The Right to Drink Episode 4: Why the )@#*$ can’t I ship booze to my door?
Earlier this year, BuzzFeed ran an article on the 28 weirdest things you can buy online. If this sounds like the most BuzzFeed listicle of all time, well, you’re right, it was. But it also hit upon an important truth: In our modern economy, you really can find anything online.
But how about a nice bottle of bourbon from your favorite distillery in Pennsylvania? Woah there, now don’t get greedy. That’s where the fun ends. You’ve just run into one of the only exceptions to the everything-at-our-fingertips Internet economy.
Depending on where you live, it’s often impossible to get booze delivered to your door. If you’re located in, say, Madison, Wisconsin, you can’t even get a six-pack of beer dropped off from the local convenience store down the street. But while numerous states do allow at least localized delivery, it usually ends there.
So why do we live in a world where we can get everything from pharmaceutical drugs to pickle-flavor lip balm delivered to our doors, but not booze? To find out, we’ll need to look back 100 years in history to where it all went wrong in the first place.
Listen to episode 4 of The Right to Drink for more from host, author and expert Jarrett Dieterle.
(Subscribe to The Right to Drink on Apple Podcasts, Spotify, by RSS feed or search for it wherever you listen to podcasts. It’s brought to you by the R Street Institute and DrinksReform.org.)
Transcript:
Jarrett Dieterle:
It’s 8pm, you’re sitting on your couch, and you just started diving into takeout Chinese from the restaurant down the street. You’ve got your latest Disney+ binge all cued up–you’re re-watching all the Star Wars movies in order–and you’re a little too excited for this Friday night in. But then, it hits you: What if instead of these boring wooden chopsticks you’re eating with, you had something a little more on-theme?
You hop online, and bam: For $14.97 on Amazon, you can have a set of light-up LED lightsaber chopsticks delivered to your door by tomorrow.
In March of this year, BuzzFeed ran an article on the 28 weirdest things you can buy online. If this sounds like the most BuzzFeed listicle of all time, well, you’re right, it was. But it also hit upon an important truth: In our modern economy, you really can find anything online.
Jarrett Dieterle:
And yes, that includes LED lightsaber chopsticks. But what about a McDonald’s chicken nugget-shaped carrying case for your AirPods? Yup, the Internet has that too. And if you suddenly need 20,000 multicolored miniature water beads delivered to your house for God knows what reason? Easy-peasy.
And how about a nice bottle of bourbon from your favorite distillery in Pennsylvania? Woah there, now don’t get greedy. That’s where the fun ends. You’ve just run into one of the only exceptions to the everything-at-our-fingertips Internet economy.
Depending on where you live, it’s often impossible to get booze delivered to your door. If you’re located in, say, Madison, Wisconsin, you can’t even get a six-pack of beer dropped off from the local convenience store down the street. But while numerous states do allow at least localized delivery, it usually ends there.
Jarrett Dieterle:
If you’re trying to order a bottle of gin from your favorite distillery in another state, forget about it. In fact, in all but a very small handful of states, it’s impossible to get liquor or beer shipped directly to your door from an out-of-state brewery or distillery.
But why, you ask? Why do we live in a world where we can get everything from pharmaceutical drugs to pickle-flavor lip balm delivered to our doors, but not booze? To find out, we’ll need to look back 100 years in history to where it all went wrong in the first place.
I’m Jarrett Dieterle, author of Give Me Liberty and Give Me a Drink, and this is The Right to Drink.
Jarrett Dieterle:
Hey everybody and welcome to the show where we talk about drinking and everything that gets in the way. Today we’re going to answer the age-old question of: why in the hell can’t you get your favorite whiskey or IPA delivered to your doorstep?
Jarrett Dieterle:
But first, as I said, we need to go back a long time. Specifically, to the year 1913. Prohibition is still seven years away, but pro-temperance forces are already on the march. By this point, numerous states and counties have already gone “dry” by passing their versions of local Prohibition. But they have a problem. Booze is still flooding in from outside their borders by the trainload.
Jarrett Dieterle:
See, Americans had already figured out that if one state went dry, they could simply get around it by transporting in a ton of booze from other wet states. Inevitably, temperance forces hated this, and no one was more agitated than one Senator William Kenyon.
Jarrett Dieterle:
Senator Kenyon ushered a law through Congress, dubbed the Webb-Kenyon Act, which was explicitly aimed at plugging up this transportation loophole. While the Webb-Kenyon Act would shortly be superseded–and made mostly irrelevant–by the passage of Prohibition in the United States, it marked the first steps in a now century-long crusade by the government to clamp down on alcohol transportation and shipping.
Jarrett Dieterle:
While prohibition only lasted 13 years, the tangled mess of alcohol laws it left behind persists to this day. And while the rest of the economy has squarely arrived in the Internet-powered 21st century, alcohol has yet to fully join the party. Although wineries are currently able to ship to over 40 states, distilled spirits and beer have remained mostly sidelined–as I said, only a few states permit liquor and beer to be shipped from out of state.
Jarrett Dieterle:
The costs of this near-universal shipping ban fall most heavily on our favorite craft beverage producers. And the costs have grown even higher in recent months. For instance, take Bob Gunter’s story. Bob is the CEO of Koloa Rum Company in Hawaii, and he was gracious enough to chat with me straight from his distillery room floor in the middle of a pandemic:
Bob Gunter:
We started distilling and making rum in September of 2009, and we opened our tasting room and store at the same time. And then we were the first and only distilled spirits tasting room in Hawaii that had been permitted in Hawaii. And so we were sort of the poster child for that type of retail operation for distilled spirits producers here…
Bob Gunter:
And so we’ve been doing that again since 2009, when we opened. The interesting component to this though is that if a customer calls us on the phone or sends us an email and wishes to order a bottle of our rum and have us ship it to them, either in the state of Hawaii or outside of the state of Hawaii, we are precluded from doing that.
Bob Gunter:
We essentially just, you know, lived and operated within those constraints for all these years up until COVID came along in March and April of this year, when we suddenly found ourselves closed, you know, with a tasting rooms were ordered closed and the retail stores closed, um, and they remain closed until today.
Jarrett Dieterle:
When you’re operating a distillery in a place like Hawaii, of course, you expect a large portion of your business to be tourist-driven. So even before COVID, a distillery like Koloa would really benefit from being able to ship their products to other states since so much of their customer base comes from somewhere else.
Jarrett Dieterle:
But again, the situation became even more dire in the middle of COVID when travel to Hawaii ground to a halt. On-premise distillery sales vanished overnight. Bob took the lead in sending several letters to the Governor of Hawaii, asking him to temporarily green-light distillery shipping during the pandemic, only to be told that it would take an act of the state legislature to make that happen. While Bob is hopeful that state lawmakers will eventually allow such shipments, it doesn’t make life any easier in the meantime:
Bob Gunter:
All of us associated with our company are either from Hawaii or have been here a long time. So we’re not, we’re not a bunch of movie stars or venture capitalists, you know, or, you know, musicians who thought it would be cool to throw some money at a facility project out in Hawaii, you know, and that kind of thing and see what happens.
Bob Gunter:
We’re the real deal. And we have, right now, 44 employees, 11 of whom are on furlough still because of our tasting room, his store being down and Hawaii being such a small Island, you know, that makes an impact. And the, the jobs, the goods and services that we, that we purchased here and all that we do, you know, in terms of growing our sugarcane and all of that really has a positive impact on our local community.
Bob Gunter:
We’re not asking for freebies or anything like that. We’re not asking for, you know, grants or gifts or anything. We’re just asking for a level playing field. Wineries can ship all over the country and they do, and it’s a big deal for them, especially now during COVID. Distilled spirits producers are not. That’s blatantly unfair, it’s discriminatory, and it’s to the detriment of all concerned.
Jarrett Dieterle:
So, it’s pretty clear that bans on shipping liquor and beer hurt craft producers like Koloa in Hawaii, but what about in other places?
Jarrett Dieterle:
Although Hawaii is known for its tourism industry, drinks tourism is hardly limited to the Aloha State. In fact, there might be no bigger alcohol-driven tourism industry in America than the Kentucky Bourbon Trail. Kentucky is of course synonymous with bourbon, and whiskey aficionados around the country make frequent sojourns to the Bluegrass State to sip the good stuff.
Jarrett Dieterle:
But unfortunately for our thirsty travelers what happens in Kentucky, stays in Kentucky. You see, those whiskey enthusiasts land in the state, spend a week touring tons of distilleries, and then return home. And once they get home, the fun ends, as Eric Gregory of the Kentucky Distillers Association describes:
Eric Gregory:
One of the biggest tourism questions we get here in Kentucky for people visiting the Kentucky bourbon trail was why can’t I ship all this home. Number one question, by far, and they’re used to wine shipping, you know, in more than 40 States, so they don’t understand, consumers don’t understand why you can’t ship spirits home as well.
Jarrett Dieterle:
Kentucky distilleries started working to change this in 2018, when they were able to convince state lawmakers to pass a modest reform allowing shipping for whiskey clubs, but it took until this year for full-scale alcohol shipping to be passed:
Eric Gregory:
So we actually, uh, worked successfully to get a bill passed in 2018, that would let visitors through the Kentucky bourbon trail, distilleries ship a bottle home, bottles home, and then sign up for a club, similar wine clubs where you could, um, participate and get a different bottle each month of the year.
Eric Gregory:
When in 2019, the Wine Institute came to Kentucky and said, you know, we’d like to expand that legislation to include full direct shipping, e-commerce here, but they only wanted it for wine. And we are the birthplace of bourbon and the home of 95% of the world’s bourbon. And we said, that’s great, but you’ve got to have parity and make it equal for wine, beer, and spirits.
Jarrett Dieterle:
Voila, that was easy, right? Kentucky fixed the problem. Well, when it comes to alcohol, things are never that simple, as we’ll talk about next.
[AD BREAK: If you’re interested in the things we’re talking about on today’s podcast, be sure to check out my new cocktail book, Give Me Liberty and Give Me a Drink!, which provides a rollicking, recipe-packed tour of America’s most insane and laughable booze laws. Give Me Liberty and Give Me a Drink is available from all major and independent bookstores. Also be sure check out DrinksReform.org, a website and weekly newsletter from the R Street Institute, which covers the intersection of alcohol and our legal system.]
Jarrett Dieterle:
Ok, so while Kentucky successfully passed a law allowing distilleries, breweries, and wineries to ship to consumers, that doesn’t mean that anyone from anywhere will be able to hop online and buy Pappy Van Winkle anytime soon. That’s because Kentucky can only fix itself; it can’t control what other states do. And again, the vast majority of states in America still ban distillery and brewery shipments from beyond their own borders.
Jarrett Dieterle:
In other words, Kentucky distillers can now ship to Kentucky residents, but outside of Kentucky, they are only able to ship to about a dozen other states where similar shipping laws have already been passed.
Jarrett Dieterle:
Why have so few states fixed this problem? Well, once again, the mindset of our old friend Senator Kenyon is still alive and well in many places. Since Prohibition, state governments are really skeptical of outsiders in the alcohol marketplace. As a result, many states enforce restrictive laws that basically only allow in-state alcohol interests to sell to in-state consumers.
Jarrett Dieterle:
This leads to rules that not only ban alcohol shipments from other states, but sometimes require all sellers of alcohol to have at least some brick-and-mortar presence inside a state. Some states even have laws mandating that you have to live within the state for a certain number of years before you have the right to sell alcohol. All of these laws have the same theme: Keep outsiders out.
Jarrett Dieterle:
But is this fair? Is it even legal in modern day America? Increasingly, these types of anti-outsider laws are being challenged in federal court–and many judges are expressing skepticism. Jeffrey Redfern, an attorney with the Institute for Justice, a non-profit public interest law firm, was part of the legal team that recently took one such case all the way to the Supreme Court:
Jeffrey Redfern:
So this case began for our clients, Doug and Mary Ketchum, they were residents of Salt Lake City and their daughter was disabled. She had cerebral palsy and was having some health effects from the bad air pollution in the area. So their doctor said they really needed to get out of Salt Lake. And they came across this opportunity to buy a historic liquor store in Nashville and they thought this would be great. They could be business owners. It would give them a little bit of flexibility to spend more time with their daughter. And the air quality in Nashville is much better. Now they learned that there was a law on the books in Tennessee that required anyone who owned a liquor store to have been a resident of Tennessee for two years before they could get a liquor license.
Jarrett Dieterle:
Not only did Tennessee require you to be a resident of the state for two years before applying for a liquor store license, but you had to be a resident for ten years in order to renew that license. And guess what? The license needed be renewed annually, which effectively meant you had to be a resident for a decade to own something as simple as a liquor store.
Jarrett Dieterle:
Jeffrey and several other attorneys took this case to the Supreme Court–and, happily, they won. The Court held 7 to 2 that laws like Tennessee’s, which blatantly discriminate against out of state businesses in the alcohol marketplace, were unconstitutional.
Jarrett Dieterle:
While the case didn’t directly involve alcohol shipping, many legal experts think it could be an important step in striking down more state laws that discriminate against out-of-staters in the alcohol world.
Jarrett Dieterle:
But in addition to basic mistrust of outsiders, there is another dynamic at play when it comes to alcohol shipping in America. As we’ve talked about in past episodes of this show, most states have laws in place that require producers like breweries and distilleries to work through wholesalers in order to sell their products to consumers. This means that a distillery can’t just sell its whiskey directly to its customers or even directly to liquor stores–it has to sell it to a wholesaler first.
Jarrett Dieterle:
And anything that might circumvent this setup, like allowing distillers or brewers to skip wholesalers and ship directly to consumers, is bound to face resistance. Naturally, wholesalers want as many alcohol sales as possible to run through them, and they’ll fight tooth and nail against anything that undercuts that.
Jarrett Dieterle:
But a lot of times alcohol producers–especially small craft producers–have trouble getting wholesalers to carry their products. Wholesalers are usually focused on the highest-selling brands from the most well-known breweries and distilleries, which means they may not even want to carry a small batch rye from a local producer.
Jarrett Dieterle:
Jeffrey describes the dynamic like this:
Jeffrey Redfern:
If you talk to manufacturers and I’ve talked to a lot of manufacturers, particularly small ones, you know, craft distillers and brewers, they have a hard time getting on shelves and getting into consumers’ hands because in a lot of States, the distributors are a handful of family owned companies, they’ve been doing this forever. They deal with the biggest manufacturers and big contracts. They don’t want to do small shipments from small producers, it’s just more work for them. And because they’re such a small group of these distributors, they’re not really pushed that much, they have a bit of an oligopoly. And it makes it really hard for the smaller manufacturers to compete in particular markets.
Jarrett Dieterle:
So there we have it. We have the history behind these laws, the impact they have on craft producers, and the reasons they’re so hard to get rid of. But what about the solution?
Jarrett Dieterle:
While Court cases and litigation like the kind Jeffrey engaged in undoubtedly help point us toward a more modern alcohol marketplace, real change will probably have to come from state capitals across the country.
Jarrett Dieterle:
Essentially, more states will need to look at what Kentucky did and decide that they, too, no longer want alcohol to be arbitrarily insulated from the glorious capabilities of the Internet. They’ll need to open their state borders to outside alcohol, and encourage neighboring states to join them.
Jarrett Dieterle:
Luckily, as Eric notes, momentum may finally be building for greater change:
Eric Gregory:
Right before everything closed down with the pandemic, the distilled spirits council of the United States had a conference in Louisville, the first ever conference in global, and a lot of other States were there and a lot of other associations were there. And man, I bet we spent most of the conference, you know, having a drink with our partners in their States, giving them copies of the bill and they’re, they’re really following it. And since then, we’ve gotten a lot of phone calls from other States. We work closely with some of the other guilds who have called, you know, I’ve made some presentations to the American Craft Spirits Association and their leadership on what Kentucky’s bill does. And we’ve given them all of our, our materials and things like that. So there definitely is a lot of interest.
Eric Gregory:
So, uh, what we’re encouraging again, in the hope that they use Kentucky’s bill as a model, is other States to pass legislation that puts spirits on the level playing field with wine and allows shipping. It’s, you know, look, everybody right now, especially during the COVID pandemic wants home delivery. Um, you know, that’s one thing that maybe, you know, coming out of this is that it’s just increased or accelerated the home delivery market for every product you can imagine.
Jarrett Dieterle:
That’s right, maybe one positive thing that will come from COVID–ok, probably the only positive thing–is a push to liberate alcohol delivery. In fact, in just the last few months, we’ve already seen states like Virginia legalize in-state distillery shipping, and places like Georgia allow booze delivery from local grocery stores–neither of which existed in those states before COVID. The natural next step is delivery from the state next door.
Jarrett Dieterle:
So it seems clear that it’s coming. It might not happen tomorrow, and it might not even happen next year. But the days when you can get that bottle of whiskey delivered alongside those LED light-saber chopsticks may be closer than we think.
Jarrett Dieterle:
I’m Jarrett Dieterle, and I wrote today’s episode of the show. Our show is produced and edited by Greg Benson, host of The Speakeasy and Back Bar, a new podcast coming soon from Heritage Radio Network. The Music is written, produced, and recorded by Jessica Leigh Graves. The cover art for the show was created by Ann Phelan. And I’d also like to thank Bill Gray and the R Street Institute, as well as today’s guests Jeffrey Redfern, Eric Gregory, and Bob Gunter of Koloa Rum.
And if you enjoyed today’s show, check out my new book, Give Me Liberty and Give Me a Drink!, as well as DrinksReform.org.
Next time we’ll dive into the weird and mysterious world of moonshine, so join us again in two weeks for more about drinking, and everything that gets in the way!
