Posts from the Washington Category
Notes on Wine Distribution v.32
February 4th, 2010
The latest version of “Notes on Wine Distribution”, by R. Corbin Houchins, is now available. Release 32 includes updates on legislation, litigation and general discussions on available distribution channels for wine. This release includes substantial changes, including new sections on age and identity, facial neutrality, and logistical support services, as well as updates to state summaries in Arizona, Delaware, Kansas, Kentucky, Maine, Maryland, Massachusetts, Montana, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia, Washington, and Wisconsin. Read about these and other updates that affect the way wine is sold and shipped within the United States.
If you are at all interested in the shipping and distribution of wine, this is an excellent resource that is well worth reading. You can view the most recent version of the document anytime by visiting the ShipCompliant Blog and clicking the link located under “Compliance Resources”, or by visiting CorbinCounsel.com and clicking on the home page link, “Notes on Wine Distribution.”
Representing Change: One Piece of Washington’s Overhaul
February 3rd, 2010
Last year, Washington State relaxed some of its restrictive alcoholic beverage laws as a result of a couple of comprehensive bills that passed the legislature (SB 5834 and HB 2040). The mandatory minimum markups between suppliers and wholesalers and between wholesalers and retailers are now history. Retailers can now pay suppliers using electronic funds transfers if they want to. Price posting (which required beer and wine suppliers and distributors to file their product prices with the state and hold those prices for 30 days) was officially abolished.
Another change in the law that has more significance than it might appear to on the surface is the expansion of the state law’s definition of “Authorized Representative.” First, some definitions are in order: a Certificate of Approval is the Washington license given to a U.S. winery or brewery located outside of Washington that enables it to ship its products to a Washington importer or distributor. An “Authorized Representative” is an entity located outside of Washington but in the U.S. that is appointed by a Certificate of Approval (COA) holder to market and sell the COA holder’s products into the state of Washington through the three-tier system.
Before last July, Washington made it very hard for out of state wineries and breweries to sell their products into Washington through marketing agents, unless they wanted to give over all of their brands to the marketing agent.
That’s because, through a quirk in Washington law whose origins aren’t very clear, there could be only one source (i.e. either one Certificate of Approval license holder, or one Authorized Representative) for an out of state winery or brewery’s products. For example, if you were a winery that produces Brand A and Brand B, and you have been selling your Brand A to a Washington importer, you couldn’t appoint an Authorized Representative to market and sell your Brand B in Washington.
That all changed on July 26, 2009. As part of the “omnibus bill” and other sweeping legislative changes that took place last year in Washington, the definition of Authorized Representative was amended to remove the exclusivity portion that had been so problematic. As a result of the change to RCW 66.04.010(2), a Certificate of Approval holder can now divide up its brands, selling some itself and using one or more Authorized Representatives to market and sell different ones, if it wants. The state does require the producer to have written agreements with each of its Authorized Representatives, and there can be only one Authorized Representative per brand, but even with these restrictions, this one seemingly minor change in the law gives producers a lot more control and flexibility over how they market their products in Washington.
-Sara Mann, Beverage Industry Attorney
Washington State Approval No Longer Required for Wine Labels
September 17th, 2009
In an action supported by Washington Wine Institute, the Washington State Liquor Control Board adopted a new policy on wine label approval. Effective August 19, 2009, the WSLCB will accept the federal Certificate of Label Approval (COLA) as label approval for beer and wine to be sold in the state of Washington. Producers will no longer be required to apply for state label approval, but as WSLCB confirmed today, wineries will still need to file their COLA’s with the Board. Alcohol and keg products that do not require Federal label approval are also approved to sell immediately.
- Jean M. Leonard, Esq. – Executive Director, Washington Wine Institute
Two Steps Forward, A Couple Back (or Maybe Sideways)
May 18th, 2009
“Tied House” laws contain two categories of restrictions on licensed beverage businesses not found in other industries.
One is general prohibition of beverage suppliers’ furnishing things of value to retailers, with certain exceptions (notably goods the retailer has paid for). The other is general prohibition of ownership or investment by a supplier company or its investors in a retailing company and vice versa, again with certain exceptions. Details vary by state, and there is an overlay of federal tied house law, most of which kicks in only if the prohibited act to some degree excludes a competitor from trade.
Originally, tied house laws were intended to prevent return upon Repeal to the vertical integration, primarily brewery-saloon, that was a prime target of the Prohibition movement. As economic relations have evolved since the early 1930s, the purpose has shifted toward protecting interests of the middle distribution tier, and especially toward countering the growing influence of large chain retailers which, but for tied house legislation, would treat alcoholic beverages in the same stringent cost-reducing manner as other grocery items.
On May 15, 2009 the Washington governor signed a bill that has been loudly touted as loosening that state’s highly restrictive tied house law. Purported reforms permit some trade practices claimed to have been previously forbidden and introduce the possibility of investment and outright ownership between tiers, which had previously been limited to extremely narrow circumstances. However, a close reading reveals that the supposed relaxation is in large part illusory and may net out to tightening Washington’s tied house restrictions.
For a skeptical view of the bill’s particulars, go to the “Legal Developments” page at www.CorbinCounsel.com and click on the link to HB 2040.
The WSLCB Announces Online Tax Reporting and Payment System
November 3rd, 2008
Washington State Liquor Control Board (WSLCB) just made filing monthly summary tax reports and paying taxes a little easier by providing an online tax filing option for wineries shipping to consumers and retailers in Washington. The WSLCB encourages wineries to use their Online Tax Reporting and Payment System which saves time and simplifies the tax reporting and payment process. Users can access the system 24 hours a day, view previously filed reports online and confirm tax payments have been made.
Eligible users should contact the WSLCB Beer and Wine Tax Unit at beerwinetaxes@liq.wa.gov or (360) 664-1721 for account information. The system can be accessed by visiting the WSLCB website at www.liq.wa.gov.
Annie Bones, State Relations – Wine Institute
Half-Year Hullabaloo: New Laws Take Effect in Three States Today
July 1st, 2008
Just a quick reminder of the legislative changes that take effect today, July 1st, 2008.
- Georgia’s new permit system takes effect. All wineries can now apply for a permit, regardless of distributor representation. Click here to see how to apply for a direct shipping permit.
- Ohio is increasing their capacity cap, making it possible for wineries that produce under 250,000 gallons annually to apply for a direct shipping permit.
- Washington is implementing a destination-based sales tax for all in-state entities.
Washington: Making Change, Streamlined Style
June 13th, 2008
On July 1st, 2008, when Substitute Senate Bill 5089 takes effect, Washington will join twenty-one other states that have conformed to the “Streamlined Sales and Use Tax Agreement”. The bill will change the way retail sales tax is collected for some Washington businesses. Beginning July 1st, 2008, any business with nexus in Washington must pay sales tax based on the destination of the shipped order. Previously, Washington businesses that shipped orders to Washington residents could pay sales tax based on where the order was originating from, making local taxes fairly easy to calculate.
The new taxing regulation requires Washington wineries to pay local taxes to every destination to which they ship (via a single sales/use tax return). This could be a bit of a jolt for Washington wineries. With over 300 different tax rates and location codes, based on special districts that cannot be defined solely by city and county designations, filling out the periodic tax return could become significantly more difficult.
Out-of state wineries will see no changes in their tax payments. Destination-based sales tax in Washington should be nothing new for them; out-of-state wineries have had to pay destination-based sales tax since July 1st, 2006, when the Wine Shipper’s License first became available.
If you are a Washington business that ships or delivers goods, be sure to check the Washington DOR’s website for useful information about the change. On this page, you can use a number of different tax lookup tools as well as watch online tutorials.
Costco Asks Court of Appeals to Think Again
February 21st, 2008
On February 19, 2008, Costco Wholesale filed a petition for rehearing in the Ninth Circuit Court of Appeals, asking the original panel to reconsider a three-judge panel’s decision of January 29th, which upheld the ruling of a federal district court in Seattle that Washington’s price posting requirement is invalid under federal antitrust law, but reinstated other parts of the price posting statute the district court had struck down as part of the invalid statutory scheme, as well as the ban on central warehousing. The petition also asks that the entire appeals court hear the case if the original panel does not grant Costco’s request, in view of the importance of the antitrust issues, the inconsistency of the result with those in an earlier Ninth Circuit case and a recent Fourth Circuit case, and the necessity to interpret a leading Supreme Court opinion. The petition offers a clue to how an appeal to the Supreme Court might be structured.
Dulling the Cutting Edge
January 30th, 2008
Yesterday’s decision of the Ninth Circuit Court of Appeals rejected almost everything about the trial court’s decision in Costco Wholesale Corp. v. Hoen that was innovative under federal antitrust law, turning the case into an expression of conservative deference to state law.
Appellate judges did not even throw Costco the scrap of a favorable word about the Granholm portion of the judgment, on which the state had already acquiesced by changing its statutory scheme to eliminate discrimination against out-of-state manufacturers. A small mitigating factor for trade in wine is that the Ninth Circuit did not attempt to expand the effect of the 21st Amendment , leaving in place both the district judge’s definition of the supposed Section 2 defense and her finding that it had not been proved.
The immediate effect of the decision, once a mandate is issued to the district court, will be threefold: (1) Washington will have to stop requiring suppliers to post prices and hold them unchanged for 30 days without actively supervising them for reasonableness, a practice the court agreed constitutes a per se violation of federal antitrust law. (2) The state may nevertheless enforce other restraints that have operated as part of the price posting scheme, i.e., the bans on quantity discounts and credit, the minimum 10% markup and the requirement that suppliers charge all retailers in the state the same price, irrespective of the point of delivery. (3) The state may also continue the two challenged restraints of trade operating only indirectly on price, the bans on central warehousing and on sales between retailers. It seems likely the mandate will take effect in due course, as there is no reason to expect the Court of Appeals to entertain a request for rehearing, and the odds are against the Supreme Court’s accepting the case for review, should a party attempt to appeal.
Practical compliance with the opinion will raise interesting administrative issues on which the Court of Appeals offered no guidance. The first unanswered question is, assuming the state wishes to retain the allowed price restraints, how it could operate a price posting system without the illegal “hold” requirement? Would some hold period significantly shorter than 30 days be legal? If not, how could one administer an instantly revisable posting? If there is can be no mandated time period for holding a price, can a uniform price rule apply to any transactions that are not exactly contemporaneous? Assuming posting is out for practical reasons, liquor price law enforcement would be mostly on the same footing as enforcement of trade laws generally, requiring investigation and often relying on competitor’s complaints, a scenario that invites cost-benefit analysis of interfering in a marketplace that is already regulated under general antitrust and fair competition laws.
All those uncertainties arise at a time when the Washington State Liquor Control Board is considering freer trade policies and some wholesalers are becoming less ardent in their support of post-and-hold price restraints. The state legislature is in a short session currently, with relatively little opportunity for profound and controversial changes in a major regulatory scheme, but the anomalies created by the Costco case suggest an attempt at a legislative fix, possibly including consideration of jettisoning the posting-related laws the Court of Appeals said the state could keep.
A setback for Costco
January 30th, 2008
A three-judge panel of the United States Court of Appeals for the Ninth Circuit ruled yesterday in the case of Costco Wholesale Corp. v. Hoen. The panel largely reversed the April, 2006 decision that declared much of Washington’s three-tier system to be unconstitutional.
Although the court did agree with Costco that the “post and hold” requirement that forces suppliers to post their prices and hold them unchanged for a period of time is unconstitutional, it disagreed with Costco on two main points. The first upheld the liquor board’s right to ban central warehousing, meaning that distributors must deliver product to each retail store instead of to a central warehouse owned by the retailer. This takes away a key advantage that Costco has in efficient distribution. The court also upheld the liquor board’s right to ban high-volume discounts to different retailers.
Both sides now have the option of appealing the court’s decision within two weeks. They could also appeal to the United States Supreme Court within three months. Costco has expressed disappointment in the decision, but it is not clear whether either side will appeal the ruling.
Tea Leaves & One Fact
March 18th, 2007
Some historians say the origin of foretelling the future from tea leaves is an ancient Greek practice of reading wine sediment patterns in the drinking vessels.
Wine-related or not, the lawyer’s pastime of seeking clues to future judicial decisions from what judges say during oral argument is about equally reliable. Nonetheless, it’s difficult to resist a comment or two, following the hearing of the Costco appeal in the Ninth Circuit.
First, the hard news: The Ninth Circuit Court of Appeals granted a stay of the trial court’s judgment that significant chunks of Washington liquor law are invalid, pending rendition of the appellate ruling. Because the case has already been argued and has priority status, the Ninth Circuit stay will not keep those rulings in limbo very long, although a further appeal to the Supreme Court could extend it.
The background: The appellate issues in Costco are based on antitrust law, not directly on the Commerce Clause. Thus, the questions raised will be resolved in the light of Sherman Act cases, not Granholm (except as to what that case may have to say about 21st Amendment defenses generally). Of those questions, the most important is to what extent price-affecting rules that would be clearly illegal under the Sherman Act if adopted by collusion among private parties are also Sherman Act violations when imposed on the private parties by state law, with no evidence of collusion. That question divides into three categories of conduct, one in which the state makes and enforces a price rule but leaves it to the private parties (in this case, wholesalers) to say what a price that will be held for a specified time is to be (e.g., price posting), another in which the rules simply eliminate a form of competition (such as quantity discounts), without inviting the private parties to set a specific price, but facilitate anticompetitive conduct in the first category, and a third, in which the rule is just a rule, and any anticompetitive result from obeying it is unrelated to category one. The trial judge found price posting, quantity discounts, uniform pricing to all retailers, prohibition of charging separately for goods and delivery, and prohibition of taking delivery at retailer warehouses for sub-distribution to individual stores all illegal, both as a group (readily understandable) and individually (a somewhat avant-garde view); she put the prohibition on retailers selling to retailers in the third category and did not rule that part of the law invalid.
Now the speculation. Although the Washington price posting law had recently been changed in an effort to reduce its antitrust vulnerability, the judges seemed reluctant to accept it as significantly different from the Oregon law previously struck down by the same court (though not the same judges) and appeared to accept the reasoning of a subsequent case on Maryland price posting, relied on by the Costco trial judge. The “post-and-hold” part of Washington’s price posting law still looks dead. The same statutory scheme also forbids quantity discounts and requires that the same delivery-included price be charged to all retailers, but the judges appeared receptive to the possibility that without post-and-hold, those restrictions might be OK –in effect, move from category two to category three. On the other hand, they could defer to the trial judge’s implicit determination that the legislature’s integrating them into the price posting system meant they were intended to be part of it, and therefore stand or fall with post-and-hold. Jump ball; my guess is they will affirm the trial court, but may provide some guidance to the legislature on what parts of the law could be reenacted. No perceptible clues appeared on central warehousing, which is the most creative part of the trial court judgment. Net impression: The judges aren’t convinced the Sherman Act condemns non-price rules that aren’t clearly ancillary to price rules, might reverse on central warehousing, and almost certainly won’t reverse on retailer-to-retailer sales. On the 21st Amendment, this panel seems as puzzled as nearly every other court before which a state has claimed the defense as to what it would look like if proven. Prediction: They won’t declare the 21st Amendment snipe hunt over, but won’t report seeing a snipe, either. More significantly, they appeared to doubt it would add anything to the existing immunity defense that applies to state action generally, not just liquor. That defense applies both to states acting unilaterally in their sovereign capacities and to hybrid systems like price posting, in which states and individuals play roles, but in the latter case requires a degree of state supervision the trial court found lacking. The appellate panel did not seem inclined to question her finding on that point or to accept the state’s contention that Costco had the burden of proving inadequate supervision. Thus, the big imponderable remains not whether there is immunity for antitrust violations, but how much of Washington law is an antitrust violation in the first place.
Washington Excise Tax Confusion
February 7th, 2007
We’ve had number of questions recently from wineries that are confused about the excise tax requirements in Washington. Apparently, the Washington LCB is now just outright rejecting winery submissions if they do not use the correct form.
To provide a little background on this issue, Washington adopted a limited direct model on July 1st, 2006. At that time, out-of-state wineries could apply for a wine shippers permit if they planned to only ship directly to Washington consumers or for a Certificate of Approval (COA) if they are selling to distributors or directly to retailers. COA holders can get an additional no-fee endorsement to also ship wine directly to consumers. Many out-of-state wineries held a COA prior to the July 1st changeover from reciprocity to the permit system.
The question is whether a given winery should submit FORM LIQ-870 or FORM LIQ-778. The answer, according to the Washington LCB, is straightforward. If you are a COA holder, your name will appear on this list and you should file from LIQ-778 and report your direct to consumer sales on line 10. If you are a wine shippers permit holder only, your name should appear on this list and you should fill out from LIQ-870.
Oh, and just in case you weren’t confused before, Washington calls their sales tax reports “Combined Excise Tax Returns” and their excise tax forms “Summary Tax Reports”.
Costco appeal on fast track
December 2nd, 2006
The case is moving along very rapidly, the Ninth Circuit Court of Appeals having taken the initiative in a November 30, 2006 order by designating the appeal as expedited and setting a very prompt date for argument (March 2007). The defendants’ motion before the Court of Appeals for an indefinite stay was denied, but can be renewed at oral argument. The timing adds uncertainty to the legislative process, as the session is scheduled to end in late April, and the cut-off date for introducing new laws will probably occur before there is a ruling on the extended stay. The stay now in place, which was entered by the trial court, expires on May 1, 2007, a schedule intended to prompt the legislature to act if it wants to revise the liquor laws in light of the Costco judgment, which unless stayed by the Court of Appeals would then become effective, rendering a sizeable chunk of Washington liquor regulation unenforceable.
Click here for a description of the effects of the judgment.
Compliance Q/A in Kennewick, WA – 11/28
November 22nd, 2006
Welcome to the (brief) second installment of shipping compliance events summary! These events are great opportunities to hear from experts on legislative changes to the rules, best practices for staying compliant and growing your market, special offers on shipping and other related services, and introductions to technology solutions.
November 28th – Washington Wine Industry Summit – Shipping Compliance Q & A
Click here for more information and registration
Three Rivers Convention Center
Kennewick, WA
Terroir in Court
October 2nd, 2006
For the first time in post-Granholm legal maneuvering, a court has recognized the geographic distinctiveness of wine as a factor in applying the “level playing field” requirement.
Kentucky is one of about eight states that responded to Granholm by authorizing only on-site sales. The argument by the wholesalers and their allies in favor of that approach was that applying the on-site requirement to all wineries, local and out-of-state, constituted equal treatment for Commerce Clause purposes.
The Granholm opinion had, of course, rejected New York’s argument that all wineries were treated equally because out-of-state sellers were, like local producers, entitled to rent warehouses and maintain offices in the state. Thus, we already knew a state could not adopt facially equal provisions that introduce substantial impracticalities for interstate sellers not shared by local wineries. The question was whether an on-site-only law was such a provision.
In Huber Winery v. Wilcher, a federal court in Kentucky ruled that Granholm forbids laws that allow residents to purchase wine at wineries in all locations, noting that the effect is to foreclose a larger number of wineries in the major producing states, while imposing only a minor inconvenience on consumers who travel to wineries in Kentucky and adjacent states. The opinion is important because (1) it applies the “strict scrutiny” test, which is standard for overt discrimination, to the de facto discrimination before it, and (2) it recognizes that practical availability of wine from one growing region does not compensate for denying practical access to the greater variety of wines from others –i.e., that “interstate commerce” is not all the same. In reaching the latter conclusion, the court agreed with the plaintiffs that “each winery’s products are distinctive,” expressly declaring that the consumer rights to interstate commerce recognized in Granholm are not satisfied by Kentuckians’ ability to purchase Tennessee and Indiana wine on-site, to the exclusion by travel distance of the products of California, Oregon and Washington.
Washington direct shipping requirements
June 30th, 2006
Permit Required: If a WA state winery has a Domestic Winery permit, nothing additional is required. If an out-of-state winery holds a Wine Certificate of Approval, only a no-fee endorsement is required. If an out-of-state winery does not hold a COA, a Wine Shipper Permit (for shipping to consumers only). Fee: $100 license fee + $15 application fee + $5 trade name fee.
Permit Application for wineries who have never shipped before:
* Master Application is to obtain the license. Fill in “Wine Shipper to Consumer” in the “other” field. http://www.dol.wa.gov/forms/700028fillable.pdf* Also, fill out the non-retail WSLCB Addendum: http://www.liq.wa.gov/publications/Liq14952AddendumNonretail.pdf
* and the WSLCB Addendum: http://www.liq.wa.gov/publications/Liq30050.pdf
* Registration with the WA Department of Revenue (DOR) occurs when you file the Master Appllication.
Application for wineries who have already obtained a Certificate of Approval:
* COA “no fee” endorsement: http://www.liq.wa.gov/publications/Liq75650-AddedEndorsement.pdf
* In addition to the WSLCB Addendum: http://www.liq.wa.gov/publications/Liq30050.pdf
Liter Tax Required: Due monthly, on the 20th of the following month. You must submit a report even if no sales have been made during the period.
* $0.2292/L for wine 14%ABV or under
* $0.4536/L for wine over 14%ABV
* Reporting /Liter tax form: http://www.liq.wa.gov/publications/Liq870.pdf
Sales or Use Tax Required: 6.5% Statewide + .015% litter tax + local taxes (ranging from .5% – 2.4%) = tax required. Freight is included as a taxable item. Reporting periods are monthly, quarterly or annually, as determined by the DOR. You must submit a report even if no sales have been made during the period.
* “Combined Excise Tax Return” (Sales or Use Tax): http://dor.wa.gov/Docs/forms/ExcsTx/ComExcsTxRtrn/CETR_06_Q2.pdf
* Addendum for multiple localities: http://dor.wa.gov/Docs/forms/ExcsTx/LocSalUseTx/LocalCityCntySlsUseTxSpplmnt_E-Blank.pdf
* Whether sales or use tax is payable, depends on “nexus.” http://dor.wa.gov/Docs/Pubs/SpecialNotices/2006/sn_06_DirectWineSales.pdf
* Tax Registration: Tax forms will be sent after license approval
Direct Shipping Label Required: containing language that asserts the package cannot be delivered to persons less than 21 years of age or a person who appears intoxicated.
Be sure to use a carrier who follows these guidelines: Must obtain the signature of the person who receives the wine upon delivery. Carrier cannot deliver to a person over 21 or an intoxicated person.
Volume Limit Requirements: None!
Late Update: To view reporting forms for other types of licensees in Washington, please click here.
New laws take effect in four states on July 1st
June 25th, 2006
Hello again, back in the swing of things after a nice two week break. We’ve seen some big developments in the world of wine direct shipping over the last two weeks that we’ll look at in more detail over the next few weeks.
July 1st is a huge day for direct shippers as new laws take effect in Washington, Idaho, and Colorado. We also just learned that HB 1968 was signed by the Governor of Hawaii on Thursday and will also take effect on July 1st. We’ll give you the full breakdown on the new rules and permit requirements in each of the these states this week. It is important to note that all four were previously “reciprocal” states and are now moving to a limited direct model to comply with the Granholm ruling. By my count, that will leave only seven reciprocal states (Illinois, Iowa, Missouri, New Mexico, Oregon, West Virginia, and Wisconsin) after July 1st.
We will also look at other direct shipping developments around the country in the near future, including legislation in Kansas and Pennsylvania, the appeal of the Costco ruling in Washington, and the lawsuits filed in California to allow the direct shipment of wine by retailers.
Washington Liquor Control Board to appeal Costco ruling
May 4th, 2006
The Washington State Liquor Control Board announced yesterday it will appeal the ruling issued by Judge Marsha Pechman. The state will likely file its appeal in the next few weeks and will claim that the 21st Amendment should trump the Sherman Antitrust Act. In other words, the state should have the right to create monopolies, which are prohibited by the Sherman Act, because they were granted extraordinary powers by the 21st Amendment, which repealed Prohibition in 1933 and gave the states control over alcohol regulation.
Costco ruling – Findings of Fact and Conclusions of Law
April 25th, 2006
We added the Findings of Fact and Conclusions of Law from the Costco v. Hoen case to our Document Library. Here are a few key passages from the document (emphasis added)
The Sherman Act reflects a strong federal policy in favor of competition. At the same time, the Twenty-first Amendment provides each state with broad authority to regulate alcohol products in order to advance certain “core interests,” such as promoting temperance, ensuring orderly market conditions, and raising revenue. This case requires the Court to consider whether the challenged restraints are effective in advancing the state’s core interests under the Twenty-first Amendment and whether the state’s interests outweigh the federal interests in promoting competition.
For the most part, the Court finds that the policies challenged by Costco are not effective in advancing the state’s core interests under the Twenty-first Amendment. The Court also finds that the state’s interests do not trump the federal interest in promoting competition even when the restraints may be minimally effective in advancing the state’s interests.
…
The following state restraints are preempted by the federal Sherman Act and are not shielded by the Twenty-first Amendment:
(a) Policies that require beer and wine Policies that require beer and wine distributors and manufacturers to �post� their prices with the state and to �hold� those prices for a full month;
(b) Policies that require beer and wine distributors to charge uniform prices to all retailers;
(c) Prohibitions on selling beer and wine to retailers on credit;
(d) Prohibitions on volume discounts for beer and wine sales;
(e) Policies that require beer and wine distributors to charge the same �delivered� price to all retailers, regardless of the actual delivery costs;
(f) Prohibitions on central warehousing of beer and wine by retailers; and
(g) Policies that require a 10% minimum mark-up on sales of beer and wine from producers to wholesalers, as well as a 10% minimum mark-up on sales of beer and wine from distributors to retailers.
Landmark ruling in Costco vs. Hoen
April 24th, 2006
On Friday, Judge Marsha Pechman released Findings of Fact and Conclusion in the case of Costco v. Hoen. In a landmark ruling for the future of the three tier system, the Court found that the Washington state-mandated wholesaler monopoly was not shielded by the 21st Amendment and was in violation of the Sherman Antitrust Act.
After the dust settles, this will likely create a ripple effect not unlike the the Granholm v. Heald ruling of 2005. For now, Judge Pechman stayed the judgement for the 30 days to give the defendants time to appeal.
We’ll have much more to say about this in the coming days and weeks.
Late Update: OK, I just read this and could not pass it up. Check out this quote from Tom Wark at Fermentation:
It will be interesting to see if any wine wholesalers issue any sort of statement. It will be even more interesting if the reactionary national association for wholesalers, Wine & Spirit Wholesalers Association (WSWA), releases a statement. I can see it now:
“we are disappointed that the judge did not respect the clear message of the 21st Amendment and blah blah blah blah…”
Wouldn’t it be nice if the WSWA instead issued a statement that made sense and was honest:
“Our rationale for trying to restrict sales and deprive consumers of choice in the realm of wine has been exploded in a perfectly reasonable ruling by the judge. We have no leg to stand on now and will work closely with state legislatures across the country to liberalize wine sales with the hope that consumers will now be able to obtain the wines they want unfettered by our desire to maintain a state-sponsored monopoly.”
