Letting USPS Carry Alcohol Could Be Great -- If It Works

[Erik Owens]

Source: https://www.winebusiness.com/

by Alex Koral

December 12, 2023

Neither snow nor rain stays the efforts of the United States Postal Service (USPS), that is unless alcoholic beverages are concerned. This is because, under Title 18 of the US Code, USPS is currently prohibited from carrying any vinous, malt or spirituous liquors under any circumstances.

 

Over the last few years, however, several attempts have been made by proponents of direct-to-consumer (DtC) shipping of alcohol to remove this stricture. In 2023 such efforts took the form of H.R. 3721, which sought to enable USPS to serve as a potential carrier servicing the DtC shipping market. 

 

While H.R. 3721 is unlikely to pass in the current Congress (indeed, what can?), that is not for a lack of interest or good cause. After all, the ban on USPS carrying alcohol is just one more remnant of the Prohibition era that makes less and less sense in a time when shipping of wine is nearly ubiquitous.

 

Besides updating anachronistic laws, there is a lot of potential benefit that could come from letting USPS carry alcohol. For one, DtC licensees would have more choice when looking for a carrier to work with—not that the active wine delivery services are lacking, but competition can drive innovation and improvements. In addition, many rural areas of the country are not serviced by even the largest of private carriers and instead rely only on USPS deliveries. As such, wine consumers living in those areas are currently unable to access the DtC wine shipping market without a change in the law. It was also estimated that H.R. 3721 could generate $190 million in additional annual revenue for USPS, which would be a huge boon for an agency that regularly posts large deficits. 

 

It is no wonder then that H.R. 3721 received broad, bipartisan support along with a ringing endorsement from the National Association of Letter Carriers.

 

As reasonable as these arguments are, there are some potentially thorny issues that could affect USPS’s ability to serve the DtC alcohol shipping market, which so far have largely gone unmarked upon. While none of these issues are necessarily insurmountable, they should be at least well considered well ahead of whenever USPS might start carrying boxes packed with wine.

 

Why shouldn’t USPS carry alcohol?

 

Perhaps the biggest unresolved question that needs to be addressed if USPS will start carrying alcoholic beverages is how it will manage the various state laws that govern the DtC wine shipping market. 

 

It is paradigmatic in the industry that wine must be shipped in compliance with the laws of the state where it is being shipped to, and states imposed numerous requirements on the carriers servicing the market. These include the need to be licensed by the state, the need to file regular reports detailing the shipments they’ve made to consumers and the need to take responsibility for any error that might occur during the delivery—each of which raises serious federalism questions.

 

It is perfectly reasonable for a state to require carriers to be approved and licensed by their alcohol control board before carrying alcohol, and private carriers are well-adapted to manage such regulatory burdens. But, as a federal agency, who in USPS would be the owner of their licenses? The Postmaster General? The President? Would the licenses need to be updated after every election?

 

And critically, what would happen if a state found issues with DtC deliveries made by USPS? Several years ago, the leading carriers came under extreme scrutiny from a number of states alleging problems with their alcohol delivery programs, including not properly checking IDs at the time of delivery and shipping from unlicensed sources. One of the responses from some states was that, if those carriers couldn’t address those alleged problems, then maybe they shouldn’t be able to ship anything at all. 

 

Thankfully those threats went nowhere, and the carriers adopted practices to safeguard wine shipments. But what would happen if Massachusetts or Louisiana determined that the risk of a few questionable deliveries of alcohol meant that USPS had to shut down entirely in the state? Yes, it is perhaps an unrealistic situation, but any attempt by a state to crack down on USPS in relation to alcohol shipping could have huge consequences that should be considered sooner than later.

 

Further, one of the primary arguments for letting USPS deliver alcohol, the potential revenue it could bring the agency, falls a little flat under further scrutiny. 

 

Indeed, being a carrier of alcohol can in itself be costly. Wine is a fragile product that requires careful handling and protection from the elements. The current leading carriers for the DtC wine shipping market have invested large sums purchasing climate-controlled vehicles and storage facilities to ensure that no shipments going to Texas in July or Michigan in December are ruined by weather. And that is on top of the outlays needed to buy ID scanners and otherwise track packages containing alcohol to ensure they are properly delivered. 

 

And it is unclear how much of the estimated revenue USPS will actually receive. The entire DtC wine shipping market brings in about $4 billion annually. $190 million would represent about 5% of that amount, which is pretty much what is currently spent by the entire market on annual shipping costs. For USPS to realize that full amount would require it to take over most of the market. Even if that were likely, it’s questionable how beneficial it would be to have a government agency take that much business from private carriers.

 

Why not?

 

Ultimately, it is hard to advocate against changing the law to permit USPS to carry alcohol in compliance with state laws. There is clear interest and support for removing the outdated prohibition and expanding options for the DtC shipping market, and no good reason to continue to block USPS from carrying alcohol when the major carriers are already doing so. 

 

Even if H.R. 3721 doesn’t pass, it has widespread support and so similar bills will almost certainly be introduced until something passes.

 

The concerns raised above should not be considered dealbreakers, but more food for thought. Even if the projections for revenue to USPS don’t fully pan out, any additional earnings will be appreciated. And controversies between state and federal agencies are not uncommon, so any issues around how USPS might be policed for its alcohol deliveries can be addressed.

 

That said, the devil is always in the details and so it would be better to address those devilish issues sooner than later.