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Wednesday, February 08, 2006

Ind. Law - More on: Wine shipping bill passes House: An example of "Be careful what you wish for"? [Updated already]

The "wine shipping" bill, HB 1190, has passed the House and is now in Senate Committee (Commerce & Transportation). The Committee is scheduled to meet today, but HB 1190 is not listed. That may be a good thing, according to an Indianapolis Star editorial today that concludes:

HB 1190 does not help consumers, aid wineries or reduce underage drinking. It's merely a wholesaler protection scheme. State senators should vote it down.
Perhaps, but would that leave the State back where we were on Nov. 27th (see this must-read ILB entry) when, as reported by the Star on that date, "Marion Superior Court Judge Thomas Carroll signed a preliminary injunction last week that allows in-state shipments through March." The injunction was necessary because Indiana's Alcoholic Beverage Commission had recently sent out a letter stating "Indiana law does not permit Indiana wineries to ship wine directly to consumers," thereby halting the long-time practice. With that in mind, read today's Star editorial.

Yesterday's Marion Chronicle Tribune had a story by Jennifer A. Wells headed: "Buying local wine could get tricky: Bill would stop direct shipping to consumers." It too deserves reading in full. The report begins:

Consumers of Indiana wineries may soon lose the option of having wine shipped directly to their homes.

A bill that passed the Indiana House of Representatives last week prohibits wineries from shipping wine directly to consumers. Instead, a complicated process, including wholesalers and local package stores, would be required.

Under the proposed legislation, consumers would order wine from a winery, which would then have a local wholesaler pick up the wine. The wholesaler would then deliver the wine to a local package liquor store, where the consumer must pick up and pay an extra fee for the wine.

A $2 handling fee would be added to the price of the wine for the distributors and another for the retailer, Oak Hill Winery Owner Rick Moulton said.

"We can't do that," he said. "We don't have the money the distributors have."

(For recent background, start with this Feb. 2nd, and this Feb. 3rd, ILB entry. Or use this link to reproduce a list of all ILB entries containing the phrase "wine shipping.")

[Updated already] The Fort Wayne Journal Gazette has this excellent and knowledgeable editorial today titled "Dump the wine bill" (although it too doesn't answer the question I posed re the Star editorial). Some quotes:

House Bill 1190 is legislation turned sour for Indiana winemakers. What started out as an effort to end confusion regarding in-state shipping of wine now threatens to shut down most of the state’s wineries.

Winery owners hoped lawmakers would pass a bill this year to explicitly protect the right to ship their product within Indiana. Wine shipments were suspended by the state last year after the U.S. Supreme Court ruled that in-state and out-of-state wineries can’t be treated differently. In November, an Indiana court issued an injunction to stop the state from enforcing the ban.

Several bills were filed to address the issue, but only HB 1190, authored by Howe Republican Marlin Stutzman, survives. To his credit, Stutzman tried to help the winery owners, but alcohol distributors, who pack a considerable political punch, intervened and had the bill rewritten to ensure they would get a piece of each sale. The amendment also took away the right for wineries to sell their product directly to retailers and restaurants.

The wineries grudgingly accepted the compromise, but the worst was yet to come. The legislation that emerged from committee had what Larry Satek, owner of Fremont’s Satek Winery, calls a “poison pill” – language that would require the state to strictly interpret Indiana alcohol law in the event of a court ruling. If a federal court ruled, for example, that it was unfair for Indiana winemakers to operate tasting rooms here if California winemakers could not, a state official sympathetic to the distributors could shut down all tasting rooms, effectively putting most Indiana wineries out of business.

“With this language, we have no degree of confidence in the business climate,” Satek said. “Who would want to invest in a business with such uncertain terms?” * * *

Sales of Indiana wines represent only 2 percent of the state’s wine sales. While they might not pack the economic punch of a massive factory hog farm, wineries are exactly the sort of small business Indiana ought to encourage. They are environmentally friendly, provide jobs and draw tourism dollars. It’s not just wine buyers, but all Hoosiers, who should let the General Assembly know this unique industry deserves the opportunity to exist and to grow.

Posted by Marcia Oddi on February 8, 2006 07:44 AM
Posted to Indiana Law