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Dec 19, 2014

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New weapons aimed at illegal interstate alcohol sales

State authorities get more clout in federal court

Oct 6, 2000 - The House of Representatives has approved legislation to make it easier for states to fight illegal interstate alcohol sales. The Senate is expected to follow suit this week.

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Although the measure deals with all alcohol sales most of the attention has focused on wineries. It does not affect companies shipping alcohol in compliance with the nation's three-tier system, such as wine.com and The Michael Jackson Real Beer Tour.

The bill passed by the House allows a state's attorney general seek an injunction in federal court to stop illegal shipments of alcohol into the state. Thirty states do not allow interstate alcohol shipments.

When the bill was introduced by Rep. Joe Scarborough, R-Fla., winemakers were worried it could intimidate vintners from shipping wine into those states where interstate transport is allowed. Direct sales by phone or the Internet now account for an estimated $500 million of the $17 billion wine industry and are crucial to small wineries with limited marketing capabilities.

At issue is a conflict between the 21st Amendment, which repealed Prohibition, and the Commerce Clause of the Constitution, which calls for free trade among the states. The amendment gave states power to regulate alcohol sales, setting up a system where producers sell to wholesalers, who sell to consumers. But the Internet allows wineries to bypass wholesalers and retailers and sell straight to the customer.

While the 21st Amendment gives states power to regulate alcohol sales, compromise language inserted in the bill by Sen. Dianne Feinstein, D-Calif., explicitly calls on judges to balance that authority against free trade.


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