Industry Issues: Understanding the CARE Act
The CARE Act is a controversial issue for wholesalers and alcohol supplier trade associations. Recently, alcohol supplier trade associations wrote a letter to the U.S. House of Representatives denouncing the CARE Act (H.R. 5034), asking House members not to support the legislation. The wholesaler side promotes the CARE Act as a reinforcement of the 21st Amendment.
The CARE, or Comprehensive Alcohol Regulatory Effectiveness Act, has two purposes: to recognize that alcohol is different from other consumer products and should be regulated by states, and to protect the authority of states to regulate alcoholic beverages.
But what does this all mean? And what does this do to the three-tier system? The Act would ban interstate shipping of wine, beer and spirits even if a state allows intrastate shipping of these items within its borders. Essentially, states would be able to regulate the distribution of alcohol. Wholesalers including the National Beer Wholesalers Association (NBWA) and the Wine & Spirits Wholesalers of America (WSWA) support the CARE Act because of its regulatory powers, and lawmakers support the bill in hopes that it will curb abusive and underage drinking habits while also protecting tax revenue.
However, alcohol supplier trade associations, including the Distilled Spirits Council of the U.S. (DISCUS), the Wine Institute, the Beer Institute, the Brewers Association and Wine America, denounce the Act, calling the bill discriminatory and anti-competitive. These groups fear that if the bill passes, it will end direct shipping of alcohol. In the letter written to members of the House of Representatives, the trade associations stated that the current system of alcohol allows for local flexibility, serving America’s best interest by providing a consistent and fair way for producers, distributors and retailers to conduct business. The letter went on to say that if it passes, states will be able to enact and enforce protectionist laws against out-of-state beer, wine and spirits producers and allow states to pass laws that violate the Commerce Clause, federal antitrust laws and any other Acts of Congress.
Whatever side of the issue you find yourself on, it remains a topic of contention between the wholesalers and alcohol beverage suppliers, and one that doesn’t seem to have an immediate compromise. The only thing both sides seem agree on is to disagree.