Kosar and Dieterle on the Meaning of the Tennessee Wine SCOTUS Case

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As we noted last week, the Supreme Court struck an important blow for freedom in its Tennessee Wine v. Thomas decision, which held that Tennessee’s requirement that liquor store owners be residents of the state was unconstitutional. R Street’s Jarrett Dieterle and Kevin Kosar explain in a piece for USA Today how the implications of this decision could be far reaching, especially when it comes to direct-to-consumer alcohol shipping:

Just after the 100th anniversary of Prohibition’s start — and over 85 years since its repeal — Americans could be forgiven for assuming that government remains blissfully removed from their cocktail glass. Unfortunately across the country, states and local governments still enforce a bevy of outdated and oftentimes downright silly alcohol laws. While these laws have proved notoriously difficult to get rid of, a new Supreme Court decision issued could spell the end for a broad swath of cronyist and antiquated booze rules — and perhaps be the first step toward a more national alcohol marketplace…

The court’s holding might seem limited to the unique circumstances of Tennessee’s law, but it has the potential to be a game changer in the world of booze. The biggest change could involve the shipment and transportation of alcohol.

Unlike just about every other product on the market today — nearly all of which can arrive at your door in two days — direct-to-consumer alcohol shipping is incredibly limited. While a previous Supreme Court case allowed wineries to ship their bottles to consumers in neighboring states, very few states allow out-of-state retail stores — not to mention breweries and distilleries — to engage in interstate shipments.

Under the logic of the court’s holding in Tennessee Wine, however, allowing in-state shipments of alcohol while forbidding out-of-state shipments violates the Constitution. If more of these laws are challenged accordingly, it could mean that a Michigander could soon be able to have her favorite Vermont beer shop send IPAs directly to her door…

Read the whole piece here.

R Street's Jarrett Dieterle Featured on Reason TV

R Street’s Jarrett Dieterle was featured in a video by Reason TV about the dumbest alcohol laws in America. He discussed both recent successful reforms, such as allowing Native Americans to distill on tribal lands and the recent Supreme Court decision in Tennessee Wine, as well as antiquated laws that still remain on the books. You can watch the video here:

The Supreme Court Just Struck a Blow for Alcohol Freedom

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The Supreme Court finally released its long-awaited decision in Tennessee Wine v. Thomas this week. The case involved a challenge to Tennessee’s “durational residency requirement” law, which said that in order to operate a retail alcohol store in Tennessee, the store owner must have been a resident of the state for 2 years. And in order to renew the license, which was required annually, the owner needed to be a resident of the state for 10 years. The law even required that all officers and directors of companies that ran alcohol retail stores—as well as 100% of all stockholders—to be state residents.

The Court, in a 7-2 decision, struck down the Tennessee law for violating the U.S. Constitution’s so-called Dormant Commerce Clause. To put it simply, this doctrine holds that states cannot discriminate against out-of-state economic interests while favoring in-state economic interests. The Tennessee residency requirement obviously favored in-staters over out-of-staters, but the law’s defenders argued that the 21st Amendment to the U.S. Constitution (which repealed Prohibition but granted broad powers to state governments to regulate alcohol) immunized laws like Tennessee’s from constitutional scrutiny. While the Court emphatically rejected that argument, its holding also could have broader implications:

Before Americans can enjoy a nationally cohesive alcohol shipping marketplace, however, much work remains. Many states still discriminate against out-of-state retailers interested in shipping alcohol—laws which will almost certainly be challenged in light of the Court’s decision. And nearly every state still labors under a three-tier system of alcohol distribution, which mandates a role for wholesalers when it comes to most alcohol sales. Furthermore, the U.S. Post Office forbids the shipment of alcohol entirely (although some private carriers permit it).

Therefore, governments around the country will have to take proactive steps to liberalize their alcohol shipping laws and streamline them in a way that makes interstate alcohol shipping more achievable. But for now, the Supreme Court’s decision in Tennessee Wine can be seen as an early step toward a more robust interstate shipping market for booze.

DrinksReform.org will have more coverage of the Tennessee Wine case and its aftermath in the weeks ahead!

Texas Passes Brewery and Liquor Store Reforms

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Texas is known for its arcane alcohol rules, including its infamous “consanguinity exception,” which restricts the number of liquor stores an individual can own to 5 outlets, but then creates a loophole that allows family members to join together to own more. The state also was known for prohibiting breweries from selling to-go beer. Both those restrictions have no been loosened by recent legislation, as reported by the Texas Tribune:

Texas on Saturday joined the rest of the nation when Gov. Greg Abbott signed a law letting adults buy beer to go from home-grown craft breweries.

Smaller brewpubs already can sell beer to go. Abbott's action means that beginning on Sept. 1, the state's giving that right to breweries, too…

[The legislation also] expands the number of liquor store permits that an individual can own, getting rid of a loophole that favored blood connections. However, publicly traded companies like Walmart, Costco, Walgreens and Kroger still won't be permitted to sell liquor in Texas. That issue's now pending before the 5th U.S. Circuit Court of Appeals.

Also, a push to amend HB 1545 to let stores sell wine and beer on Sundays starting at 10 a.m. rather than noon failed, as did a separate proposal to allow liquor sales on Sundays…

Read more here.

Pennsylvania May Finally Scrap Flexible Pricing Authority for Spirits

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As covered before on these pages, Pennsylvania grants broad power to its liquor regulatory agency—the PLCB—to set the price mark-ups for distilled spirits sold in its state-run retail stores. R Street’s Jarrett Dieterle has previously pointed out that liquor mark-ups in control states function analogously to taxes, especially when the money they generate flows to the state’s general fund. This week in The American Spectator, R Street’s Kevin Kosar discusses an effort afoot in the Pennsylvania legislature to at least limit the unilateral power of the PLCB to set mark-up levels:

Keystone State legislators may abolish Pennsylvania’s stealth drinks tax. The House Liquor Control Committee is examining HB 1512, which would end the Pennsylvania Liquor Control Board’s “flexible pricing” power.

Rep. Jesse Topper, the measure’s primary sponsor, argues that flexible pricing power is not a power one should give to a monopoly. “[T]he PLCB is neither constrained by market discipline nor antitrust laws,” he wrote.

Topper’s bill would repeal the flexible pricing provision “in order to reinstitute some kind of consumer protection.” If enacted, the PLCB would revert to using a longstanding pricing system that set spirit prices by a formula

[F]lexible pricing is effectively a stealth tax and may therefore raise constitutional questions. Instead of elected officials setting income- or sales-tax rates to cover the cost of government, the pricing mechanism has enabled the state Legislature to outsource revenue-raising authority to an executive agency…”

Read Kevin’s whole piece here.

Facebook Continues to Ban All Alcohol Sales

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Legendary whiskey writer Chuck Cowdery recently posted about Facebook’s ongoing policy to clarify its ban on alcohol sales through its site:

Yesterday, all or most of the myriad whiskey pages on Facebook received a letter stating, in part, "While we allow people to talk about alcohol products we will not allow people to sell or purchase these regulated products on our site. This has always been true in places like Marketplace and Commerce posts in groups, but we will now extend this to organic content…

None of this is new. Except in Kentucky and a few other places, the secondary market for alcohol is illegal, and in those few places where it is legal it is restricted.

The state beverage alcohol agencies that are supposed to enforce these laws rarely do, but they will lean on companies such as Facebook, eBay and Craig's List to get them to clamp down on the peer-to-peer commerce that takes place on their platforms…

(Read Cowdery’s full post here).

As Cowdery mentions, some states, like Kentucky, have recently made moves to liberalize their policies on secondary sales, but otherwise these types of sales are illegal across the country. Both Cowdery and R Street’s Kevin Kosar have written previously about why legalizing the secondary booze market could be beneficial.

SEC Football Stadiums Now Can Serve Alcohol

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Last year, R Street’s Marc Hyden called for the SEC to loosen its restrictions on allowing colleges in its conference to serve alcohol at football games. Hyden noted that other NCAA schools already allowed alcohol sales and that it only made sense for the SEC to follow suit:

There are many reasons [some] oppose permitting alcohol in the SEC’s stadiums, but none of them are good.

The most frequent justifications are promoting public safety and protecting the attendees’ general well-being. After all, we can’t have increased crime or fans getting sick and passing out. (University of Georgia fans probably wish they had slept through the title game, but I digress.)

While increased alcohol consumption can sometimes exacerbate tense situations, a 2016 study found no increased criminal activity when college stadiums serve alcohol to general attendees. There is reason to believe, however, that alcohol-related crime may even decrease in certain locales with alcohol sales when paired with other policies, as was the case at West Virginia University. Further, permitting general alcohol sales in collegiate arenas might actually offer a public health benefit.

(Read Hyden’s full piece here.)

This past week, according to Bleacher Report, the SEC finally heeded this call and announced that it will allow individual schools within the conference decide whether they want to serve alcohol at games:

SEC Commissioner Greg Sankey announced Friday the conference is set to lift its ban on stadiumwide alcohol sales Aug. 1.

"Schools will have autonomy," Sankey told reporters. "This now an opportunity for institutions to make responsible and appropriate decisions [about alcohol]."

More here.


American Whiskey Gets a Partial Tariff Reprieve

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The Trump Administration’s ongoing tariff wars have roiled the American drinks industry, hurting producers of both beer and whiskey. Canada and Mexico’s retaliatory whiskey tariffs were recently lifted, but as the Chicago Tribune reports, producers are still concerned about European markets:

American whiskey producers feeling the pain from the Trump administration's trade disputes have gotten a shot of relief with an agreement that will end retaliatory tariffs that Canada and Mexico slapped on whiskey and other U.S. products.

The whiskey industry hailed the arrangement to ease trade tensions among the North American allies and said it hopes it's the first of several rounds of good news on the trade front. Distillers have suffered shrinking exports since the last half of 2018 due to tariffs in some key markets.

President Donald Trump last Friday lifted import taxes on Canadian and Mexican steel and aluminum and delayed auto tariffs that would have hurt Japan and Europe. In return, the Canadians and Mexicans agreed to scrap their retaliatory tariffs on U.S. goods, including American whiskey.

But U.S. whiskey makers still face significant trade hurdles in the European Union, the industry's biggest export market…

Read more here.

Connecticut Lawmakers Try to Legalize Self-Service Beer Bars

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Self-service beer bars have grown in popularity in recent years as customers enjoy the experience of being able to pour their own brew from a tap. Numerous states still prohibit this type of self-service , however. According to WTNH.com, Connecticut lawmakers may finally legalize self-service for wine and beer in the Nutmeg State:

Imagine getting your beer or glass of wine like you would a fountain soda.  It may soon be a reality in Connecticut

The bill that would allow self-service alcohol machines at bars just got the thumbs up from the House of Representatives. 

You would get a card from the bartender and swipe it at the machine…

Read more here.


R Street's Kevin Kosar Interviewed About Moonshine

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R Street’s Kevin Kosar was interviewed by Live Science about mooshine and whether it is safe to drink. As Kosar noted, Moonshine can be made from a variety of products and it’s most likely to exist in places that put up high bariers to legalized alcohol:

What is moonshine? Broadly, moonshine is any type of distilled liquor that's manufactured without government oversight, though some argue that moonshine can be labeled as such only when it is made with certain ingredients or comes from specific geographic regions, experts told Live Science.

People all over the world make and drink moonshine, particularly in places where alcohol is illegal or where legal alcohol is prohibitively expensive or hard to get…

ngredients for moonshine vary widely depending on what's available. In the early 20th century, American moonshiners typically made their brews from corn mash. But moonshine is also made from grapes, plums or apricots (Armenia), barley (Egypt), palm tree sap (Myanmar), bananas (Uganda) and cashew fruit (India), said Kevin Kosar, author of "Moonshine: A Global History" (Reaktion Books, 2017).

"It's just basic chemistry. If you can tease sugar out of something, you're on your way to making a drink," Kosar told Live Science…

Even when moonshine doesn't contain toxic levels of methanol, it's impossible to tell how strong it is — an uncertainty that could lead to accidental alcohol poisoning The best way for drinkers to stay safe is to give illicit alcohol a wide berth, Kosar said..

"Unless you're a close friend of the person producing the moonshine and have absolute trust in their competence to produce it, don't drink it," he warned.

Read the whole article here.