There is a term in journalism called “burying the lede”. It refers to when a reporter leads off a story or writes a story in which the main point is non-existent or buried deep in the story. The Michigan Beer and Wine Wholesalers provided a classic example with their recent announcement concerning “illegal” wine shipments into the state.
A recent story run by a few Michigan TV stations reported the claim by the Michigan Beer and Wine Wholesalers Association that 185,408 bottles of wine were illegally shipped into the state of Michigan in the last quarter of 2018. In the story, the wholesalers bemoan the fact that these wine shipments not only took tax revenue away from the state but also deprived Michigan wine retailers of sales.
But nowhere in the story or claims by the wholesalers was there any investigation as to why Michiganders felt the need to go out of state to buy their wine, nor how the supposed lost tax revenue could be obtained. That’s the story.
Consumers always look to the closest vendor when they want to buy wine. Wine is very heavy and very expensive to ship. If a consumer is going out of state to buy their wine, it means they can’t find what they want from local retailers. And by the way, if Michigan consumers can’t find what they want from an in-state retailer, it means the state’s wholesalers, who provide the Michigan retailers with their inventory, aren’t providing that wine or aren’t bringing enough of that wine into the state.
Put another way, it’s the Michigan wine wholesalers who are falling down on the job. Moreover, if the wine isn’t available in the state, it’s not a lost sale for the local retailer. They didn’t have the wine to sell in the first place.
As for taxes not paid to the state on these alleged illegal shipments of wine, it was never mentioned in the story that there is a very easy way for the state of Michigan to obtain taxes on wine shipped into the state. Simply pass a law making it legal for out-of-state retailers to ship wine to Michigan consumers in the same way it is currently legal for out-of-state wineries to do so. Like out-of-state wineries, require that out-of-state retailers remit taxes to the state.
But in reality, Michigan wine wholesalers care nothing about the state’s coffers. If they did, they never would have pushed through a law in 2017 concerning wine shipping that they were told was unconstitutional and would be challenged in court, forcing the state to pay for the lawsuit. And that’s exactly what happened.
In 2008 Michigan was sued in federal court because their wine shipping law allowed in-state wine retailers to ship wine to Michiganders, but discriminated against interstate commerce by banning wine shipments from out-of-state retailers. The state was sued in federal court and the state lost. So, Michigan changed its law. Then in 2017, as the behest of the Michigan Beer and Wine Wholesalers, another law, identical to the law judged to be unconstitutional in 2008, was passed, again with the state discriminating against out-of-state retailers and violating the Commerce Clause of the Constitution.
As the 2017 law was moving through the Legislature in Lansing, lawmakers were told this was the same law that was judged unconstitutional just nine years ago, that the state would be sued upon passage of this new law and that the state would lose again. Wholesalers responded claiming no, now things were different. There would be no lawsuit and if there was, Michigan would win.
Suit was filed immediately after the 2017 law was passed. Last year, a federal judged ruled, again, that it was unconstitutional. It cost the state hundreds of thousands of dollars to defend that law in court.
No, the Michigan Beer and Wine Wholesalers don’t care about state tax coffers. They don’t care about Michigan wine shops. They care about their bottom line. They believe wine shipped from out-of-state to Michigan consumers is a loss of revenue to wholesalers. And they don’t care if consumers can or cannot buy the wines they want.
Meanwhile, Michigan citizens get stuck with the enormous litigation bills every time the state follows the lead of the Michigan wholesalers and enact one unconstitutional law after another.
So, here’s how the recent stories prompted by the Michigan wholesaler claims about illegal shipments should have read:
“Michigan wine lovers are forced to buy wine out of state after state wine wholesalers fail to provide the state’s retailers with wines consumers want. Michigan has lost out on hundreds of thousands of dollars in tax revenue due to the states wine wholesalers insistence on passing unconstitutional laws meant to protect them from competition.”