Supreme Court Overturns Wine Shipping Laws

By Ryan Snyder

On Monday, California winemakers celebrated victoriously when the U.S. Supreme Court ruled that states could not discriminate against out-of-state wineries that wanted to ship wine directly to consumers. The 5-4 decision affected New York and Michigan, which allowed in-state wineries to ship to customers within that state, but did not grant out-of-state wineries the same rights.

But, don't pop open the bubbly too soon. While these laws were overturned, that doesn't mean all wineries will automatically be allowed to ship right to the doorstep of any New Yorker or Michigander. Both states will have to re-examine their ideals and make one of two possible decisions: Allow all wineries to ship to their state, or allow no wineries to ship to their state.

Is there really a possibility that either state could prevent any wineries from shipping to their state? Sure. Fifteen states currently ban all direct wine shipments, and both Michigan and New York could potentially follow suit.

The first issue facing states is the need to ensure that minors will not be able to purchase alcohol illegally. By not allowing Internet purchases, the states believe they retain tighter control over alcohol purchases by requiring age verification via personal identification upon purchase.

The second issue is the possible break-up of the current 3-tier system of alcohol sales. Wine producers sell their wines to regional distributors, which then sell the wine to retailers. Distributors have been lobbying against direct selling, which they believe could present a large obstacle to their business. We may also see large wholesalers joining the lobbying efforts, to prevent any possible dips in sales.

The final issue is that states want to guarantee they'll receive sales tax for any wine purchases. While some are hesitant to allow Internet sales, they have no qualms about selling within the state because they are able to enforce taxation wine shops. If wineries and wine websites can prove that they'll pay sales tax to the state, it may quell any fears the states have.

There are currently six other states that have laws allowing in-state wine shipments while outlawing out-of-state wine shipments: Connecticut, Florida, Indiana, Massachusetts, Ohio and Vermont. Overturning wine laws in Michigan and New York does not invalidate the laws of these states. Instead, they will be heard by the Supreme Court on an individual basis. Ohio Wine Producers is one group eager to determine the probabilities of the Supreme Court overturning Ohio’s laws and is currently meeting with its legal counsel to assess the situation.

Meanwhile, these fifteen states do not allow wineries to ship to their state: Alabama, Arkansas, Delaware, Kansas, Kentucky, Maine, Maryland, Mississippi, Montana, New Jersey, Oklahoma, Pennsylvania, South Dakota, Tennessee and Utah. The Supreme Court’s decision will not directly affect these states – only the residents of each state have that ability. If you live in one of these states, be sure to contact your state representative and encourage him or her to challenge this law.

While the Supreme Court’s decision may not mean much for wine geeks in the 21 shunned states who have to fly all the way to California just to bring back a case of wine from their favorite winery, it does provide one thing: Hope. Hope that one day we will be able to logon to the website of any winery, and open the door a few weeks later to find a man dressed in brown holding a package filled with Bacchus-inspired goodies and bearing a smile.

However, we may be missing the bigger picture. By opening up the shipping channels to any winery the real winners will be the Mom and Pop wineries that aren’t represented by the major wholesalers and distributors. Tourists visiting smaller wineries such as Fratelli Perata in Paso Robles immediately fall in love with their wines because they develop a personal connection with the family members at the winery. These family wineries often rely on hand-selling their products and by allowing individuals in any state to buy their wines, small wineries will be able to stay afloat and some will be able to thrive.