Five years ago, in Granholm v. Heald, the Supreme Court struck down most state laws prohibiting out-of-state wineries from selling and shipping directly to consumers. It was a great deal, both for the wineries who found new customers, and for wine lovers who could get access to their favorite wines without having to go through a middleman.
Now, there’s a move afoot in Congress to essentially overturn the Court’s holding in Granholm and kill the direct-to-consumer wine business:
The battle over whether consumers can order wine directly from wineries is moving to the halls of the U.S. Capitol. Members of Congress yesterday introduced a bill (HR 5034) that could end direct shipping of wine and other forms of alcohol in the United States, or at least put major roadblocks in front of lawsuits by consumers and wineries trying to reduce restrictions on direct shipping. Wine Spectator obtained a copy of a draft of the bill on Wednesday, which was crafted by the National Beer Wholesalers Association (NBWA). It would strengthen state governments’ control of alcohol sales, allowing them to protect the three-tier system of distribution while putting a much greater burden on people challenging it.o
“The whole idea [behind the bill] is to make it prohibitively difficult for wineries and consumers to challenge discriminatory and irrational laws that have little or nothing to do with the protection of the public,” said Kirkland & Ellis attorney Tracy Genesen, who has been the lead attorney on many direct-shipping lawsuits that have resulted in state alcohol laws being overturned.
Essentially, the law would give states complete authority to either ban all direct-to-consumer shipments of alcohol, or to regulate it in such a way that out-of-state wineries are effectively shut out of the market:
In the proposed bill, the Commerce Clause is weakened in respect to alcohol: “It is the policy of Congress that each state or territory shall continue to have the primary authority to regulate wine. Silence on the part of Congress shall not be construed to impose any barrier under [the Commerce Clause] to the regulation by a state or territory of alcoholic beverages.”
The bill also includes an amendment to the Act of 1890, otherwise known as the Wilson Act. The Wilson Act states “that all fermented, distilled or other intoxicating liquors or liquids transported into any state or territory” are subject to the same rules as alcohol produced within the state. The proposed bill calls for maintaining the states’ control over alcohol shipped in, but no longer requires the state to treat it the same as alcohol produced within the state. Thus, in-state wineries could be given preference.
The proposed bill continues, “Notwithstanding that the state law may burden interstate commerce or may be inconsistent with an act of the Congress, the state law shall be upheld unless the party challenging the state law establishes by clear and convincing evidence that the state law has no effect on the promotion of temperance, the establishment or maintenance of orderly alcoholic beverage taxes, the structure of the state alcoholic beverage distribution system, or the restriction of access to alcoholic beverages by those under the legal drinking age.” Genesen said that will make it much harder to challenge laws. “To try to change the burden of proof to make it impossible to challenge these laws is turning the clock back 70 years.”
The proponents of the bill include the states who would like nothing more than to end the lawsuits that that the Granholm decision has brought about, and the liquor wholesalers, who never deal directly with consumers and see direct-to-consumer sales as a threat to their distribution schemes. On the other side, of course, are the consumers, and wineries and other alcohol providers who actually benefit from being able to bypass the middleman and deal directly with the consumers.
H.R. 5034 was introduced by Massachusetts Congressman William Delahunt who received $ 10,000 from the National Beer Wholesalers Association during the 2008 election season, and the NBWA has donated more than $ 1,500,000 to campaigns during the 2010 Election cycle, the majority of it to Democrats.
Let’s hope they don’t get what they’re quite obviously paying for.