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Dan Walters: Old liquor law faces a new test in California Legislature

When Prohibition ended 79 years ago, California replaced the bootleg liquor trade with a legal monopoly – a series of laws that locked in industry marketing practices and enforced industry-established retail prices.

The misnamed “fair trade” laws were the handiwork of the Capitol’s dominant lobbyist of the era, Artie Samish, who later described it this way in his autobiography:

“Only by regulation and enforcement could the alcoholic beverage business thrive and prosper. Cutthroat competition could have been ruinous. So I put through fair-trade laws to protect wholesalers, distributors and retailers. All of them make a profit in California, and they always have.”

Samish went to prison for treating the Legislature like a puppet (he was once photographed holding a ventriloquist’s dummy he named “Mr. Legislature”). But his laws remained on the books for decades, until the courts struck down price-fixing.

Nevertheless, other portions remained intact. One is called “tied-house” and ostensibly separates liquor trade into three separate levels – producers (brewers, vintners and distillers), wholesalers and retailers – and prohibits intermingling.

One says “ostensibly” because over the years, the Legislature has granted many specific exemptions, such as one given to members of the Bronfman distilling family (Seagram) when they purchased Universal Studios, which sold liquor in its theme parks, and another for movie titanFrancis Ford Coppola when he, as a winery owner, wanted to open a restaurant.

The many exemptions indicate that the tied-house law is overdue for repeal or at least an overhaul. But wholesalers, who fear direct sales to consumers by producers and/or being bypassed by producer-to-retailer arrangements, want to keep it intact.

Furthermore, Capitol politicians like having exemption-seekers come to them, hats in hand. The tied-house law has generated a steady flow of campaign contributions and lobbying fees, and scarcely a year passes without at least one exemption bill being introduced.

It appears that 2013 will be no exception, because a newly formed association of 22 small California distillers wants to emulate wineries and breweries and receive legal permission to stage “tastings” to sell their whiskeys.

“California is a huge presence in the wine world and has also produced notable brewery entrepreneurs,” says Cris Steller, an El Dorado County distiller and secretary of the California Artisanal Distillers Guild.

He said “a level playing field for California distillers” would provide “a positive economic impact” for more than just his industry.

The guild has retained a lobbying firm and lined up a legislator to carry its “Taste California” bill, but wholesalers, who see it as a further erosion of their role, will strenuously oppose it.