Wine lovers around the country have reason for hope this year. Several states are considering allowing residents to order from out-of-state wineries and have the bottles delivered to their homes. Despite formidable opposition from many alcohol-beverage wholesalers, the measures may gain momentum from a pending U.S. Supreme Court ruling on the issue of direct-to-consumer shipments.
Among the states are three major wine markets that have already been engaged in stiff battles over interstate shipments. New York is defending its current ban on such shipments in the Supreme Court case; Florida has been fighting to protect its shipping ban in a suit working its way through the federal courts; and Indiana had its ban upheld by a federal appeals court in 2000.
The three states are all considering versions of a "model" shipping bill widely supported by wineries. Such bills allow out-of-state producers to send wine to any adult resident, as long as a winery obtains a shipping license and pay state sales and excise taxes. To prevent sales to minors, the package carriers must obtain the signature of an adult on delivery.
In New York, Gov. George Pataki has included a direct-shipping provision in his current budget proposal, as a way of bringing in new tax revenue. The proposal would let out-of-state wineries ship up to two cases per month to any adult if they pay $125 for a license. The New York Farm Bureau supports the idea because it could also help expand sales for New York wineries; they would benefit from reciprocal laws in other states that allow out-of-state wine shipments. But the budget approval process in New York is typically drawn-out and highly contentious; Pataki tried the same approach last year, and the shipping measure failed to pass.
As a drawback for wine consumers, Pataki also proposed increasing the excise tax on wine from 5 cents to 28 cents per liter, which would ultimately raise the retail cost of a bottle. The portion paid by New York wineries would be used to promote New York wine. Currently, according to documents included in the budget proposal that cite data from the Federation of Tax Administrators, New York has one of the lowest excise taxes on wine among all the states, comparable to that of California, which has some of the most liberal wine laws in the country.
In Florida, two legislators have introduced competing bills. Sen. Paula Dockery's bill (906) follows the model language, allowing wineries to pay a $100 annual fee. Sen. Burt Saunders' bill (480) would limit shipments to four cases per year and require consumers to register with the state; shipping advocacy groups oppose the latter provision, calling it unworkable.
Gov. Jeb Bush has publicly expressed willingness to permit some form of shipments in Florida. The Tampa Tribune reported last month that Bush said, "Any time you purchase goods over the Internet, there needs to be safeguards. But the idea that you can only buy wine through a certain distribution system, I've always felt that was a little unjust." Bush's sister, Dorothy, is married to Bobby Koch, the head of the Wine Institute, a trade group of California wineries. In addition, Bush has first-hand experience with missing out on a wine due to Florida's shipping ban. He won a Super Bowl bet with Gov. Gray Davis in 2003, but couldn't have the promised California wine sent directly to him without breaking state law.
In Indiana, Rep. Chet Dobis' bill (1094) would allow shipments of two cases per month from wineries that pay a $100 registration fee and a $50 annual renewal fee. It has been referred to the Committee on Public Policy. Another bill (144), sponsored by Sen. Vi Simpson, would lift restrictions on the amount of wine and beer that state wholesalers and dealers can deliver to consumers.
In Connecticut, Sen. Thomas Herlihy introduced a version of the model shipping legislation (Bill 161) that would permit shipments of up to two cases a month, but he is pessimistic that it will even make it to the floor. "The fact that nothing has been done to improve this situation to date suggests that the bill's chances are slim," he said.
In Vermont, Sen. Matt Dunne introduced Bill 58 to allow out-of-state shipments of up to one case per month from wineries that purchase a shipping license for $500, with an annual $250 renewal fee. If the bill passes, shipping or receiving wine mailed without a permit would carry a significant penalty: up to $1,000 in fines and 30 days in jail. "Vermont is a control state and has a conservative history in terms of distribution methods," Dunne said. "The bill has a ways to go before it becomes a law--there's a 50/50 chance at this point [of it passing]."
North Dakota already allows limited direct shipments as long as wineries pay for a permit. But Rep. Dan Ruby is trying to help the state's fledgling wine industry with Bill 1325 by eliminating the required license fees and sales taxes for wineries in certain states--those that have similar laws and would grant North Dakota producers reciprocal shipping privileges. The bill has already passed the House by a nearly unanimous vote, Ruby said, and he hopes for the same from the Senate. "Our wine industry is still fairly new, so we haven't had need for legislation like this until recently," he said. "Last session, we got local wineries permission to sell from their premises, so I feel good about this bill."
Wyoming, on the other hand, could move in the other direction. Bill 238, introduced by Rep. Rodney Anderson, would up the annual shipping fee for out-of-state wineries from $50 to $250.
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