Archive for May, 2006
"Domestic farm winery" bill passes Arizona legislature
May 29th, 2006
Senate Bill 1276 passed the Arizona state House last week and now awaits Governor Janet Napolitano’s signature. SB 1276 would continue to allow for the direct shipment of orders where “the wine was purchased while the purchaser was physically present at the winery”. The bill would also allow for off-site orders, but with serious restrictions. Only “limited production wineries” would be allowed to ship off-site orders, where a limited production winery is defined by SB 1276 to mean:
A licensed domestic farm winery that produces not more than twenty thousand gallons of wine in a calendar year may make sales and deliveries of wine that the licensed domestic farm winery produces to consumers off of the licensed premises and that is ordered by telephone, mail, fax or catalogue, through the Internet or by other means.
20,000 gallons equates to roughly 8,400 cases, which means that a significant number of U.S. wineries would be excluded from shipping off-site orders to Arizona.
The good folks at Free the Grapes are encouraging Arizona residents to ask Governor Napolitano to veto this bill. From their action alert:
SB 1276 is not an incremental step in the right direction; it is a big step backwards for Arizona consumers. And if it becomes law, wholesalers who oppose direct shipping will surely promote it as a workable model for other states to adopt. This will threaten years of diligent, successful work by winemakers, legislators and regulators to enact reasonable laws that allow limited, regulated direct shipments.
If passed, this bill will almost certainly be challenged in the courts. Just when it seemed like the Granholm dust was beginning to settle, states began introducing these bills with discriminatory capacity caps. New rounds of court cases challenging these caps will mean many more changes to come in the world of wine direct shipping.
“Domestic farm winery” bill passes Arizona legislature
May 29th, 2006
Senate Bill 1276 passed the Arizona state House last week and now awaits Governor Janet Napolitano’s signature. SB 1276 would continue to allow for the direct shipment of orders where “the wine was purchased while the purchaser was physically present at the winery”. The bill would also allow for off-site orders, but with serious restrictions. Only “limited production wineries” would be allowed to ship off-site orders, where a limited production winery is defined by SB 1276 to mean:
A licensed domestic farm winery that produces not more than twenty thousand gallons of wine in a calendar year may make sales and deliveries of wine that the licensed domestic farm winery produces to consumers off of the licensed premises and that is ordered by telephone, mail, fax or catalogue, through the Internet or by other means.
20,000 gallons equates to roughly 8,400 cases, which means that a significant number of U.S. wineries would be excluded from shipping off-site orders to Arizona.
The good folks at Free the Grapes are encouraging Arizona residents to ask Governor Napolitano to veto this bill. From their action alert:
SB 1276 is not an incremental step in the right direction; it is a big step backwards for Arizona consumers. And if it becomes law, wholesalers who oppose direct shipping will surely promote it as a workable model for other states to adopt. This will threaten years of diligent, successful work by winemakers, legislators and regulators to enact reasonable laws that allow limited, regulated direct shipments.
If passed, this bill will almost certainly be challenged in the courts. Just when it seemed like the Granholm dust was beginning to settle, states began introducing these bills with discriminatory capacity caps. New rounds of court cases challenging these caps will mean many more changes to come in the world of wine direct shipping.
Preliminary injunction in Texas is a temporary truce
May 29th, 2006
The recent preliminary injunction entered by agreement in Wine Country Gift Baskets.com v. Steen is only a temporary truce. Both sides are reportedly preparing for a contest over the final judgment, while the delivery companies and potential retailer-shippers attempt to figure out what the requirement that shipments be by �a carrier permitted by Texas Alc. Bev. Code Ch. 43� means in context.
Wine Country demonstrates that we are still struggling to understand the implications of Granholm. Much of the difficulty arises from what appears on superficial reading as an inconsistency in the majority position. The result in the case, like most of the text of the majority opinion, is decidedly hostile to location requirements. Nevertheless, the majority quotes from the Scalia opinion in the no-majority (4-4-1) case, North Dakota v. U.S., which refers to a 21st Amendment right to require all wine to pass through an �in-state wholesaler.�
North Dakota may have replaced Young�s Market as the repository of sacred text for adherents of old-time 21st Amendment theory. The subject quotation, however, is merely obiter dicta in Granholm and therefore not part of the case as a binding precedent. Mr. Justice Thomas excoriates the majority for what he takes as their obtuse failure to see the contradiction between that dictum and the actual holding of the case, which clearly finds the 21st Amendment inadequate as a basis for imposing in-state location requirements on wineries shipping to consumers. Nonetheless, careful reading of the majority opinion strongly suggests that North Dakota stands only for the right to require a three-tier system, and not a right to refuse distribution licenses to out-of-state wholesalers.
Costco has already resulted in a statutory change, granting out-of-state domestic manufacturers essentially the same rights as wholesalers within Washington. A similar suit is reportedly in preparation for Oregon, possibly couched broadly enough to include non-manufacturing suppliers, and another Texas suit, with a multi-state wholesaler plaintiff, is rumored.
Under Granholm, a successful plaintiff can only hope to level the playing field. The Costco court leveled down, on the theory that opening the state�s borders would be more disruptive to the entire regulatory system than would ending the local producers� self-distribution privilege -a ruling that would have put many local wineries in a serious bind had the legislature not leveled up before it became effective. A similarly inclined court could solve the Granholm problem in Wine Country by invalidating delivery rights of local retailers, leaving a legislative fix dependent on state politics. It would, however, be difficult to imagine a decree invalidating the right of local wholesalers to distribute, an activity that lies at the heart of nearly all regulatory schemes in the country. Thus, a win in court by an out-of-state wholesaler plaintiff could create a national market in supplying the retail trade and leave little room for legislatures to level down.
Wine Institute direct shipping portal updates
May 26th, 2006
The Wine Institute direct shipping portal was updated last night with the first of many changes to come over the summer. After launching a new look and feel for their home page, they are now turning their attention to the direct shipping portal.
Frames were removed from the direct shipping portal as a first step, so you can now link directly to the offsite compliance map, onsite compliance map, state detail pages such as Florida or New York, and the “Who Ships Where” page for example.
Coming soon will be an all new look and feel for the direct shipping portal, more dynamic and well organized content, better help and navigation, and an all new page for self-distribution rules and regulations.
If you have any ideas about how to make the direct shipping portal more informative and valuable, please fill out their feedback form.
Kansas to allow direct shipment of on-site orders
May 25th, 2006
Kansas Governor Kathleen Sebelius signed Senate Bill No. 297 last week, making it legal for in-state and out-of-state wineries to ship wine directly to Kansas consumers provided that “the consumer must purchase the wine while physically present on the premises of the wine manufacturer”. The new laws go into effect on July 1st. The legislation is a small step in the right direction as Kansas was previously a prohibited state for shipping wine. Kansas consumers will be responsible for paying all applicable taxes.
SB 297 also establishes new, but complex rules for off-site purchases. Wineries that produce less than 100,000 gallons can apply for a $50 permit that allows for off-site orders to be placed by Kansas consumers if the wine is first shipped directly to a licensed retailer.
Wine sold and shipped by a person holding a shipping permit shall be delivered to the licensed premises of the licensed retailer designated by the purchaser during hours the retailer is authorized by law to sell alcoholic liquor. The retailer shall collect taxes with regard to such wine pursuant to K.S.A. 79-4101 et seq., and amendments thereto, in accordance with rules and regulations of the secretary, as if the sale were made in this state. The retailer may charge the purchaser a handling fee of not more than $5 for each delivery of wine received by the retailer on behalf of the purchaser. The retailer shall ensure that the purchaser of the wine is 21 or more years of age.
Wineries that produce more than 100,000 gallons must ship off-site orders via the three-tier system.
the wine shall be shipped in the original unopened container to a licensed distributor, who shall deliver the wine to the licensed premises of the retailer designated by the consumer;
