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Are More States Encouraging Direct Shipment of Wine?

Contemporary publications indicate that much legal initiative with respect to direct shipment of wine and other alcoholic beverages appear within the legislative bodies of several states. These regulations show a favorable pattern for wine producers: the encouragement of direct shipment of wine products to consumers and stores. The states of both North Dakota and Maryland recently demonstrated support of direct shipment by either passing legislation or introducing new bills that allow wine producers to directly ship their products to consumers or stores and bypass the wholesale distribution model.

In North Dakota, the law previously allowed wine producers to sell directly to consumers but did not allow wine producers to sell directly to stores. To sell to stores, wine producers had to sell their products to wholesalers first. However, on Tuesday, the House voted 62–31 to “approve giving North Dakota wine makers the ability to sell their product directly to stores.” (See ND Wine Makers May Sell Directly to Stores.) It is postulated that the new law allows wine producers to broaden the market for wine, as wholesalers often limit the amount of wines wholesalers purchase or offer to stores and other retail operations. For consumers and wine producers, this is great news; a more extensive anthology of wine will be available from which to select.

Additionally, last Friday, legislators in the state of Maryland filed bills in the General Assembly allowing direct shipment of wine. The bills—House Bill 234 and Senate Bill 248—permit direct shipment of wine to consumers and allow wineries and retailers to “ship wine directly to buyers so long as they are permitted to do so.” (See Bills Filed to Allow Direct Shipment of Wine in Maryland.) Interestingly, Maryland is one of the thirteen states within the United States that, as of date, does not allow direct shipment of wine to consumers. The filing of these bills in Maryland is timely, especially in light of H.R. 5034, the bill that seeks to direct shipping of wine from wineries and retailers to consumers. Maryland is a state that debated direct shipment for many years; but given the recent attention to H.R. 5034, perhaps Maryland’s current legislative support of direct shipment is indicative of what is in store for the remaining twelve states.

In light of recent legislation and bills, this raises the following question: are more states encouraging direct shipment of wine?

For more information on wine or alcohol law, direct shipping, or three-tier distribution, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

Lindsey A. Zahn

About 

Lindsey is the founder and author of On Reserve: A Wine Law Blog. She is an alcohol beverage and food attorney and is admitted to the New York State Bar.

{ 3 comments… add one }
  • Matthew Mann February 2, 2011, 4:34 PM

    I agree with your underlying premise that more states are moving to allowing direct shipment of wine. It is an encouraging development. In addition to MD and ND, it looks as if NJ may be heading that direction as well, especially with the impetus of Freeman v. Corzine.

    I’m still troubled by protectionist attempts to insulate domestic wine suppliers from external market forces however. A good argument could be made that the ND law violates the principles of Granholm, as it clearly limits the direct to retailers privilege to ND wineries, forcing non-ND wineries to ship 3-tier. I’m struggling to think of a good reason why such facial discrimination is permissible. It needs to be challenged.

  • Lindsey A. Zahn Lindsey A. Zahn February 2, 2011, 4:51 PM

    Matthew,

    You are right — New Jersey is another state moving in this direction as well. There are been much chatter about the laws of NJ the last few months.

    Excellent point about ND’s laws. It does seem, facially, that the laws discriminate against out-of-state wine producers with respect to direct shipment to retailers and/or stores. However, Granholm did not explicitly hold such action as discriminatory; what Granholm specifically outlawed is any discrimination against out-of-state wine producers to directly ship to consumers if in-state wine producers are allowed to do such. Granholm did not directly state the same should be applied in matters pertaining to direct shipment of wine to stores and retailers from wine producers OR from wholesalers or retailers to consumers. I do agree that it is difficult to legally understand how SCOTUS (or any other legal body) could argue this is not discrimination, but do understand that a group of wine retailers recently petitioned to SCOTUS for a writ of cert to review such issues as raised subsequently by Granholm. (For more information, see http://www.winelawonreserve.com/?p=908.) I have not kept abreast to this recently, but my assumption is that SCOTUS will probably not review it this upcoming summer.

  • Matthew Mann February 2, 2011, 6:02 PM

    Lindsey,

    I understand that Granholm is limited to the direct to consumer context but would argue that its rationale could be extended to a direct to retailer context as well. I do believe that the 5th Circuit ruling sent to SCOTUS is distinguishable because the focus there is on the tier against whom the perceived discrimination is being applied: the retailer tier rather than the producer tier. In the ND scenario, it’s “apples and apples” because the only tier involved is the producer tier.

    The question in ND is the availability of the market being accessed, ie-the trade market as opposed to the consumer market. It’s an open question as to whether the state has a legimate public interest to allow such a discriminatory regulatory scheme to exist in preventing non-ND producers from selling direct to trade, but I think a good argument could be made that it doesn’t. If that is indeed the case, then I think the rationale underpinning Granholm would be applicable here as well.

    Thank you for your blog, BTW, I find it very interesting and valuable.

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