Lamberth in Wonderland: Fulfillment House Ban lifted in Tennessee, but still be concerned

 

State Representative William Lamberth has lifted his proposed ban on fulfillment houses, alleluia!

After hearing from many consumers and Tennessee wineries, Mr. Lamberth discovered fulfillment houses are important to the wine industry, and that many Tennessee wineries utilize fulfillment houses. Not one to upset his constituents, Lamberth backed off his proposal.

One must ask, why are you introducing these bills in the first place? Obviously, it only took him a week of hearing about real world damage, which caused him to back off. I am sure Representative Lamberth did not discover the fulfillment house issue on his own, but was informed by a special interest in the liquor field. Since he compared fulfillment houses to distributors numerous times, I imagine the guess can’t be too hard who pushed this.

But let’s look at Lamberth’s analogy that a fulfillment house should be regulated and licensed like a distributor. His analogy fails from many errors. Specifically, he misses the point that distributors are regulated because they have a physical presence in the state and sell alcohol. This is something fulfillment houses do not do. Remember this, fulfillment houses, store, pick, pack, and get a package ready to put on a UPS or FedEx truck.

I think Representative Lamberth misunderstands the fulfillment house’s role in the industry. This was specifically illustrated when he couldn’t correctly answer a question on whether and how much tax a fulfillment house pays.

Gladly, I’ll answer the question for him, they pay none! Let’s repeat, the fulfillment houses store, pick, pack, and get a package ready to put on a UPS or FedEx truck. It is the winery, for whom the fulfillment house provides a service, that pays the tax. Nobody that knows the liquor industry well, would state that fulfillment houses are evading taxes.

Again, we are stuck with another sad situation, a law maker that lacks a deep understanding wants to overregulate what them don’t understand. In the end, big government is going after businesses providing a value-added service. Fulfillment houses provide small winery’s lower cost and access to more markets. But again, when you have large players wanting to reduce direct-to-consumer wine shipping, well you will find ways to make life difficult in the marketplace.