Oct. 6 2010 12:00 AM

Proposed regulations on wine sales might make consumers see red

Hold on to your rights, wine lovers, because they are (still) under attack by the associations representing beer and wine wholesalers on state and national levels. Unfortunately, considering the fact that grape growing and wine making are bright, shining areas of expanding commerce in Michigan, a representative of our own administration is assisting in the onslaught, by supporting federal legislation that’s potentially damaging both to consumer choice and to Michigan’s wineries.

First, some background. In 2005 the Michigan Beer & Wine Wholesalers Association — with the eager assistance of legislators, willing to be misled — pushed for legislation that would have eviscerated the ability of Michigan wineries to directly market and ship their wines. In its original form, the bill would have made it illegal for Michigan’s wineries to even sell wine out of their own tasting rooms without first selling the wine to a distributor, and it would have made it illegal for wineries to sell direct to restaurants and retail establishments, or to ship wine to consumers.

The legislation would have driven many Michigan wineries into bankruptcy and slowed or stopped the development of new wineries. But those legislators benefitting from the largesse of the wholesalers (which, at the time, included virtually all of them on both sides of the aisle) were only too eager to support the bill. This inspired a groundswell of opposition from the populace, the formation of a grass-roots opposition, and critical editorials from every newspaper in the state that put forth a position.

Ultimately, a drastically altered version of the bill was passed, which preserved the rights of wineries to market their own wines and provided for regulated shipping of wines to consumers, both from Michigan wineries and out-of-state wineries.

With that background, we can anticipate the goals of the state Beer &Wine Wholesalers Association.

Fast forward to 2008, when a wholesaler-backed bill was rammed through the legislature under virtual cover of darkness (the final bill, typos and all, was literally passed in the middle of the night after rules were suspended). This bill made it illegal for Michigan wine shops and other wine retailers to ship wine to customers, stripping many Michigan businesses of an important stream of revenue, particularly at holiday time.

The reason? Supporters were willing to throw Michigan wine retailers under the bus in order to ensure that no out-of-state retailer could sell wine to Michigan consumers that did not generate a profit for a distributor. In the world of wine wholesaler associations, controlling 99 percent of wine sales just isn’t enough.

Fast forward again to 2010. The same association is busy in Lansing pushing House Bill 6007, which will create “territorial integrity” in the distribution of wine.

That is code for seeking a legislative mandate that distributors will have no competition from other distributors with regard to any label they sell.

In the backward world of association disinformation, the bill is lauded as a bill to enhance competition (huh?) and protect us consumers from tainted, counterfeit and defective products.

I can’t make this stuff up. And by the time you read this, the anticonsumer and anti-winery provisions, packaged up within the “Michigan Hospitality Recovery and Relief” package, will probably be waiting for Governor Granholm’s signature. For good measure, it includes a provision establishing a $50,000 annual fee for wine auctions. That isn’t a fee: It’s a confiscatory hold-up, which has the sole purpose of limiting consumer access and eliminating competition from potential sellers who do not purchase wines direct from a wholesaler.

Meanwhile, in Washington, the National Beer Wholesalers Association is hard at work pushing for an end run around the United States Constitution in an effort to lay the groundwork for eliminating consumer access to any wines not sold by distributors (keep in mind that distributors sell only a very small percentage of the wines in the world). This is being packaged up as a states’ rights bill, HR 5034, with arguments being made that it is to protect minors and promote temperance. The real goal is to circumnavigate pesky constitutional impediments to eliminate all forms of competition.

And assisting as one of the point people for the wholesalers is the chairwoman of the Michigan Liquor Control Commission, Nida Samona. While Michigan is attempting to promote our wineries and agritourism, she was only too eager to travel to Washington and testify to Congress that “liquor is ‘a lawlessness unto itself.’” She goes on to testify that “unfettered competition, the lowest price and widespread availability of alcohol are not in the public interest” and then makes a plea that federal legislative action is critical to help Michigan regulate alcohol, free of the limitations of the “dormant commerce clause and federal antitrust law restrictions that would otherwise apply.”

So to summarize, according to a representative of our executive branch, competition is bad, low prices are bad, widespread availability of wine is bad, the United States Constitution is getting in the way, and antitrust restrictions are bad.

I can’t make this up. An enterprising political reporter may wish to
ask our Liquor Control chairwoman whether she actually wrote her own
testimony to Congress. The Utah attorney general already has admitted
that his congressional testimony in support of the bill was written by
the general counsel for the National Beer Wholesalers Association
(according to The Salt Lake Tribune).

What HB 5034 really would do is provide state wine wholesaler associations with
an unfettered opportunity to exert the enormous influence they know
they can wield with state legislators, in an effort to shut down direct
wine shipping and direct marketing from producers to retailers and
consumers. This would not only strike a damaging blow to hundreds, if
not thousands, of small family-owned wineries, but also limit choice for
consumers and inhibit the expansion of wine commerce in Michigan and

This is
special interest politics at its worst. For more information, visit www.
FreeTheGrapes.org and, as soon as possible, follow the links to send a
strong message to your congressman and senators:

Just say no.

In Vino Veritas