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Georgia Mulls Direct-Shipping Bills

Two bills boast more open direct shipping to Georgia consumers, but only one of them appears to truly offer it

Eric Arnold
Posted: February 26, 2007

Two new bills on direct shipments of wine to consumers are being debated--and potentially voted on--in Georgia this week. The state currently has some of the most restrictive laws among those that allow direct shipping and, depending on which bill proves most alluring to state representatives, things could get a whole lot better--or remain somewhat prohibitive.

Georgia was one of the few states unaffected by the 2005 Supreme Court decision on direct shipping, which ruled that states must treat in- and out-of-state wineries equally. Since 2000, Georgia has done just that, but the conditions under which wineries can ship are highly restrictive. Consumers can order wine only from wineries that are not represented by a wholesaler in Georgia, but those wineries can ship a maximum of 50 cases annually (five per customer). Any U.S. winery can send five cases annually to a Georgia consumer, but only if he or she has made the order in person, at the winery.

The bill that would relax these restrictions is HB 159, introduced by Rep. Wendell Willard (R). The bill is being supported by the San Francisco-based Wine Institute, an association of California wineries that encourages states to pass consumer-friendly shipping laws. Similar to the model direct-shipping bill introduced in several other states, HB 159 would require in- and out-of-state wineries to obtain a $100 direct-shipping license, pay all sales and excise taxes, and ship no more than 24 cases of wine a year to any one resident. Wineries would also have to report annually on what they sold to whom. Favorable as the bill might be to both wineries and consumers, however, its chances aren't particularly good.

"Our bill has not had a hearing," said Hunter Limbaugh, a lobbyist for the Wine Institute. "If we could get our bill to a vote by the full house, it would pass, and likewise in the senate." He lamented, however, "Sometimes it can be just a couple of people who control the destiny of legislation," meaning that the bill can be buried on agendas or mired in committee discussions by those in opposition, preventing the bill from reaching the floor for a vote.

The bill that is likely to get a vote this week, though, is HB 393, introduced by Rep. Ron Stephens (R), which passed the House Regulated Industries Committee last week. Stephens claims to have worked on the bill with both the state's wholesalers and Georgia's wineries, of which there are more than 20. While the bill appears to allow for more direct shipping, it's similar to the bill in Massachusetts that was vetoed, then passed with an override, in that the Georgia bill only allows direct shipping for wineries that produce less than 100,000 gallons of wine annually. After the passage of Massachusetts' bill, which capped direct shipping for wineries at 30,000 gallons, two Massachusetts consumers and the Family Winemakers of California sued the state in federal court, claiming that the law is actually framed in a way to prevent direct shipping altogether, since in major winegrowing states such as California, even small wineries tend to produce more than 30,000 gallons per year.

Despite this, Stephens is not concerned about HB 393's volume cap. "We fully understand that there is a challenge out there," he said. "We can't pass the bill or not pass the bill on what might or might not happen. But we think this is a good bill the way it's written."

He feels similarly about HB 393's requirement that the consumer made an in-person visit sometime in the past five years to the winery he or she is ordering from. Late last year, a U.S. District Court judge struck down the provision in a Kentucky law that required that consumers purchase the wine in person at an out-of-state winery before they can have it shipped home. "That is one federal court case and opinion, so we can't base this bill on what might or might not happen in the court system," Stephens said.

Limbaugh, however, thinks the in-person requirement is where the bill becomes especially problematic. "It's not clear in my reading of the bill who the burden is on," he said. "It's not good when you have to assume what a law means, and whether the winery would be responsible for knowing if it had a face-to-face transaction in the preceding five years."

Partly because of that, Limbaugh thinks that HB 393 won't become law. "Even if the bill passes the house, I have some confidence that we could keep it from passing the senate," he said. "There's nothing about these capacity caps and on-site requirements that is beneficial to Georgia consumers."

Some of them appear to realize that. A recent story on HB 393 reported on the website of the Atlanta Journal-Constitution drew dozens of comments, few of them positive. "So let me get this straight," wrote one reader. "If I want to buy a California wine that is a specialty wine that no one in this state carries, I can order it over the Internet, but I have to travel to California first to show my ID? Please … does anyone in the legislature have a brain they are actually using?"

The wine industry and other companies have put in place several measures to check that those purchasing wines are over the age of 21. Companies such as ChoicePoint and IDology have teamed up with wine-industry associations to offer online age-verification services.

Stephens still maintains, though, that the bill as it's written is favorable to both in- and out-of-state wineries. "I'm chairman of economic tourism and development in the house, and this is a huge economic issue for us, and growing rapidly," he said. "Over the past few years the wineries in the state are getting more and more popular. We just hope we can get these smaller wineries in all the houses of Georgia that want to have them."

But Limbaugh doesn't buy Stephen's intentions. "There's very little direct shipping in Georgia now," he said. "The goal of HB 393 is to keep it that way."

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