NCPA - National Center for Policy Analysis

Challenging The 21st Amendment

September 13, 1999

One lawsuit in Texas and another possible suit in Florida will seek to determine the scope of the 21st Amendment -- which allows states to set their own laws governing the sale of alcohol within their borders.

On one side of the controversy are consumers and wine producers who want the right to deal directly with each other. Opposed are wholesalers and retailers of alcohol who fear being bypassed in the exchange. States which prohibit direct shipments of alcohol from out of state also are fearful of losing revenues if wine can be shipped from, say, California to customers in those states.

Central to the issue is the Constitution's commerce clause which gives only Congress the right to regulate trade between the states. However, the 21st Amendment Enforcement Act passed by the House of Representatives would make it easier for states to enforce their rights under the post-prohibition amendment -- they would not have to win extradition order to prosecute out-of-state producers or shippers who violate state laws regulating alcohol sales.

The Internet has buoyed interstate sales of wine over the past decade.

  • Experts estimate that anywhere from $200 million to $1 billion worth of wine is now shipped directly from producers to consumers.
  • The value of all wine sold in the U.S. is estimated at $16 billion as of last year.
  • While just 10 wineries produce 90 percent of all wine sold in the U.S., another 1,600 small wineries account for the remaining 10 percent.
  • Direct shipment of alcohol is a crime in 28 states -- and five have made the transaction a felony.

Some experts estimate that up to 8 percent of states' revenues come from taxes on alcohol, on average.

Source: Joe Guinto, "Who Really Controls the 'Net?" Investor's Business Daily, September 13, 1999.


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