Court Opens Door to More Wine Shipments to Kentucky

Judge upholds state's new law allowing customers to order from small out-of-state wineries and eliminates one restriction

Tim Fish
Posted: December 29, 2006

Tuesday's ruling by a U.S. District Court judge makes it easier for small wineries across the country to ship wine directly to consumers in Kentucky, a state that only a decade ago made that practice a felony.

Judge Charles R. Simpson III in Louisville upheld a state law, signed by Gov. Ernie Fletcher on April 18, that would establish new guidelines for shipping wine into Kentucky, but he struck down a requirement that consumers must purchase the wine in person at an out-of-state winery before they can have it shipped to their homes.

The new law is set to take effect Jan. 1, and if it stands up to appeals, it will only allow shipments from wineries that produce less than 50,000 gallons a year, will limit shipments to a two-case maximum per consumer and will create a Kentucky Grape and Wine Council to promote the state's winery industry.

Simpson had previously ruled that portions of Kentucky's alcohol laws were unconstitutional, and state lawmakers amended their initial legislation several times in an effort to stem potential challenges.

But direct-shipping advocates were still dissatisfied with some of the restrictions, and Cherry Hill winery in Oregon pressed ahead with a challenge to the state's alcohol regulations that had been first filed before the new legislation was passed. The winery's attorney, Robert Epstein, called the ruling "a victory for small wineries and wine consumers."

Epstein, who has participated in similar lawsuits around the country, applauded Simpson for eliminating the on-site purchase requirement, although he takes issue with the 50,000-gallon limit. "We got what we really wanted," Epstein said, "which was to do away with the requirement of buying wine face-to-face."

States have been grappling with the issue of direct shipping for years. In 1996, Kentucky was first to make it a felony for a producer to ship wine across state lines to consumers, prompting numerous vintners to boycott the state and encouraging several other states to follow suit. Winery trade groups battled alcohol wholesalers in the legislatures and courts as they tried to encourage states to establish a system for allowing regulated, limited shipments. Things finally came to a head in May 2005 when the U.S. Supreme Court ruled that states cannot ban out-of-state wineries from shipping wine directly to consumers while allowing in-state wine producers to do so.

Attorneys for Kentucky's Office of Alcoholic Beverage Control were not available for comment, but the state is expected to appeal the ruling to the U.S. Court of Appeals for the Sixth Circuit, in Cincinnati.