Illinois and its Payoffocracy
August 8, 2008 – 9:35 am
Since 2005 when Illinois Governor Rod Blagojevich declared it so, September is Illinois Wine Month in that state. That month is coming up and the outstanding Illinois wine industry will get some well deserved recognition. The industry has come a tremendous distance in the past 20 years producing outstanding wines and delivering Illinoisans and visitors with a new attraction.
It’s an unfortunate occurrence however, that this will be the first Illinois Wine Month since the Illinois legislature decided to punish its most successful wineries. A law was passed in 2007 and took effect this past June that prohibits Illinois’ largest wineries from “Self Distributing” wine to retailers and restaurants. Up until this past June, Illinois’ most successful wineries, Galena and Lynfred, as well as every other winery in the state, had been able to choose to sell their wines to wholesalers for distribution to retailers and restaurants or they could have sold their wine directly to restaurants and retailers. House Bill 429 changed the law so that only wineries making less than 25,000 gallons of wine per year would be allowed to bypass the wholesalers and sell directly to restaurants and retailers on their own. And even then, they can only sell 5,000 gallons per year in this manner.
Because states may not discriminate against out of state wineries, they too may sell directly to Illinois retailers and restaurants directly—if they make less than 25,000 gallons per year.
25,000 gallons amounts to a little over 10,000 cases of wine annually. The 5,000 gallons of wine wineries under this production cap may sell amounts to a little over 2,000 cases.
It is of course true that there is no legitimate public policy justification for shutting out Illinois’ largest wineries from the self distribution channel and forcing them to use very expensive wholesalers to distribute their wine. None. The only reason this provision is in place today is to serve to protect Illinois’ obscenely politically well connected alcohol wholesalers from competition. Illinois wholesalers have been able to purchase a near monopoly on distribution of wine in Illinois to the detriment of Illinois wineries, Illinois retailers, Illinois restaurants and Illinois consumers.
How could this be possible?
In 2007 alone Illinois alcohol wholesalers contributed nearly $700,000 to state political campaigns—more than $1,900 per day in political payoffs contributions. The Associated Beer Distributors of Illinois alone contributed $460,000 of the $700,000, making them the single largest individual contributor in Illinois in 2007. Between 2000 and 2006, Illinois alcohol wholesalers contributed more than $5.7 million dollars to state political campaigns.
This is how a completely unjustified new law with no visible public policy benefits gets enacted and how Illinois’ most successful wineries get punished. All it takes is money.
Were the state of Illinois not a Payoffocracy and instead a real democracy, Illinois wholesalers would not be protected from competition and would be forced to demonstrate their usefulness to the very wineries that are now forced by law to use their “services”. It should also be noted that were the services of Illinois wholesalers in anyway an absolute necessity to Illinois wineries or to out-of-state wineries and if Illinois wholesalers were capable of competing without economic protection from the state, they would never have forced this repugnant law on the state.
It’s worth noting how the Illinois Beer Wholesalers Association and other supporters of HB 429 justified this legal abortion of a law. Donna Spagnola, chairman of the Board of Directors of Associated Beer Distributors of Illinois said, It’s a safety issue. What happens when you ship things direct is you lose that ability to trace it. It (distribution) addresses quality and freshness issues. It ensures the product is rotated, ensures you don’t have tainted products.”
You know what Ms. Spagnola is talking about when she discusses things like “the ability” to trace wine don’t you? She’s talking about the filing of a piece of paper with the state. Thank God we have alcohol wholesalers to carry out the complex task of filling out paperwork and putting it in an envelope, stamping it and carrying it to the mail box.
So, as Illinoisans and Illinois wineries enjoy their well deserved recognition via Illinois Wine Month in September, they also might take a moment to appreciate the price the state pays and its residents pay in integrity and honesty in order to get wines to market.