Meeting Public Comments

Chelsea Crucitti [Wine & Spirits Wholesalers of America]

Chair Bloomingdale and Members of the House State Government Committee,On behalf of the Wine and Spirits Wholesalers of America (WSWA), whose members include wine and spirit wholesalers and brokers large and small across America, we respectfully submit these comments in opposition to HF 83, which would permit certain distillers from across the country to ship distilled spirits directly to Iowans doorsteps.HF 83 would harm Iowas distillers and retailers. HF 83 will not benefit Iowas small local distillers as the online market will be dominated by large, outofstate spirits companies that have the infrastructure and funds to afford national marketing and shipping. Directtoconsumer (DTC) shipments will circumvent Iowas retailers entirely and could significantly strain local businesses and potentially lead to store closures and job losses. HF 83 would increase underage access to alcoholic products and is an unfunded mandate. The shipment of alcohol directly to a consumers home increases the likelihood of underage access as there is little to no oversight of the final delivery by the common carrier. A recent DTC sting operation by the Vermont by the Department of Liquor and Lottery (DLL) found that:No purchase was delivered completely lawfully.Two deliveries were made to a minor without the age verification.Recipients were only carded 20 percent of the time upon delivery by a common carrier.Only half were shipped by a licensed entity and, of those licensed entities, only 20 percent reported shipments to DLL resulting in potential tax loss. The report concluded that DTC shipping is significantly underregulated and significant investment to properly regulate DTC and ensure public safety would be needed. The cost of a comprehensive enforcement program would be extremely expensive for any widespread application. The Department does not currently have the resources to regulate the currently licensed activity wine DTC shipping.The DLLs results correlate with an economic analysis undertaken by WSWA estimating:it would cost Iowa $610,732 to fully enforce alcohol DTC shipping. DTC shipping could cause a loss of 131 jobs and over $5 million in wages, andsignificantly reduce state and local taxes. DTC erodes Iowas regulatory control and, importantly, transparency of spirits entering the state and the sale and distribution of those spirits to consumersa system that has successfully balanced consumer health and safety with access for over 80 years.We respectfully request that you oppose HF 83.