Houdini Blues
Issue 12, June2002
Welcome to this the twelfth issue of Houdini Blues, a subzine of TAP edited by Michael Lowrey, 6903 Kentucky Derby Drive, Charlotte, NC 28215. My email address is mlowrey@infi.net or call me at (704) 569-4269. Bonus points if you catch the music reference in the subzine name.
I'll be running an orphaned game here soon. It's Hellsmouth, which was formerly run by Mark Kinney. I also have about six signed up for my next Diplomacy game start come on, sign up, it'll be good for you.
The article this time is on the ship after which the Outpost game is named interesting history though certainly not one of the most distinguished ships of the past 100 years or so.
© 2002 by Michael Lowrey. All right reserved.
N.C. Wine Shipments
In a free society with a market-based economy, it seems only natural that we should be able to order for delivery to our homes all sorts of everyday items. That is, after all, exactly the appeal of E-Bay, Amazon.com and the LL Bean catalog. In North Carolina, however, state law prohibits individuals from having wine shipped directly to their homes from out-of-state. Or at least did until recently, for U.S. District Court Judge Graham Mullen has struck down the law as unconstitutional. Regardless of the eventual outcome of the court case an appeal is certain North Carolina's prohibition on wine shipments from out-of-state serves only to protect wholesalers from competition and limit consumer choice.
With the advent of the Internet, many states passed laws prohibiting shipments directly from producers to consumers, fearing that they would lose tax revenue and concerned that the sales would encourage under-age alcohol consumption. North Carolina's law was enacted in 1997. At least 27 states besides North Carolina, including South Carolina, Virginia, Florida, Texas, and Michigan, prohibit the shipments. Several other states allow only shipments from states to which their state's producers are allowed to sell directly to consumers.
The legal issue centers around two parts of the U.S. Constitution. The 21st Amendment, which ended Prohibition, granted the states the authority to regulate alcohol sales. The state contended that it was doing just that, by barring distribution outside the traditional three-tier system of manufacturers, in-state wholesalers, and retailers. The North Carolina law, like those in five others states, made it a felony for an out-of-state shipper to send wine to North Carolina. In-state shipments are legal.
Judge Mullen, however, agreed with arguments presented by the plaintiffs, six individuals from North Carolina, an Indi
ana man seeking to ship a bottle of wine to his parents in Mooresville for their anniversary, and Oakstone Winery in California. They argued that the Constitution's Commerce Clause, which bars states from regulating interstate trade, also applies. The judge noted that by treating in-state and out-of-state producers differently the state was in fact restricting interstate trade.
Even should the ban on interstate ships be upheld on appeal, the mandated three-tier distribution system has outlived its usefulness. Ironically, this system was established after Prohibition to create more competitive markets with lower prices and more choices for consumers. By requiring wholesalers an extra level in the distribution chain and prohibiting sales directly between manufacturers and retailers, the idea was to create a force to counteract the market power of producers. Any such advantages are limited, however, when a market contains many small producers.
The litigation is part of a national effort by smaller wineries to challenge in court recent laws prohibiting sales outside the three-tiered distribution system.
For these wineries the issue is one of market access. "If we were cheese or milk, there's no question we'd have the right to sell everywhere," noted Tracy Genesen, legal director of the Coalition for Free Trade, which is working with a number of California wineries in fighting the laws, to The Charlotte Observer. "It deprives a winery from being able to have a national system of marketing, because these smaller wineries don't get picked up by big distributors." There are more than 2,000 wineries in the U.S., of which the 10 largest have a 90 percent market share.
Beer and wine distributors, who are major beneficiaries of the laws that limit the competition they face, are also among the restrictions' major supporters. This is understandable, for they are protecting their source of income 18 to 25 percent of the costs to retailers come from distributors themselves. The claimed justifications of the current system, generating state tax revenue and protecting minors, are also illusionary.
There are ways to do both without banning out-of-state shipments. Louisiana, for example, allows wineries to register for a $100 fee, pay state taxes and mail up to 60 bottles of wine a year directly to residents 21 years old or older. The odds of kids ordering expensive bottles of wine over the Internet with a credit card for delivery in a few weeks is rather low to begin with; reasonable shipping requirements can reduce it further.
In a world with diverse product offering including wine customer choice is critical. Unfortunately, they are severely limited in North Carolina and many other states, where a constitutionally-dubious restriction on out-of-state wine shipments serves only to benefit wholesalers.