April 19, 2018

The Hill: When states treat alcohol like contraband, entrepreneurs suffer

By Anastasia P. Boden Attorney

Published by The Hill April 19, 2018.

Alcohol Prohibition was one of the most disastrous experiments in this nation’s history. Its failure was so manifest that within just 13 years, the nation pivoted from enacting the Prohibition Amendment (with the support of 46 states) to enacting the Repeal Amendment (with the support of 38). Yet despite this lesson of history, many states continue to treat the alcohol industry as a second-class business, subjecting it to restrictions that would be considered outrageous if applied to other products.

Virginia, for example, prohibits businesses from advertising the price of any happy hour special. The state also outlaws using any term other than the sanitized “drink special,” or generic “happy hour.” There can be no “Wednesday Wine Night,” in Virginia. Instead, there can only be Wednesday “drink specials,” where discounted drinks are ostensibly offered but the price remains a mystery until one gets to the bar.

What’s the point of denying consumers access to truthful commercial information? Perhaps Virginia paternalistically believes that creative advertising would lead to overconsumption, but there’s no evidence that consumers in neighboring Maryland and DC are unable to control their alcohol intake when exposed to such indecent advertisements as “Turn Down for What Tuesday,” or “$5 draft beers.” Virginia’s regime serves only to create an absurd parody of the Prohibition Era; businesses are once again forced to advertise with a wink and a nudge, even though, now, the underlying business practices are perfectly legal.

Perhaps Virginians should consider themselves lucky. In Ohio, no alcohol advertisement can contain Santa Claus. In Alabama, alcohol advertisements cannot be too “sensuous.” Other states regulate the type of container from which you drink alcohol. In Florida, standard-size growlers — traditionally used to carryout beer from breweries — were illegal up until 2015. When a small brewery sued, the state responded with a straight face that without the law, a person might consume an entire growler, drive drunk, and tell an unsuspecting police officer he’d “only had one drink.” In fact, the real reason Florida banned growlers and not six-packs was that established beer companies feared competition from craft breweries.

Still other states have antiquated regulations prohibiting tasting rooms or brewpubs — laws that disproportionately affect upstart craft brewers. Due to consumer demand, many states have grudgingly relaxed these laws, but even the “modernized” laws have led to new and unexpected restrictions on personal liberty. Alabama permits brewpubs, but limits how many beers they can sell to a consumer for carryout. In order to ensure that craft breweries were selling under this cap, the state proposed a rule that would have required brewers to record and store the names, phone numbers, addresses, and birthdays of anyone who purchased craft beer for home consumption. That law would not only have been a logistical nightmare, it also would have meant a remarkable loss of privacy for adults who just want to enjoy a craft beverage.

Perhaps the winner for most absurd alcohol law is Indiana, which bans the sale of cold beer at grocery stores and convenience stores, but exempts liquor stores. When repeal was proposed, temperance unions (yes, those still exist) warned that cold beer sales would lead to widespread drunk-driving. (It’s unclear why anyone who really wanted to drink and drive wouldn’t just drink the warm beer, or go to a liquor store). The real reason the law survives, of course, is to protect the exempt liquor stores from fair competition.

Many of these laws are not only silly and outdated; they’re also unconstitutional. Although some states act as if there’s an “alcohol exception” to the Constitution, the Supreme Court has made clear that there is not. In 1996, for example, the Supreme Court struck down Rhode Island’s ban on advertising liquor prices.

Armed with this precedent, a Virginia restaurateur is challenging Virginia’s happy hour advertising ban in federal court. Entrepreneur and chef Geoff Tracy just wants to tell his consumers about his legal happy hour practices. Virginia’s law not only restricts his First Amendment rights, it also hinders his ability to compete with other businesses based on happy hour specials.

Whether you are a happy-hour regular or a teetotaler, the fact that states continue to enact these unconstitutional and misguided laws should be troubling. The same rationale could easily be used to suppress your “vice” of choice, be it energy drinks, “high-fat” foods, or anything else that may fall out of favor. Just as in any other industry, when entrepreneurs are left free to advertise and compete, consumers win.

Anastasia Boden is an attorney with the Pacific Legal Foundation (PLF) and a member of the Federalist Society Regulatory Transparency Project. Tommy Berry is also an attorney with PLF. Together they represent Chef Geoff is his First Amendment lawsuit.

 

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