Wining

I’m fortunate enough to live in a state that, despite having its own wine industry, places no restrictions on the import of wine from other states. (We still can’t buy wine on Sundays, but that’s another matter.)

Other folks, though, are less fortunate. New York and Texas, among others, both restrict mail-order wine from out of state, despite allowing it within the state. This blatant protectionism is finally made its way up to the Supreme Court. Todd Zywicki over at Volokh has put up a couple of good posts on the subject, demonstrating how the “public good” arguments put forward by these states are bogus …

Does this mean that minors will be buying Pinot Noir over the Internet? Probably not. The FTC surveyed liquor enforcement officials in several states that permit direct shipping and they reported few, if any, problems with direct shipping leading to increased underage access. This is not surprising, of course, as intuition tells us that minors are not likely to get a hankering for a perky Merlot, swipe their parent’s credit card, order wine on-line, and have it shipped to them for arrival several days later, and to make sure that there is some adult at home to sign for the package when it arrives.
In fact, the actual experience of state liquor officials confirm this intuition. They point to several reasons why minors are unlikely to buy wine over the Internet. First, Gallo, Blue Nun, and other cheap perennial favorites of 20 year olds are cheaper and easier to get at 7-11; because of shipping costs, only more expensive wines are cheaper on-line. Second, there are substantial inconveniences associated with obtaining alcohol on-line as opposed to a traditional seller, such as needing a credit card and being forced to wait several days for delivery of the product. Finally, many states have implemented safeguards that can reduce the danger of underage access to alcohol, such as clearly labeling the package and requiring an adult signature upon delivery.

… how it leads to substantially higher prices (and lower selection) for residents of those states …

Because shipping costs do not vary with the wine’s price, consumers experience the greatest savings on expensive wines, while brick-and-mortar stores may offer better prices on less expensive wines. The McLean study suggests that, if consumers use the least expensive shipping method, they could save an average of 8-13 percent on wines costing more than $20 per bottle, and an average of 20-21 percent on wines costing more than $40 per bottle.

… and how it really isn’t Constitutional …

So the Court has held that notwithstanding the specific mention of “importation” in the 21st Amendment, it does not repeal the “Import-Export” Clause, and notwithstanding the mention of “transportation” it does not prohibit the transportation through New York for delivery to a duty-free shop at the airport (the facts of Hostetter). In short, notwithstanding the initial impression that the plain language of the 21st Amendment gives the states the power to do whatever they want to, the Supreme Court has not interpreted it that way and it is absurd to think that Congress intended that meaning.
Whatever the 21st Amendment does, therefore, there is no evidence that it was intended to overturn one of the fundamental purposes of the Constitution, which was to eliminate internal trade barriers that plagued the country under the Articles of Confederation. As James Madison stated, the Commerce Clause “grew out of the abuse of the power by the importing States in taxing the non-importing, and was intended as a negative and preventive provision against injustice among the States themselves.”

In reality, as is true with so many Blue Laws, it’s the forces profiting from the status quo — local wine producers and liquor stores, in this case — that is behind many of these discriminatory/anti-commerce laws. I look forward to seeing how the Supremes address this.