letter to congress you can copy and send yourself)

The bill itself, plain and simple (and yet confusing to read).

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