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On January 26, 2001 the Twenty-First Amendment Enforcement Act went into effect, giving states the right to crack down on out-of-state merchants shipping alcohol into the state. The Act gave states jurisdiction beyond their own borders as well as power to seek federal court injunctions against those who ship alcohol into the state in violation of a state law. Lori Enos,
“Battle Intensifies Over Net Alchol Sales”,
E-Commerce Times, March 16, 2005. CURRENT STATE REGULATION As a result of this new authority, many states have considered and passed alcohol shipment bills. States have taken several approaches to the regulation of interstate alcohol shipments including permitting direct shipment only from states that reciprocate by allowing similar shipment into such state, permitting shipment under limited circumstances, and prohibiting direct shipment entirely. The following are samples of each regulatory approach. 1. Reciprocal State Legislation Cal. Bus. & Prof. Code § 23661.2 2. Limited State Legislation A winery may apply for a 3. Prohibited State Legislation The direct
shipment of alcoholic beverages to residents of
As these legislative debates heat up there are several lobbying groups attempting to influence the outcome. On one side are groups representing the growers who want to encourage Internet alcohol sales by limiting direct shipment regulation. On the other side are those who support the wholesalers who want to maintain their profit margin by encouraging direct shipment regulation. Finally, there are citizens and legislators who express concerns about tax revenues and protecting minors. The following are two major lobbying groups involved in the debate: The orderly marketing of alcohol through the chain of distribution (most states mandate a licensed, three-tier system of distribution - supplier to wholesaler to retailer to prevent illegal trafficking, and market manipulation) The efficient collection of applicable state and local excise taxes (in most states, wholesalers collect and remit such taxes) Controlled access to prevent minors from obtaining alcohol (retailers engaged in face-to-face transactions are better able ensure minors do not purchase alcohol). Illegal direct shippers bypass state
alcohol control systems and the three-tier system to evade state and
local excise taxes, and avoid regulatory scrutiny. In so doing, they
deny states and localities excise and sales tax revenue, and provide
minors with a new avenue for circumventing the law and illegally
obtaining alcohol. Wineries’ Arguments… Consumers are driving changes in how consumer products are bought and sold-- they want and expect to be able to purchase the wines they want in the manner of their choosing (e.g., via telephone, catalog and Internet). Free the Grapes! supports augmenting, not replacing, the three-tier system with the controls and regulations necessary to respect local laws, to avoid underage access and to provide provisions to make tax payments. We think it's wrong that the distributors are telling consumers which wines they can and cannot enjoy. Distributors are restricting
consumer access and
threatening winemakers because of greed.
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| Disclaimer. This website was built by third year law students Tracy Kimbrell and Heather Hammond for Professor Laura N. Gasaway's Cyberspace Law Seminar at the University of North Carolina School of Law. While we hope you will find this website useful, it is intended for educational purposes only. It does not purport to offer legal advice, and we cannot guarantee regular updates. Back to top |