Fight for Wine Direct-Shipping Rights Heats Up in Tennessee

Bill introduced to state senate on behalf of local winery inspires anti-teen-drinking campaign by wholesalers—that's potentially illegal
Mar 18, 2008

Controversy has erupted in Tennessee over a new bill that would allow direct-to-consumer wine shipping, as the state's wholesalers have attempted to derail the legislation's passage by launching a campaign ostensibly to stop teen drinking. Their move has prompted the bill's sponsor to call the matter before the state ethics commission to investigate potentially illegal lobbying.

Currently, direct wine shipments to Tennesseans are illegal, and though the state has seen pro-consumer bills fail in the past, this latest effort is enjoying some popular support. Senate Bill 1977 was introduced by Sen. Doug Jackson (D), who wanted to help a small winery in his district grow its business. "We don't have big wineries here—they're all small operations that are very proud of what they do," said Jackson, adding that many small farms have turned away from growing tobacco in favor of grapes for winemaking. "It's a source of income for families, a source of general employment."

The bill would require any winery or retailer to buy a $100 license from the state, and ship no more than two cases of wine annually to any Tennessean of legal drinking age. Out-of-state producers and retailers would have to report annually on what they sold to whom, and pay any appropriate taxes to the state. Despite past failures of similar bills, Jackson thinks SB 1977 has potential to pass this time around because his colleagues have seen how similar laws have worked in other states, and generated revenue for the government. "The bill is not facing an economic argument—it just comes down to a policy decision."

And therein lies the problem for Jackson's bill. Shortly after he introduced the legislation, the state's wholesalers began a campaign to rally support against the bill. Wine wholesalers generally oppose direct shipping since sales from wineries to consumers cut the wholesalers out of the distribution process and, therefore, the profits. Wholesalers also oppose sales from out-of-state retailers since a wholesaler in a different state earned a portion of the sale, not a wholesaler in the state in which the wine was delivered. According to Jackson, Tennesseans began receiving direct-mail pieces aimed at drumming up public opposition, and a website called stopteendrinkingtn.org was launched, alleging that the bill would allow for greater access to alcohol by minors.

"That's not what the bill would do, and that's not what this law has done in other states," said Jackson. "But that has become the point of attack."

That attack, Jackson argues, is illegal under Tennessee law. Jackson wrote a letter to the state's ethics commission, a copy of which was also posted online by the Knoxville News Sentinel. In it, Jackson alleges that the anti-teen-drinking website was launched by Seigenthaler Public Relations, a firm working on behalf of the state's liquor wholesalers. "The law would require the wholesalers to do a filing indicating that they are an employer of a lobbyist," said Jackson. "And that would require a filing by the PR firm, disclosing their activities."

Seigenthaler president Amy Seigenthaler Pierce argued that her firm's activities are not lobbying. "We're not lobbyists. We haven't contacted any legislators, nor do we intend to do so," she said. "Everything we've done, we have made every effort to comply with the law, as we always do."

Tommy Bernard, CEO of Nashville wholesaler Horizon Wine & Spirits, did not respond to a request seeking comment.

Jackson said that the ethics commission will meet and address his concerns next week, but the wholesalers could file their lobbying forms in the meantime. Jackson noted, however, that many of his constituents are fooled by the stopteendrinkingtn.org website only initially.

"The people who go to that website, and when they contact me and find out that the people behind it are the liquor wholesalers, they become dismayed," said Jackson. "They think it's some sort of philanthropic organization that's concerned about youth consumption of alcohol. But the populous is deprived of the ability to find out who's really behind this campaign because no one has officially filed and disclosed their activities."

Jackson believes that if the bill gets to a floor vote, it'll pass, but it first has to get through the senate's commerce committee which, historically, has supported the wholesalers, he said.

"I wish I could take every member of the [commerce] committee down to these wineries—I have a few in my district and in counties surrounding my district—and talk with the families that are in this business and the hopes they have for it, and how much sweat and toil they put into trying to grow the very best grapes and make a quality product, and I think then they would understand," Jackson said. "When they hear from these families how important this bill is to their future, and then you see the effect of the wholesalers, it doesn't affect them whatsoever. It's less than a decimal point on their bottom line."

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