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Wednesday, February 08, 2006

Law - Wine shipping in other states, more of the same

"Committee kills proposal to let wineries ship in state" is the headline to this story from the Sioux Falls, South Dakota ArgusLeader. Some quotes:

PIERRE - A bill that would have made it legal for South Dakota wineries to ship wine within the state's borders failed to make it out of a House committee Tuesday.

HB 1187, sponsored by Rep. Casey Murschel, R-Sioux Falls, would have allowed wineries that produce less than 50,000 gallons of wine per year to ship wine to people of legal drinking age in South Dakota.

"They want the opportunity to grow into the existing three-tier system," Murschel said of the farm wineries.

The bill, which was voted down 10-3 in the House Commerce Committee, would have fixed an inequity that has existed since the U.S. Supreme Court ruled last May that states could not prohibit shipments from out-of-state wineries if they allowed them from in-state wineries.

While that opened some markets for the state's 11 wineries, they were still prohibited from shipping within the state.

From the Baltimore Sun, a story headlined "Md. wineries are told to halt direct sales: Comptroller's office decision poses threat to small producers." Some quotes:
The state comptroller's office has told Maryland wineries that they can no longer sell their wines directly to restaurants and retailers - erasing their long-held legal right to bypass the middleman and threatening the survival of some producers.

A Maryland wine industry spokesman says the decision could put up to half of the state's 22 wineries out of business. Kevin Atticks, executive director of the Maryland Wineries Association, said some Maryland wineries distribute about two-thirds of their product through direct sales to stores and restaurants and would lose money if they had to deal with wholesalers.

"It's a decision that could spell the end of the farm wine industry," Atticks said. * * *

The comptroller's decision is part of the continuing legal fallout from a Supreme Court decision last year that struck down state laws forbidding direct shipment of out-of-state wines to consumers if a state permits such shipments from in-state wineries.

When the high court ruled, the initial reaction from the comptroller's office was that "the decision should not have any effect" on Maryland's $8-million-a-year wine industry.

But then a lawsuit challenged the Maryland statute that prohibits direct shipments to consumers - one of the strictest laws in the nation and one backed by the state's powerful liquor distribution lobby. The lawsuit, filed by a Maryland resident and two Pennsylvania winery owners, argued that Maryland favors in-state wineries by allowing them to bypass wholesalers while out-of-state vintners cannot.

Rather than defend the current law, the comptroller's office - under advice from the state attorney general's office - chose last week to reinterpret the meaning of the statute. Though the state had held for a quarter-century that the law allowed Maryland wineries to take their wines directly to stores, the comptroller gave the wineries 60 days - until March 31 - to find wholesalers to distribute their wines.

Posted by Marcia Oddi on February 8, 2006 04:59 PM
Posted to General Law Related