« Environment - What you need to know for recycling electronics in Indiana | Main | Ind. Law - "A free, lifetime perk that has to come to an end" »

Wednesday, January 11, 2006

Ind. Law - Small wineries in Illinois buffeted by the alcohol-distribution lobby; What is happening in Indiana?

"Wineries fight for right to ship" is the headline to a story today in the St. Louis Post-Dispatch. Some quotes from the beginning of the lengthy report:

SPRINGFIELD, ILL. Illinois' powerful alcohol-distribution lobby is using its clout and money in an attempt to bottle up the state's tiny wine industry with new restrictions on mail or Internet sales, the wineries allege.

They warn that the proposed restrictions could ultimately mean fewer choices for the state's wine drinkers - especially connoisseurs of small-town labels out of Southern Illinois.

A U.S. Supreme Court ruling last year decreed that states cannot set up different rules on mail-order sales for in-state and out-of-state wineries. That means Illinois either has to restrict all in-state mail-order wine, or drop its restrictions on out-of-state mail-order wine (and, by implication, all other alcohol).

Pending legislation, backed by wholesalers who supply alcohol to Illinois liquor retailers, would lump in-state wineries with out-of-state, and put restrictions on both in selling directly to customers over the Internet and by mail.

The distributors argue that such direct-sale alcohol can too easily fall into the hands of kids.

But the wineries claim the wholesalers' real problem with the direct-market trend is that it cuts out the middleman - them.

While the direct-mail market is relatively tiny compared with traditional liquor store sales, "It's really big for the small mom-and-pop winery in the state of Illinois," said Richard Faltz, president of Fox Valley Winery in Oswego, Ill., southwest of Chicago.

"The vast majority of Illinois wineries are too small to get the attention of the distributors. They don't make enough wine," Faltz said. "So if they can't sell their wine to their wine club members . . . they're out of busines."

What is going on in Indiana? The ILB's last reports were Dec. 16, 2005 and Nov. 29th, 2005. Included in the November entry is a quote from the Indianapolis Star that begins: "Indiana's 31 wineries won a temporary victory in their fight to ship products directly to consumers' homes when Marion Superior Court Judge Thomas Carroll signed a preliminary injunction last week that allows in-state shipments through March."

A Dec. 10th article in the Fort Wayne Journal Gazette by Dan and Krista Stockman has good coverage of the anticipated legislation and issues in the upcoming session. Here is the beginning:

Until March, at least, you can order wine from your favorite Hoosier winery and have it shipped to your home. But you still can’t have wine shipped to your house from your favorite California or New York or Illinois winery. That issue should have been resolved in May by a U.S. Supreme Court ruling, which said states must treat in-state and out-of-state wineries equally in regards to shipping, but in Indiana the ruling only made things hairier.

Hopefully, that will all change when the General Assembly reconvenes next month. At least two bills addressing the issue of who wineries can sell to are expected to be introduced. One will be favored by the wineries, while the wholesalers will like the other one.

Rep. Eric Koch, R-Bedford, has been working with winemakers, having three in his southern Indiana district. Work on his bill – still being written – began shortly after the Supreme Court ruling when the Indiana Alcohol and Tobacco Commission issued a notice that Indiana wineries are not allowed to ship within the state – a practice that had been going on for 30 years.

Koch said his legislation, which will be introduced in the Senate by Sen. Brent Steele, R-Bedford, simply restores the practice the state allowed for decades. “It would allow a farm winery to ship or sell wine directly to Indiana residents for personal use,” he said. There would be limits on how much a winery could ship to each customer and taxes would have to be collected on the sales, Koch said.

Proposed 2006 legislation. A number of wine bills have been introduced; here is a list.

Posted by Marcia Oddi on January 11, 2006 05:34 PM
Posted to General Law Related