18 May 2005 - The Supreme Court Decision on Shipping

So the Supreme Court has ruled. States must treat in-state and out-of-state wineries the same regarding shipping laws.

Since I’m in Maryland, we’ll start here – how is the ruling going to affect wine sales here? Immediately, not at all, since Maryland already prohibits shipping, period, whether it’s in-state or out-of-state. In fact, Maryland is one of five states where shipping is a felony. Given the grip large distributors have on the MD legislature and comptroller’s office, as well as the tiny size of Maryland’s wine producing “industry,” the situation is not likely to change soon.

I’m guessing that the short term effect of the ruling on a national level is that some states (Michigan and Illinois come to mind) will actually ban all wine shipments, while some will decide to allow all shipments (see New York). Follow the money. States with substantial wine production are already more liberal about shipping laws because the wineries have some financial/political clout.

Overall the ruling will have little impact on the status quo:
1. Wine is still considered a controlled substance – it is, after all, controlled by ATF (alcohol/tobacco/firearms) instead of UDSA (department of agriculture).
2. Big distributors (bootleggers during prohibition) still make the biggest state legislative lobby and they have comptroller’s offices on their side because tax collection is simplified. In Maryland the connection is even more insidious, since the MD comptroller’s office also acts as the distributors’ bill-collector (ask me about the state’s credit-control regulations sometime).
3. Retailers are scared to death that they’ll lose business to direct shipping. Easier to limit free trade than actually work a little harder to increase wine sales, I guess. Again, Maryland sticks out, this time for its anti-chain license regulations. Somehow it’s ok for chain restaurants to have multiple liquor licenses, but not chain retail supermarkets or liquor stores. So, Maryland is one of the last states where grocery stores do not carry wine or beer. Most wine shoppers are women, and most retail liquor stores in Maryland are less than inviting places to shop. Imagine how much wine consumption would increase in Maryland if women could buy wine and beer in more pleasant surroundings?

What are the long term possibilities? I’m no attorney, but show me how many times the 21st amendment has been successfully challenged in the Supreme Court? In other words, the battle is going to be fought at the state and local level, and who is going to fight that battle? Small wineries, yes, but what about the big guys? Do they have any reason to spend energy on the shipping battle? Considering they have adequate distribution, no. Distributors are adamantly against open shipping, concerned they’ll lose business. Short sighted thinking lacking any vision of a larger, faster growing, more interested wine drinking public, but not surprising. Who’s left? Consumers. I wish them (us) the best of luck.

I’m a retailer, so you might wonder where I stand on the issue. Despite the fact that I pay thousands of dollars for the license and privilege of selling alcoholic beverages, I would like to see all the regulations governing wine sales come crashing down. Do away with any regulations regarding shipping; eliminate the legal protection of the three-tier system – a three tier system -- producer/supplier to distributor to retailer -- is a natural business model that will thrive without the legal crutch; remove wine from ATF control and put it where it belongs, in the USDA; let all licensees sell wine any day, including Sunday.

Americans are soda and beer drinkers. Despite increases in the past 20 years, we’re still 50th or so worldwide in per capita wine consumption, 5th or so in wine production! Eliminating legal barriers would help make more of us wine drinkers, and our laws controlling abuse will help keep us responsible wine drinkers.