Retailer shipping to Georgia (request for help)

Posted this on CellarTracker earlier today but wanted to enlist help/advice from here as well.

Hello Friends,

As recently as a year ago, virtually any retailer in the U.S. would gladly ship wine to Georgia even though it technically wasn’t legal. Fast forward to now and it appears UPS and FedEx have been coerced into acting as the enforcement arm for Georgia law, making most retailers skittish about shipping here.

Obviously, this pisses me off. I can’t think of anything other than a firearm I can’t legally have shipped directly to my house from another state. And at least with firearms, I can have an out-of-state retailer ship to a licensed retailer here. It’s insane not being able to get a legal product delivered across state lines.

In a libertarian fit of anger, I wrote to my state senator and have a sit-down with him in mid-November.

Now that I’ve secured the meeting, I need to get prepped for it. I’d like your help.

1. I think I want to ask him to sponsor a bill that would allow out-of-state retailers to ship wine to Georgia. Is that the right ask?

2. The central argument in my head, especially to a Republican, is around economic freedom. If a wine isn’t available here, I can’t have it. If it’s available here but 2X more expensive, I’m compelled to pay the higher price.

3. Secondarily, over-regulation in this arena hurts consumers in the form of prices set by two distributors.

4. Another argument is that having wine shipped means you’re buying expensive wine (to offset shipping costs) and this wouldn’t impact 99% of the mostly lower-end wines sold in-state.

5. I’ve already done a bit of research and there are 14 states (plus DC) that have retailer direct shipping. Any sense for how these states got this through (or just never restricted it)?

6. Any history I should be aware of that pre-dates my interest in wine?

7. Anybody want to actively help me in this cause (either pre/during/post meeting)?

Thanks in advance,
Aaron

There’s currently a proposed bill in Massachusetts (House Bill 3891) that amends the language in a law passed in 2013 that permitted OOS wineries to ship into the state (directly to consumers). The amendment would also permit OOS retailers to ship into Massachusetts. I’m not sure whether GA allows wineries to ship DTC, but I thought it was a good move on the Mass. rep’s part to put it through as a modification to a pre-existing law. It might be a good angle to play if available.

Glad you are taking the initiative. That’s the first step. Might want to slip him or her a packet thick with paper money, as that’s how distributors seem to get laws passed favorable to them. Seriously, money talks, but the Senator’s meeting with you at least shows they have some interest in serving their constituency. I hope other people chime in here, but definitely pose this as an economic argument and one of free choice. The state should properly only care about loss of sales tax revenue. What business do they have in propping up monopoly pricing power (only 3 distributors are responsible for 50% of wine sales in the US)?

From a politician’s perspective, there are at least three dimensions: electoral politics (both primary and general), policy, and financial/fundraising. Assuming you can’t affect the last one through a single meeting, so focus on the first two.

If at all possible I would arrive with numbers, presented in graphic form. One to two page summary, with longer backing materials. This might be a useful starting point to put together your brief: http://freethegrapes.org

But you’ll absolutely need Georgia specific info. I’d suggest covering the impact of DTC shipping on state tax revenues, in-state business revenues, and in-state employment. I have no idea who the wholesale distributors are in Georgia, but if they’re not Georgia-based, there’s a compelling narrative you could build about protecting the interests of Georgia consumers vs greedy out of state corporate interests.

Lastly, you’ll need to address the myth that DTC shipping is going to be used by underage drinkers to get hammered. Some info about current incidence of underage drinking in Georgia, how they access it, and what if any impact DTC has had on those rates in other states. Even if you can just show that there’s no direct correlation between DTC and underage drinking rates, it will help.

Sweet soothing music to my ears…sigh.

I’d reach out to Tom Wark, who advances less restrictive shipping. Here’s but one example:

I have no experience on this issue in particular, but I think it’s far to say that pols typically look out for their own intere$t$. Good luck.

https://nawr.org/

Here is a related advocacy group you could check out as well.

Good luck. I may be able to help you with preparations, though I’m not optimistic about your chances. As a starting point, you need to try to find out how much money your senator is getting from the alcoholic beverage industry. If he or she isn’t getting much money, then the amount of political influence the alcohol lobby has and how they use it to stifle competition and enrich themselves should be a point of emphasis.

The next step is to familiarize yourself with GA requirements for wineries who ship direct to consumers. Sales tax (or lack thereof) will be an issue, and is a card the industry plays hard. Wineries legally shipping into GA are required to collect and remit sales tax as part of their permit. I’m not sure how many retailers will be willing to get a permit even if one is offered.

You need a strategy for how to deal with the reverse issue. If out of state retailers can ship to GA, then GA retailers should be allowed to ship both in and out of state. It is currently illegal for any GA retailer to ship or deliver alcoholic beverages to a consumer. The DOR is currently soliciting comments on whether to even allow curbside pickup, but you will still have to pay when you pick up, not when an order is placed: Georgians may soon get 'curbside pickup' for beer, wine sales. For GA retailers selling out of state, the state is losing sales tax as well, which will be another concern.

The large distributors will fight any crack in the three-tier system tooth and nail. Review the battle breweries and brewpubs fought for the right to make limited direct to consumer sales, and how the distributors met privately with the Revenue Commissioner to get her to craft regulations that gutted the first deal. Creative Loafing had good coverage of it.

Another example of distributor power is that Georgia is a franchise state, so distributors have a monopoly on the brands they carry and a producer can only change distributors if their current distributor agrees to release them or they stop all sales into the market for more than a year. Distributors can buy on credit, but retailers must by law pay cash on delivery.

I’m not trying to dissuade you from trying to get a law passed that will open up the market. I’d love to see it. But I’m cynical that there is any real hope, particularly with statewide elections coming up with the governor’s seat up for grabs, so many elected officials won’t do anything to endanger the big bucks the distributors throw around. The hypocrisy of limited government Republicans taking huge amounts of money to protect a monopoly is appalling, as is the unholy alliance between religious right temperance forces, anti-drunk driving advocates, and liquor distributors to limit free trade, but the next candidate I see raising those as issues in a campaign will be the first one, and I’m a native of GA.

Best of luck Aaron. But I must say, we tried this in earnest this year in Texas and actually got as far as getting a committee hearing-which is a significant step. Immediately after this the three tier lobby went into full court press; at first throwing money around Austin, then threatening to bankroll challengers to anyone that voted to move it out of committee. Needless to say it died on the vine.
Tom Wark and Jeff Zacharia (of Zachys wine) are great champions of this cause, I’d reach out to them.
Fwiw, when I was dealing with “staffers” and legislative aides on this issue they were probably the most shocked that you can go to an auction at Christie’s in New York and buy a million dollar painting and have it shipped to Texas, but if you bid and win on a $100.00 bottle of wine you can’t, you might point out how unfair that seems.

Coming from an Atlanta native…

Georgia is a ‘Franchise State’ and most of the distributors are GA-owned. The GADA (GA Alcohol Dealers Association) and the distributors have huge sway with the state government. 2 license law for retail liquor ownership, franchise law, no liquor in c-stores, grocery, or club… heck, alcohol wasn’t even sold retail on Sundays until recently. Good luck, but you’re fighting an uphill battle.

The Atlanta area is a dynamic wine market though, so the good shops have nice selections. Retailers in the GA market also generally take modest margins, so prices are often competitive.

Aaron,

Good show. You have a great opportunity. A few suggestions.

1. Bring a couple other people with you. It makes a difference.

2. What you are asking for is to be able to receive wine shipments from out-of-state wine retailers in the same manner that out-of-state wineries may ship. Same limits and same restrictions and same requirements.

3. I’m unsure if Georgia wine stores can ship wine to Georgia residents. But if they can’t, then you need to suggest that any bill should allow Georgia wine stores to ship to you also.

4. The following objections are usually put up by opponents of retailer shipping:
   -It violates the three tier system (Response: Georgia has already endorsed consumers receiving shipments from out of state wineries. Shipments by out of state retailers is no different )

-It is competiton for local retailers and will cost jobs (wine lovers don’t buy wine from out of state and pay the shipping costs if they can find what they want locally. When a wine is bought from out of state, it’s not a lost sale because the wine purchases is almost always not available locally)

-It’s impossible to regulate hundreds of 1000s of wine retailers (In fact, in every state where both out of state wineries and retailers may ship, wineries hold 65%-70% of all direct shipping licenses.)

-Minors (No member of law enforcement anywhere in the country has ever pointed to direct shipping of wine as a problem of minor access to alcohol. There is a reason for this: it isn’t a problem and never has been.)

Here’s something else to consider. When out of state retailers may not ship wine into a state, that means consumers in that state have ZERO access to imported wines via direct shipment since only retailers sell imported wines in the United States

Yes, the prospect of delivering tax revenue to the state of Georgia is important. But it’s rarely the most important argument. I can get you estimated tax revenue for retailer shipments in a couple days. I’d need to do a calculation.

Finally, it’s very important that you are able to offer the representative draft legislation. At the very least, you should let him know that you can provide him with draft legislation within two weeks.

Give me a call if you have any questions: 707-246-6451