Comments on: Discrimination Against Out-Of-State Retailers After Granholm http://shipcompliantblog.com/blog/2007/09/18/discrimination-against-out-of-state-retailers-after-granholm/ Untangling the complex world of wine direct shipping and compliance Tue, 11 Jun 2013 19:37:39 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: R. Corbin Houchins http://shipcompliantblog.com/blog/2007/09/18/discrimination-against-out-of-state-retailers-after-granholm/comment-page-1/#comment-23170 R. Corbin Houchins Sun, 23 Sep 2007 21:19:28 +0000 http://shipcompliantblog.com/blog/2007/09/18/discrimination-against-out-of-state-retailers-after-granholm/#comment-23170 Tom Wark is an astute observer of wine industry developments, and I join him in hoping that the distinctions I draw between the wineries' case in Granholm and the interstate retailers' cases to be heard will not lead to a different result. My post concerns the misapprehension, frequently encountered among pro-trade supporters, that Granholm itself prohibits discrimination against out of state retailers relative to in-state retailers, and not the strength of the retailers' position. The point is that the retailers will have to make their case on the fact record they and their opponents develop. The factual distinctions between retailers and wineries are not trivial, and if retailer litigants present their cases as if merely citing Granholm will assure victory, they may well set back the cause of freer trade. Tom Wark is an astute observer of wine industry developments, and I join him in hoping that the distinctions I draw between the wineries’ case in Granholm and the interstate retailers’ cases to be heard will not lead to a different result. My post concerns the misapprehension, frequently encountered among pro-trade supporters, that Granholm itself prohibits discrimination against out of state retailers relative to in-state retailers, and not the strength of the retailers’ position. The point is that the retailers will have to make their case on the fact record they and their opponents develop. The factual distinctions between retailers and wineries are not trivial, and if retailer litigants present their cases as if merely citing Granholm will assure victory, they may well set back the cause of freer trade.

]]> By: Tom Wark http://shipcompliantblog.com/blog/2007/09/18/discrimination-against-out-of-state-retailers-after-granholm/comment-page-1/#comment-22792 Tom Wark Thu, 20 Sep 2007 19:11:29 +0000 http://shipcompliantblog.com/blog/2007/09/18/discrimination-against-out-of-state-retailers-after-granholm/#comment-22792 "Three glaring differences between the two producer cases decided in Granholm and the impending retailer cases make the outcome of the latter problematic. First, wineries have a track record of filing shipment reports, excise tax returns, and other compliance documents in multiple states, without creating collection problems. Second, a federal layer of winery regulation means that punishment for violations can be nationwide loss of access to markets, not merely loss of the state whose laws were violated, by action against the basic permit. Retailers do not hold federal basic permits. Third, it seems likely the states will have some factual ammunition to bolster the argument that interstate retailing will present them with sellers that are both much more numerous and less demonstrably law-abiding than wineries." The issue of filing shipping reports is of very little significance if the point is to determine if retailers can be relied upon to to follow the laws laid down by a state with regard to paying taxes and filing reports. Retailers across the country have been doing so in a number of states, not to mention there home states for years. Second, the fact that no federal basic permit exists for retailers suggest that there is no incentive for retailers to follow the laws. This discounts the fact that retailers would in most cases be agreeing to submit to state jurisdiction and it discounts the existence of the 21st Amendment Enforcement acts. Both these things offer a great deal of incentive for retailers to follow the letter of the law. Finally, a survey of those states that issue permits to both out-of-state wineries and out-of-state retailers show that the vast majority of permits are issued to out-of-state wineries, not to out-of-state retailers. This evidence has been presented both to legislators as well as to courts. There is no question that the burden placed on regulators is far greater as a result of winery-originating shipments than retailer originating shipments. All these issues were thoroughly outlined in Illinois and really are not in question. Illinois wine consumers lost a long held right not because there were questions about how Granholm applied to retailes. They lost their rights due to the control of the state legislature by wholesalers and due to the fact that the other players in the Illinois debacle had demonstrated no concern for the long term health of the American wine industry. One can only hope that these three issues you outline are the only obstacles that are in the way of consumers being able to have access to the wines they want. Tom Wark Executive Director Specialty Wine Retailers Association “Three glaring differences between the two producer cases decided in Granholm and the impending retailer cases make the outcome of the latter problematic. First, wineries have a track record of filing shipment reports, excise tax returns, and other compliance documents in multiple states, without creating collection problems. Second, a federal layer of winery regulation means that punishment for violations can be nationwide loss of access to markets, not merely loss of the state whose laws were violated, by action against the basic permit. Retailers do not hold federal basic permits. Third, it seems likely the states will have some factual ammunition to bolster the argument that interstate retailing will present them with sellers that are both much more numerous and less demonstrably law-abiding than wineries.”

The issue of filing shipping reports is of very little significance if the point is to determine if retailers can be relied upon to to follow the laws laid down by a state with regard to paying taxes and filing reports. Retailers across the country have been doing so in a number of states, not to mention there home states for years.

Second, the fact that no federal basic permit exists for retailers suggest that there is no incentive for retailers to follow the laws. This discounts the fact that retailers would in most cases be agreeing to submit to state jurisdiction and it discounts the existence of the 21st Amendment Enforcement acts. Both these things offer a great deal of incentive for retailers to follow the letter of the law.

Finally, a survey of those states that issue permits to both out-of-state wineries and out-of-state retailers show that the vast majority of permits are issued to out-of-state wineries, not to out-of-state retailers. This evidence has been presented both to legislators as well as to courts. There is no question that the burden placed on regulators is far greater as a result of winery-originating shipments than retailer originating shipments.

All these issues were thoroughly outlined in Illinois and really are not in question. Illinois wine consumers lost a long held right not because there were questions about how Granholm applied to retailes. They lost their rights due to the control of the state legislature by wholesalers and due to the fact that the other players in the Illinois debacle had demonstrated no concern for the long term health of the American wine industry.

One can only hope that these three issues you outline are the only obstacles that are in the way of consumers being able to have access to the wines they want.

Tom Wark
Executive Director
Specialty Wine Retailers Association

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