How a Bill Could Make It Hard to Buy Your Favorite Beer

Beer distributors and producers are warring in Washington. What's at stake? The right to ship beer straight to consumers.

Alcohol can have a blurring effect. Especially when it comes to politics.

"When politicians look at the beer industry, it doesn't matter if you are a Democrat or Republican, a libertarian or vegetarian, there's something for you to embrace," said Craig Purser, the president and CEO of the National Beer Wholesalers of America.

Purser was emceeing the second day of NBWA's legislative conference, which goes through Wednesday and has brought hundreds of beer wholesalers to Washington. The conference is dominated by the debate over a bill that would give states more power to regulate alcohol distribution. The NBWA supports the bill, while independent beer producers and wineries oppose it. The point of contention is whether producers can ship their wares directly to people who want to buy it, or whether they should have to use the middleman—wholesalers who now dominate the market.

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The wholesalers want to maintain their nearly complete share of the market, and the producers want to have more options to distribute.

And there is evidence that Purser is right about the blurring effect. The bill—reintroduced in the House on March 17th—is a rare example of bipartisanship on Capitol Hill, attracting many cosponsors from both ends of the political spectrum, from Rep. Debbie Wasserman Schultz, D-Fla., to Rep. Jim Jordan, R-Ohio. The dispute has also brought together disparate groups like the Progressive Policy Institute and the anti-tax FreedomWorks to oppose the legislation.

The bill would help consolidate the power of some of the most powerful middlemen in the country: alcohol wholesalers. Wholesalers are responsible for bringing 99 percent of all alcohol from producers to retailers and bars. This state-sanctioned monopoly has allowed wholesalers to become something of a marketing juggernaut, earning many of their owners billions of dollars, and allowing for the creation of heavy-hitting lobbies like the NBWA.

In 2005, a federal court ruling opened the door to more direct-to-consumer shipping of alcoholic products, thus allowing for the bypassing of the middleman. Even though direct-shipping only constitutes 1 percent of all sales, the wholesalers fear that the ruling is a chink in their armor, and could lead to larger-scale diminution of their power. The legislation in question would help stop any of that slippage and keep alcohol regulation firmly in the hands of the state regulators, with whom home-state wholesalers have a cozy relationship.

The bill would do a number of things to restrict the distribution of alcohol, but the great point of contention has been the limits it would put on direct shipping of alcoholic products. The bill seeks to limit the ability of federal courts to intervene in cases involving state alcohol distribution laws. It would reinforce state supremacy in writing alcohol legislation within their borders.

States are arguing that they know better than the federal government about their citizens' relationship with alcohol.

Just look at Utah and its Mormon-dominant population. To some, reconciling this state's beliefs with the rest of the country sounds like too tall a task for the federal government.

"When people of Salt Lake City feel differently about alcohol than the people in Detroit, that is the beauty of the American system," Utah Attorney General Mark Shurtleff testified at a congressional hearing last year. "I will tell you that the federal government's intervention in alcohol policy has not been really successful, whether it is the Whiskey Rebellion or the failure of Prohibition."

As if the cozy relationship between the state and the wholesalers wasn't already clear, it was later revealed that Shurtleff's statement had been prepared by the general counsel of the NBWA.

Certainly, the hundreds of men—and a few women—who sat in the audience of the NBWA legislative conference at the Capitol Hill Hyatt Monday believe states should have the ultimate say when it comes to alcohol distribution.

After all, they are the state-sanctioned source of the vast majority of booze. And they didn't just come to Washington to hear Purser speak, or Sen. Kelly Ayotte, R-N.H., or Rep. Kevin McCarthy, R-Calif., both of whom are scheduled to speak Tuesday. They came to convince their representatives to vote for the bill.

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This article appeared in the Tuesday, March 29, 2011 edition of National Journal Daily.

Image: Bernt Rostad/flickr