NC Rep. Howard Coble sponsors CARE Act
By L.A. Williams, Correspondent
Christian Action League
WASHINGTON, D.C. — Order a cocktail in a restaurant, start a microbrewery or decide to sell beer at your festival booth and the how, when and where of the transaction are regulated by state law. But click onto a Web site to have a bottle of wine delivered to your door and the rules could get a little fuzzy.
Who has the final say — the state you’re buying from, the state where you live or the latest judicial ruling that may or may not apply precisely to your situation? While the 21st Amendment to the Constitution, which ended Prohibition more than 75 years ago, made it clear that states had the power to regulate “transportation or importation” of alcohol into their borders, too often states’ rights to do so are being challenged and eroded.
But the situation could change if H.R. 5034, the Comprehensive Alcohol Regulatory Effectiveness (CARE) Act of 2010 is passed. The bill is being co-sponsored by U.S. Congressman Howard Coble (NC-6).
Raising the ire of some Tar Heel wineries, who fear such a law could be the beginning of the end of their direct shipping businesses, the legislation in fact does not address any specific state alcohol law but deals with what some three dozen attorneys general describe as the “growing threat facing our states from unprecedented legal challenges that seek to eliminate our ability to regulate alcohol.” But admittedly, a direct shipping case decided in May 2005 plays strongly in the legislation’s backdrop.
In Granholm v. Heald, the Supreme Court ruled 5-4 that while states may prohibit wineries from shipping alcohol to the doorsteps of their citizens, a state cannot allow an in-state winery to do so while prohibiting the same business practice from an out-of-state winery. The ruling, which in effect said Internet sales are protected by the Dormant Commerce Clause, has been used as a basis for a number of challenges to alcohol regulations in other states and has weakened the three-tier system (producers, wholesalers and retailers) that helps prevent sales to underage drinkers.
“This is crucial, especially with studies showing how easily teens can obtain alcohol via an online order,” said the Rev. Mark Creech, executive director of the Christian Action League. “Unfortunately many sellers target youths with interactive games and appealing Web sites. Then they simply have them check a box to indicate they are over 21.”
Since 2003, wineries inside and outside of North Carolina have been able, with a wine shipping permit, to ship up to two cases of wine per month to any purchaser. Packages must be labeled “Contains Alcoholic Beverages: Signature of Person Aged 21 Years or Older Required for Delivery.”
But some retailers, both in the U.S. and abroad, blatantly advertise that their products will be shipped discreetly in plain brown wrappers. And even if the box meets state labeling standards, that doesn’t guarantee the delivery person will follow the law or be an expert in recognizing fake IDs. Further, state agencies do not have the resources to consistently monitor all the stores and restaurants that sell alcohol, much less run stings on home orders. According to a study by the Wine and Spirits Wholesalers of America, since 2002, 39 states “did not conduct a single online alcohol compliance check.” Six more states said they had no record of ever conducting such a check.
So underage drinkers have no real reason to fear getting caught placing online orders, which explains a recent study that found that 12 percent of teens had a friend who ordered alcohol online and a full third of respondents reported being open to purchasing alcohol online before reaching age 21.
“This is a growing problem and it will only worsen unless states are allowed to take back control and make sure alcohol sales involve face-to-face encounters with the person receiving the product,” Creech said.
According to the N.C. Alcoholic Beverage Control Commission Web site, 80 in-state and 885 out-of-state wineries currently have wine shipper permits.
The CARE Act language agrees with the Granholm ruling in prohibiting states from discriminating, without justification, against out-of-state producers, but it would strengthen state alcohol laws by putting the legal burden of proof on plaintiffs who wish to challenge those laws.
In fact, the challenger would have to show clear and convincing evidence that the law he is challenging has no effect on “the promotion of temperance, the establishment or maintenance of orderly alcoholic beverage markets, the collection of alcoholic beverage taxes, the structure of the state alcoholic beverage distribution system or the restriction of access to alcoholic beverages by those under the legal drinking age.”
“This makes sense because these are all areas that the state should be concerned about. If we’re going to hold the state responsible for alcohol control, then our lawmakers in Raleigh have got to have the authority to regulate without constantly having their rules undermined in the courtroom,” the Rev. Creech added.
Winery owners say they are afraid that if Coble’s bill passes, distributors will convince state lawmakers to halt the direct sales and require that wineries go through them to sell out of state, a move that would cut winery profits. As it is, wineries are not required to use a wholesaler unless they ship more than 1,000 cases of wine in the state per year.
Although Creech agreed that the wholesalers have their own motives for supporting the CARE Act, he said many of their arguments are valid, especially in regards to underage drinking.
Creech says a very positive aspect of alcohol control is the buffering effect wholesalers provide between retailers and alcohol manufacturers. “Manufacturers are, without question, in the business of selling their product and often use high pressure sales techniques to meet their objectives – objectives that are more about their bottom line than protecting the public’s health – objectives that can put teens at risk,” said Rev. Creech. “When the three-tier system is undermined this buffer is diminished,” he added. “The wholesalers keep multi-national conglomerates from employing overly aggressive marketing and sales practices that can lead to abuse – practices that could easily become the rule rather than the exception. Without the presence of the wholesalers to act as intermediaries, ensuring certain regulations are followed; the alcohol manufacturers end up making the decisions on how alcohol sales are handled in the State and that can be problematic. If I’ve said it once, I’ve said it a million times, alcohol is no ordinary commodity and the nature of the product demands the strictest of controls and those controls need to remain squarely on the local and state levels.”
The three-tier system also ensures the fair collection of taxes owed to the states. Under this system, the product purchased by wholesalers is inventoried by the state upon its arrival, making it easy for the state to monitor and collect all taxes that are due. When alcohol is shipped across borders without such controls, it’s more difficult to regulate and collect the taxes that are due.
The North Carolina Beer and Wine Wholesalers Association (NCBWWA) points out that states need flexibility in how they deal with alcohol sales and control because “people in North Carolina probably feel very different about alcohol than those in Las Vegas.” “Alcohol regulations differ by state because there is no ‘one size fits all’ approach,” the NCBWWA says.
The CARE Act was introduced in the U.S. House of Representatives by Coble, Rep. Bill Delahunt (D-MA), Rep. Mike Quigley (D-IL) and Rep. Jason Chaffetz (R-UT).
Take Christian Action: To express support for the bill, members of the Sixth District can contact Rep. Coble via his Web site at http://coble.house.gov/. Those in other parts of the state may contact their Congressmen or go to www.house.gov and type in their zip code to find out who represents them.