Fight for Wine to Flow Past State Borders

Wine lovers, be warned: Shipping your favorite cabernet to a cousin in Kentucky could be a crime.

It is a felony in six other states to directly ship wine across their borders. All but 13 states have significant restrictions that make it difficult to send wine to a friend or business associate on the East Coast.

Advocates for free and easy interstate wine shipments liken it to Prohibition and call it restraint of trade. Supporters of the laws contend it’s a health issue for minors, a tax issue for state government and a competitive issue for distributors.

Based on litigation pending in several states, the battle over direct wine shipments has shaped up as a conflict between 21st Amendment rights--state authority to regulate alcohol--and constitutional guarantees covering the rights of interstate commerce.

Throw in the complexities of doing business on the freewheeling Internet, and the dispute becomes as murky as wine sediment in the bottom of an oak barrel.

At McCarthy & Schiering Wine Merchants in Seattle, owner Daniel McCarthy keeps a shippers’ pamphlet handy to remind him which states have which rules, and where he could face criminal charges for sending a case of chardonnay.

“I would say it probably affects our sales by about 25%,” McCarthy says of the restrictive state laws.

McCarthy, who did about $3 million in business last year, would like to offer more direct shipments as a convenience to customers interested in Northwest wines.

“I could also do more rare and fine wines if I were to use an Internet site,” he said. “I don’t do that right now because of this whole shipping situation. I don’t want people dropping an order for wine and then not being able to fill it.”

Several Internet sites have been set up to lobby for direct shipments, including one group called Free the Grapes in Napa, Calif., with a fierce-looking grape mascot named “Shackles.”

The biggest problem falls on new, small wineries trying to break into the market, says Chris Figgins, a board member for the Washington Wine Institute whose family owns the Leonetti Cellars winery in Walla Walla. New wineries can have difficulty finding an interstate distributor, so the other option would be to ship directly to consumers.

John De Luca, president of the Wine Institute in San Francisco, a public policy association representing more than 500 California wineries, says much of the direct shipment reform movement is driven by consumers who try wines while traveling or read about them in the wine press, and then want access to vintages not handled by their state’s distributors.

Of course, there are businesses that skirt the laws.

“A lot of people have taken a policy of ‘We’ll ship anywhere,’ ” McCarthy said.

Recently passed federal legislation gives state attorneys general the authority to go outside their borders to prosecute such offenders.

Many in the wine industry blame big distributors or wholesalers for tying up the interstate market with what they call protectionist legislation in their home states under the guise of concern for minors.

But Phil Wayt, director of the Washington Beer and Wine Wholesalers Assn. in Olympia, says distributors have legitimate worries--unfair competition and the possibility of direct shipments expanding to beer and spirits.

“The concern of our distributors is not so much we want a piece of the pie,” he said. “It’s that the unchecked, unregulated and unreported distribution of product into the state has an unfair advantage over all the other systems.”

De Luca says the new year will bring a renewed push on a state-by-state basis to facilitate direct shipment.

Since 1985, the institute’s lobbyists have been able to change interstate commerce laws for wine in 20 states and intrastate laws in 30 states, De Luca says.

“We’d like to continue that,” he says. “Hopefully, wholesalers will work with us at the state level to craft creative solutions.”

On the Net:

Wine and Spirits Wholesalers of America: https://www.wswa.org

https://www.freethegrapes.org

https://www.wineinstitute.org