Speier Takes Aim at a Relic of Prohibition

A bill from Rep. Jackie Speier of California would permit the Postal Service to ship booze, but a patchwork of state laws still stands in the way.

AP Photo/Eric Risberg
Alex Clearfield
Add to Briefcase
Alex Clearfield
Oct. 22, 2017, 8 p.m.

Prohibition may have ended in 1933, but Rep. Jackie Speier is looking to end one of its remaining vestiges. The California Democrat’s new bill, HR 4024, would legalize shipment of alcohol through the U.S. Postal Service from licensed wineries, breweries, and distilleries, as well as wholesalers and retailers.

The bill mandates that any alcohol shipped must be for private use only and that senders obtain a Treasury Department permit to ensure they comply with state excise taxes. Since Prohibition, the USPS has deemed “nonmailable” any “intoxicating liquor” with higher than 0.5 percent alcoholic content.

A staffer for Speier said the congresswoman came up with the idea in the 113th Congress while serving on the House Oversight and Government Reform Committee, which has jurisdiction over USPS. She realized that no one had come up with “a rational explanation” as to why the decades-old law was still on the books.

In 2013, when Speier first introduced a version of the bill, then-Postmaster General Patrick Donahoe said shipping alcohol could raise $50 million annually. The proposal continues to enjoy support within the USPS as it looks to dig out from billions in debt and explores new revenue streams. Current Postmaster General Megan Brennan voiced support for the idea before the Oversight Committee last year. Speier’s office says the major postal unions support the bill as well.

In a statement to National Journal, National Rural Letter Carriers’ Association President Jeanette Dwyer said the group’s members “welcome the opportunity to meet the growing needs of Postal customers whether that means keeping up with the dramatic increase in parcels from e-commerce or delivering new products such as alcohol.”

It could also be a boon to producers looking to save on shipping costs. Amy LaBelle, owner of New Hampshire-based LaBelle Winery, said her company would likely save on shipping, adding that she has had customers cancel orders because shipping through private carriers was too expensive.

The liquor wholesale and distribution industry isn’t quite sold, however. In a statement to National Journal, Wine & Spirits Wholesalers of America President Craig Wolf said “USPS shipment of alcohol would create an essentially ‘black market’ channel for counterfeit and potentially adulterated alcohol to reach American consumers, including minors” and “creates compliance, tax collection and reporting challenges the USPS is not equipped to address.”

And the wholesalers’ opposition to the bill may not be the biggest hurdle to a full restructuring of alcohol-shipping laws. The 21st Amendment, which gives states wide latitude to regulate alcohol, including shipping of the product, may be.

“In the liquor space, we’re not really allowed to ship directly to consumers,” said Scott Harris, co-owner of Loudoun County, Virginia–based Catoctin Creek Distilling Company. “We have to go through a three-tier system: We have to sell our products to distributors, which sell to retailers, which sell to customers.”

Jarrett Dieterle, a fellow with the libertarian-leaning R Street Institute, said that while the bill would be a baby step, it’s still “a worthwhile reform” and could lead to changes in state-level restrictions on shipping alcohol.

“Agro-tourism is big; millennials love going on brewery tours, and brewers would love to ship that alcohol back,” Dieterle said, but he added that the three-tier system stands in the way of USPS shipping being the “panacea” that would allow consumers to “press a button on a computer and get any booze they want.”

Ryan Malkin, principal of Malkin Law and counsel for the American Craft Spirits Association, says retailers could be a major beneficiary because nearly all states allow intrastate shipping of liquor.

According to the Wine Institute, 45 states allow some sort of interstate shipping of wine, but the National Conference of State Legislatures says only five states allow direct shipment of all spirits.

Kevin Kosar, the R Street Institute’s vice president for policy and a former Congressional Research Service analyst for postal issues, says USPS will encounter a number of compliance issues arising from the patchwork of laws. “Something concerning is that USPS is a federal agency, so if it’s not following state laws, who’s going to do anything about it?”

There are a number of other logistical hurdles, including breakage, spoilage, and additional time spent in the system, given that USPS goes to every residence and business while private carriers go only where they have to.

Most critically, USPS may need to determine whether the return on investment is worth it. Kosar says even if the $50 million projected revenue is pure profit, “it’s a rounding error” given USPS’s annual revenue stream of roughly $65 billion.

What We're Following See More »
GOP Holds onto AZ-08 Seat Narrowly
9 minutes ago

Arizona Republican Debbie Lesko won a special election to fill the deep red seat Trent Franks retired from earlier this year. Unofficial balloting had her up 52.9% to 47.2%. This victory is a bit close for comfort, considering Donald Trump's 21-point victory there in 2016. This victory will do very little to calm GOP nerves five months before Election Day.

Apple CEO To Meet With Trump
43 minutes ago

Apple CEO Tim Cook will meet with President Trump today, "at a time of heightened trade tensions between the U.S. and China with technology caught up in the spat. Both countries have proposed import tariffs on each others' products, but the U.S. has been tough on Chinese technology firms." China is an important market for Apple, and Cook is expected to bring up the worsening trade relationship.

Mick Mulvaney Admits To Selling Access As Representative
1 hours ago
District Court: Trump Must Reopen DACA
1 hours ago

U.S. District Judge John D. Bates ordered the Trump Administration to continue DACA, and for the first time, ordered it be reopened to new applicants. Bates said the decision to end the immigration program was "'arbitrary and capricious' and therefore 'unlawful.' However, he stayed his ruling for 90 days to give the Department of Homeland Security a chance to provide more solid reasoning for ending the program." Bates is the third judge to rule against the Trump administration. "Federal judges in California and New York have also blocked the administration’s plans on [the same] grounds, and ordered the administration to renew work permits for immigrants enrolled in the program."

Supreme Court Takes Up Travel Ban
1 hours ago

The Supreme Court will hear oral arguments today over Trump's third travel ban, which "the court allowed to go into effect while the case was litigated." Government lawyers are expected to argue that President Trump has the constitutional authority to exclude foreigners from traveling to the United States. Based in-part on President Trump's own rhetoric, critics have called the measure an unconstitutional "Muslim ban" that violates religious freedom. The highly-anticipated argument will be the last of the term, and has drawn widespread public attention. "For the first time since the same-sex-marriage arguments in 2015, the court is allowing same-day distribution of the session's audio," and Justice Sotomayor has opted to hear the case, despite a broken shoulder. Lower courts "have ruled all three versions either violate federal law or are unconstitutional."


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.