The Fate of Interstate Retail Wine Sales Hangs in the Balance
With the difficulties we had this past holiday season shipping wine to friends and family, He and She were reminded of just how complicated it can be to figure out who can be sent what across state lines. Here we are in mid-January, and Santa has yet to deliver some of our gifts. Why is getting wine shipped such a challenge in this era of online shopping and overnight delivery?!
As Naked Wine Angels, we are able to get ahold of unique and delicious wines produced by small-production winemakers from around the world that aren’t available in wine shops. He and She love to share our best finds with fellow wine-lovers - but getting the juice to them is where the “fun” begins. Kristina Benzler, of NakedWines.com would love to see the laws updated to meet online customer demand. “I understand your frustrations, I’ve worked here for five years now and all the laws on what, when, and where we can ship is frustrating to all of us. We wish that we could ship all of our wines to all states, however we have to follow the laws. We can only ship wines that have been finished at our facility to some states, and since we fund independent winemakers, not all of our wines are finished at our facility.” Check out our previous post to learn more about what being a Naked Wine angel is all about.
We learned a lot stumbling our way through our recent orders, and hopefully can shed some light on the subject for you all. Perhaps the laws will change this year.
The Rules and Regs
Naked Wines can only ship domestic wines to New York, and nothing sparkling. Don’t expect wine sent to New Jersey to arrive quickly - All wine being shipped into the state must first pass through a FedEx facility in Paterson which only processes the wine two times weekly. Our friends in Ohio can receive 24 cases per year, while those in New Mexico and Montana are limited to two cases. Oh, and Montana consumers must have a connoisseur’s license to receive wine shipments. Direct shipments to Utah are prohibited and are considered a felony offense. Carriers won’t ship directly to consumers in Kentucky because if they mistakenly sent wine into one of the dry counties, they would be committing a felony as well.
The current laws prevent wine consumers in 36 states from receiving shipments of wine from out-of-state wine stores, wine retailers, wine-of-the-month clubs and/or wine auction houses. If you live in one of these 15 states you are fortunate to have wine shipped to you without issue:
But Are these State Laws Constitutional? All Rise for the Supreme Court!
Lucky for us, we aren’t the only ones annoyed by the current alcohol shipping laws. The U.S. Supreme Court has agreed to take the Tennessee Wine and Spirits Retailers Association v. Blair case this month which will have implications for wine shipments across state lines. The issue is whether the 21st Amendment empowers states, consistent with the Dormant Commerce Clause, to regulate liquor sales by granting retail or wholesale licenses only to individuals or entities that have resided in-state for a specified time. The case is due to be argued on January 16, 2019.
Many eyes are watching this case. In November 2018, the group WineFreedom.org set up a GoFundMe campaign to raise $25,000 to hire attorneys to prepare a consumer-oriented Friend of the Court Brief (also known as an Amicus Brief) appealing the shipping laws. Within a couple hours of announcing their campaign, they were halfway to their goal. Wine Freedom exceeded their fundraising objective in just days, with only 335 of us donating, some giving as much as $1,000. The funds raised were used to pay Kirkland & Ellis LLP to prepare the brief, with the National Association of Wine Retailers being the party of interest. The document was submitted to the court on December 20, 2018 and it states “this case has profound implications for the interstate and foreign wine markets.”
The Supreme Court has received many Amicus Briefs for this important case with opposing views from wine wholesalers, retailers, think tanks and special interest groups (ex: National Alcohol Beverage Control, Wine & Spirits Wholesalers, Open Markets Institute, Center for Alcohol Policy). It can be difficult to get a law repealed once it’s on the books. He and She are unsure of how the court will rule, but we are hopeful.
The 21st Amendment of the United States Constitution was passed in 1933 to end the national prohibition on alcohol. The reason state alcohol laws are so varied is because of Section 2 of the 21st Amendment which gives states the authority to regulate alcohol sales within their own borders, "The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited."
These state laws are why we can’t ship wine to friends in Utah, why restaurants in New York City can’t serve mimosas at brunch until noon, and why you can’t buy a case of beer before Sunday’s big game in Mississipi.
Tennessee’s current laws require alcohol retailers to be residents of Tennessee for at least two years before becoming eligible for a retailer permit and the first permit is only good for one year. To renew the license one must have resided in Tennessee for ten years! The law is meant to curtail competition among wine retailers in Tennessee. One of the effects of this obsolete law is that it keeps out-of-state retailers from opening shop and shipping alcohol into Tennessee.
Sidebar: The law was challenged by retail giant Total Wine and the 6th Circuit Court of Appeals upheld Tennessee’s residency requirement for alcohol retailers. In the legal community, it’s believed that the U.S. Supreme Court has granted cert (agreed to hear the case) because of the scathing dissenting opinion written that says this law turns the commerce clause on its head. The U.S. Supreme Court accepts less than one percent of cases brought to them and hasn’t addressed a case like this since 2005.
In the Tennessee v. Blair case, out-of-state alcohol retailers are arguing that Tennessee’s residency requirements are a violation of the Dormant Commerce Clause. While Tennessee Wine and Spirits Retailers Association is arguing that Tennessee has the authority to regulate state alcohol sales because of the 21st amendment.
A similar issue was settled for alcohol producers by the U.S. Supreme Court in 2005. Now, this Tennessee Wine and Spirits Retailers Association v. Blair case will settle this issue for alcohol retailers. A ruling is expected this spring.
How You Can Help
Tell your lawmakers to support consumer access to wine in all states. Ask your state representatives to sponsor a bill to protect your consumer rights. Don’t let the giant wholesalers and retailers dictate what wines are available to you. Don’t let the special interest groups keep you from your favorite bottles! Hopefully, sending and receiving wine will become easier by next holiday season.
We appreciate and welcome your comments. Cheers!
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