NCPA - National Center for Policy Analysis

An End to Out-of-State Beer?

November 10, 2010

The United States has seen a massive increase in the number of microbreweries in the last decade.  Many bars now pride themselves on offering a wide variety of on-tap beers from smaller producers and stocking bottles from around the country.  But that could soon come to a grinding halt pending the decision of H.R. 5034, the Comprehensive Alcohol Regulatory Effectiveness Act of 2010 (the "CARE" Act of 2010), in the U.S. House of Representatives, says Michelle Minton, director of the insurance studies project at the Competitive Enterprise Institute.

The CARE Act is a response to a Supreme Court decision, Granholm v. Heald, in which the Court ruled that states could not pass laws that discriminate between in-state and out-of-state wineries in violation of the Commerce Clause of the Constitution.  While the ruling was specifically about wine, it should apply to all types of alcohol, says Minton.

If the CARE Act or a similar bill passes:

  • It could potentially bar out-of-state beers, ensuring a captive market for home-state breweries.
  • Not only would this eliminate certain beers from the market, but also it would likely increase the price of those out-of-state brews that could make it across state lines, as they would likely pay a fee for the privilege of competing with in-state breweries, vineyards or distilleries.
  • It would also mean an end to online sales of alcohol.

The biggest supporter for the CARE Act comes from beer distributors and individuals who act as middlemen between producers of alcohol, says Minton.

Source: Michelle Minton, "An End to Out-of-State Beer?", November 8, 2010.

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