Kōloa Rum Company has crafted premium rums on the Hawaiian island of Kauai since 2009. The distillery’s name honors the region’s rich sugarcane heritage that began in 1835 with the establishment of Hawaii’s first commercial sugar mill in the nearby town of Kōloa. “It all started here,” locals say of Kōloa, where sugar drove Hawaii’s economy for generations.
Under CEO Bob Gunter’s leadership, this entrepreneurial success story seeks to celebrate the distillery’s historical connection, infusing its rums with the spirit of the island’s agricultural traditions.
While Kōloa Rum Company honors Hawaii’s past, an outdated federal law known as the Jones Act threatens its future. Adopted in the aftermath of World War I, this 1920 law requires all shipping between U.S. ports to use vessels that are built, owned, and crewed by U.S. citizens. The Jones Act’s purported intent was to prevent dependence on foreign shipping with a fortified domestic shipping fleet. Its real intent was protectionism. Instead of building new ships, the Jones Act built trade barriers that forbid foreign competition with American shipping to this day.
On its own terms, the Jones Act has been a massive failure. The number of American cargo ships has shrunk dramatically since the law passed. In fact, today there are less than a hundred—all with quality far worse than foreign cargo ships. The remaining ships largely exist to maintain a monopoly on shipping between the contiguous U.S. and ports in Alaska, Hawaii, and Puerto Rico.
The Act’s harmful consequences to businesses and consumers are well-documented. Goods shipped to Hawaii often cost twice as much as in other states—a daily obstacle for Kōloa Rum Company, which must import essential materials like bottles and packaging that cannot be sourced locally. As a result, it is nearly impossible for Kōloa Rum Company to compete with both foreign and domestic rum producers who aren’t shackled by the Jones Act.
The shipping logistics required by the Jones Act are as absurd as they are expensive. Because no international vessels may serve Hawaii directly, Kōloa Rum Company must first ship products to Los Angeles, then on to destinations like Australia. And the trip from Hawaii to Los Angeles costs nearly three times more than shipping from Los Angeles to Australia.
With businesses trapped under high costs and crippled by impossibly unfair competition, the economic damage inflicted on citizens in Hawaii and Alaska alone has already reached billions of dollars—and continues to mount.
The Jones Act isn’t just bad for business—it’s illegal. The Constitution’s Port Preference Clause prohibits Congress from favoring ports of one state over those of another to ensure equal treatment in interstate commerce. The Jones Act, however, was specifically designed to disadvantage Hawaii and Alaska, then territories, despite strong opposition to the law’s discriminatory effects from Hawaiian and Alaskan officials.
Despite many attempts to repeal or reform the Jones Act, including the recent “Open America’s Water Act,” powerful entrenched interests maintain this protectionist scheme.
Represented at no charge by Pacific Legal Foundation, Bob and Kōloa Rum Company are fighting back with a federal lawsuit challenging the Jones Act’s constitutionality under the Port Preference Clause. Victory would restore equal footing among Hawaiian businesses and their competitors and finally cast away one of the nation’s most egregious examples of economic protectionism.
What’s At Stake?
- The Constitution demands that each state’s ports must be treated equally.
- The Jones Act is an outdated, discriminatory law that stifles competition, limits the economic opportunities of our client, and increases the cost of goods for all Americans.
