(Also published by the Franklin Center for Government & Public Integrity)
If you’ve ever had a remarkable local beer while traveling, you may have experienced the frustration of knowing that you won’t be able to find that beer once you go home.
Most small craft breweries do not have national distribution contracts. However, Michigan craft beer fans might soon have reason to cheer. Later this month, as Gov. Rick Snyder considers suggestions from the Liquor Control Advisory Rules Committee on how to update the state’s alcohol regulations, one of its recommendations may likely be to legalize direct-to-consumer beer shipping.
Opponents, including beer wholesalers, claim that such a change would allow minors to have easier access to alcohol. That argument is baseless and a smokescreen for stifling competition.
Many states now allow the direct shipping of wine, but beer does not enjoy the same privilege. While the wine industry is traditionally comprised of small and family owned vineyards, the beer market has been dominated by a small number of large brewers and wholesalers. These large producers and distributors have dominated the market for the last century and they want to keep it that way. As wineries have slowly increased their ability to reach consumers, members of the National Beer Wholesalers Association have spent millions of dollars opposing any legislation that would allow brewers, retailers or consumers to get their beer without going through a distributor.
As the demand for craft beer has increased, consumers are no longer content to settle for the options provided by the big distributors. Support for direct shipping has been growing in almost every state, but entrenched and well-financed opponents have been largely successful in preventing change.
In Michigan, a direct shipping license from the Michigan Liquor Control Commission allows a winery to ship 1,500 cases a year to Michigan residents. Wholesalers and others may argue that extending this privilege to beer suppliers would increase minors’ ability to buy beer, but the available evidence indicates that direct shipping would have no effect on underage drinking in Michigan.
Teens who try to order booze online face significant hurdles, such as the need for a credit card and the likelihood of parents being home when the delivery arrives. In addition, all the statistical data indicates that minors aren’t even trying to buy alcohol online. As reported in a four-year study from the Substance Abuse and Mental Health Services Administration (released in 2006), the vast majority of minors acquire their alcohol from parents or other adults who either give it to them or buy it for them.
According to the study, only 1.2 percent of minors bought alcohol themselves, while almost 35 percent received alcohol from their parents or other adults. Another 20 percent took the alcohol secretly from their or others’ homes.
There was not one report in the survey of a minor getting alcohol by buying it online. And why would they when it is easier and more immediate to steal alcohol from parents’ liquor cabinets or get an adult to buy it at the store?
Wholesalers might argue that perhaps once direct beer shipping becomes legal more teens will attempt to purchase online, and that shippers do not always check identification upon delivery and the state could not require them to do so. This is not so.
The claim that states cannot legally require common carriers to ID recipients of alcohol-containing deliveries comes as a result of a 2008 Supreme Court ruling, Rowe the Attorney General of Maine v. New Hampshire Motor Transport Association. In Rowe, the Supreme Court ruled that the state of Maine could not enact laws requiring mail carriers delivering tobacco products to check the ID of those receiving the package. The Court based its decision on the “supremacy clause,” which holds that in instances when federal laws conflict with state statutes the federal laws are supreme.
Because the Federal Aviation Administration Authorization Act of 1994 limits states’ ability to regulate delivery companies, Maine’s ID requirement was struck down. However, alcohol, as wholesalers are fond of saying, is a different kind of consumer good. In the case of alcohol, the federal right to regulate common carriers is negated by the fact that the most supreme document — the U.S. Constitution — explicitly gives the right to regulate alcohol shipping to states.
Currently, beer can only be purchased in Michigan at a licensed retail outlet, such as a liquor store, restaurant or bar. Unless the bar happens to be a brewpub, all of the alcohol sold in these locations comes from Michigan’s wholesalers. Direct shipping would allow consumers to buy their beer directly from producers — much like you might buy a book from Amazon or shoes from Zappos.
Wholesalers offer a valuable service to brewers, including a network of established contacts and a fleet of delivery trucks. They understandably fear that direct shipping would hurt their bottom line. Perhaps it would, but they are not entitled to the effective monopolies they currently hold; it should be up to consumers and brewers to decide.
Legalized direct shipping would be better for beer producers and beer lovers, and would have little or no effect on minors’ ability to buy alcohol.