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
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.

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