A recent news story informs us that the largest wine and spirit wholesaler in America, Southern Glazer’s, has been fined $3.5 million by the New York State Liquor Authority for what has been called a “Pay For Play Scheme”. What did not happen as a result of this crime was Southern-Glazer’s having their federal permit revoked.
It reminds us that wholesalers, particularly in the form of the Wine & Spirit Wholesalers Association, have for many years claimed that one of the important reasons wine retailers should not be allowed to ship across state lines is that they have no federally issued permit that can be threatened to be revoked if they break the shipping laws of a state. Yet as we see, when federally permitted actors like wholesaler Southern-Glazer’s breaks the law, they don’t have their permit revoked. It is either a double standard or evidence that having a federal permit is not necessary to punish bad actors in the wine industry. We think it is the latter.
The fact is that despite not holding a federal permit like alcohol producers and wholesalers, wine retailers could easily be held accountable for not following the direct shipping laws of other states. The heavy fine levied against Southern-Glazer’s is evidence of that.
In fact, if a state issued permits to out of state retailers allowing them to ship wine into their state, it could easily be a condition of holding the permit that the retailer agree to submit themselves to the legal and regulatory jurisdiction of the state issuing the permit. Under these circumstances, if a retailer shipped wine to a minor or failed to collect taxes, the state could issue a fine and/or revoke the direct shipping permit just as New York State has done with Southern-Glazer’s.
The Wine & Spirit Wholesalers of America, the trade association for American wine wholesalers and the source of the claim that a lack of a federal permit for wine retailers ought to disqualify them for interstate shipping rights, doesn’t really mean what it says. If it really thought a federal permit and the threat of revoking it were necessary to police participants in the alcohol industry, it would be calling for its member, Southern-Glazer’s, to have its federal permit revoked.
But it’s not calling for that.
The next time we hear these same folks demand that retailers should not be granted the right to ship interstate because they do not possess a federal permit, we’ll ask when we can expect them to call for the revocation of the federal permit of their largest member.