by Aaron Bergh
The state of California is about to re-ban an entire industry from selling and shipping its products online. After a temporary allowance that expires on Dec. 31, you will no longer be able to purchase craft spirits from your favorite distiller and have it delivered to your door—unless we take action. So whether you’re an enjoyer of the many tasty spirits, our local distillers have to offer or just someone passionate about empowering small businesses, we need your help.
Every business should have the right to sell their goods by any means they’d like. As long as sales are conducted in a responsible manner, it shouldn’t matter if it’s through a brick-and-mortar shop or online store. Although wineries convinced the state to recognize their right to conduct commerce decades ago, spirits distillers have lacked the deep pockets and lobbying power needed to influence California legislators.
The moratorium on direct-to-consumer shipping is an archaic law left over from the chaotic aftermath of Prohibition. In a supposed effort to prevent alcohol producers from monopolizing the market, every state enacted a Three-Tier System, which requires alcohol producers to sell all products to a wholesale business and prohibits producers from selling directly to retailers and customers. Instead of preventing monopolies, the regulations resulted in a government-mandated middleman that monopolizes and controls the industry through its exclusive bottleneck. The Three-Tier System in California remained largely unmodified for the spirits industry for 80 years until the passage of the Craft Distillers Act of 2015. The Act affirmed a distillery’s right to sell its products directly to customers instead of having to pay exorbitant fees to a wholesale company to sell to a retail shop. But there’s still a major catch: the product must be purchased in person – it cannot be shipped.
The main mission of the California Department of Alcoholic Beverage Control (ABC) is to ensure safe consumption of alcoholic beverages—in particular, keeping alcohol out of the hands of children. Legislators and wholesaler lobbyists have long alleged that allowing online liquor sales would result in more kids obtaining alcohol. However, the argument quickly falls apart when you consider the many liquor retail stores who are already permitted to ship throughout the state.
Over the past year and a half, distillers have had the chance to prove that we can ship our products responsibly. When the COVID pandemic and the business closures that came with it occurred in 2020, the ABC offered distilleries some relief by issuing a temporary allowance for shipping. Fortunately, there are strong safeguards in place – the driver of the shipping company is legally required to check the ID of the recipient before letting them take a package with alcohol in it. Some naysayers still point to the seemingly jaw-dropping results of ABC sting operations in April of 2020: over 79 percent of drivers delivered packages to undercover agents without checking for a valid ID.
When I contacted the ABC in an attempt to obtain a breakdown of license types found in violation, I was told the data was not readily available. After searching news publications across the state, most of the stories I read suggest that most violations were committed by restaurants delivering through independent drivers like GrubHub, not distilleries delivering through FedEx. I could not find a single instance when a distillery was found to have delivered alcohol to a minor. In any case, the ABC was able to provide me with updated delivery sting operation findings. Now that delivery companies have had a chance to adapt to the new rules, the compliance rate has been continuously improving: now only 16 percent of drivers failed to comply in November 2021 operation. A strong case can be made that alcohol delivery actually promotes safety by encouraging alcohol consumption in the safety of your home instead of at an establishment before getting behind the wheel of your car.
If distilleries can ship spirits direct to consumers in a safe and responsible manner, why is the state poised to take away our newfound freedom? The answer lies in the organizations that have everything to gain from exploiting small businesses and keeping others out of the marketplace. When distillers are able to increase their direct-to-consumer sales, it means they can ditch the oftentimes ineffective wholesalers that have held them hostage, and their 80-year gravy train loses steam.
Earlier this year, our statewide trade group, the California Artisanal Distillers Guild, managed to scrounge up enough resources to get California Senate Bill 620 introduced to the legislature. If passed, the bill would allow distillers to continue shipping spirits within the state as well as out-of-state customers.
Unfortunately, the Wine and Spirits Wholesalers of America fiercely oppose this bill, causing legislators to pause its progress through the California State Senate. At the end of this month, it’s back up for reconsideration. This is where we need your help.
If you care about small businesses in your community, growing your local economy, value safety, or have enjoyed the convenience of having craft spirits delivered to your door, please consider taking a few minutes to send a quick email in support of SB 620. Contact information and email templates can be found at calwisespirits.com/takeaction. Your voices will be heard.
