My dad and I took a winding drive through Napa Valley when my dad stopped by a winery to buy a case of wine. At the counter, the cashier asked us where we were from, to which my dad said Kentucky. This prompted the man to pull out a massive binder with the state-by-state rules for shipping wine.
And much to my dad’s dismay, Kentucky was listed in the binder as a no-ship state. This is a prime example of one of Stigler’s types of regulations – controlling substitutes. Kentucky’s bourbon industry knows very well that fans of liquor also tend to be fans of fine wine – so by restricting their ability to buy California wine, they can reduce competition for Kentucky residents.
There’s one problem with no-ship rules…other states retaliate. California had a similar law prohibiting shipments of Kentucky bourbon to their state to prevent competition with their precious wine.
While it seemed like capture was here to stay, the COVID-19 pandemic and the ensuing economic pressure on Bourbon Trail tourism pushed distillers to finally sign on to a new law that would open up shipments of bourbon and wine between both states. Public interest finally prevailed – and now Kentuckians and Californians can get whatever bourbon or wine they want (within the quantity restrictions).
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