Supreme Court asked to review interstate wine shipments

News Wine News
  • Friday 12 March 2004

The United States could be on the verge of a revolution in wine sales and consumption patterns across the country.

The United States Supreme Court, in Washington, has been petitioned to hear two different cases involving interstate shipment of wine, which, if accepted and ruled upon, could dramatically change the way the wine industry does business.

Both cases stem from ambiguities in the federal Constitution. At issue is whether interstate wine shipments are governed by its 21st Amendment, which ended Prohibition and authorizes states to regulate the sale of alcohol, or are governed by the so-called commerce clause in Article I, which authorizes Congress ‘to regulate commerce . . . among the several states.’

On March 8, the Washington-based Institute for Justice, which calls itself a ‘libertarian public-interest law firm,’ asked the Supreme Court to review a February decision by a lower-level federal court in Manhattan that upheld New York State’s law banning direct shipments of wine to New York State consumers by out-of-state wineries.

The Institute represents a small Virginia winery and a small California producer wanting to sell wine in New York, and also several New York consumers ‘who cannot purchase their wines because of the ban.’

Wineries in New York are allowed to ship wine to New Yorkers, a condition that the Institute calls ‘economic protectionism.’

In January, Michigan’s attorney general, Mike Cox, asked the United States Supreme Court to review a lower-level federal court’s ruling that Michigan’s ban on direct shipments into the state was unconstitutional. Such shipments bypass Michigan’s regulated alcohol-tracking and tiered distribution system, through which producers sell to wholesalers-distributors, who in turn sell to merchants and restaurants, who in turn sell to the public.

On March 5, the attorneys general of 36 states filed a brief with the Supreme Court that supported Cox’s position. The advocates of bans on direct shipments say that the states need regulatory systems to collect taxes and to ensure that alcohol does not fall into the hands of minors.

Opponents of this argument in the wine industry and among consumers maintain that it is a smokescreen whose real intent is to protect liquor and wine distributors, who have the most to lose if free trade flourishes.

Currently, 24 states ban direct interstate shipments of wine and 25 permit them. A 2003 study by the Federal Trade Commission, a federal agency, said that bans on direct shipments constituted a serious barrier to internet commerce, and that states’ concerns about tax collection and minors’ access to wine could be satisfied through less burdensome methods.

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