Ohio has declared war on several out-of-state wine merchants. Attorney general Dave Yost has filed a request in federal court seeking an injunction against multiple online wine and liquor retailers from other states, alleging that they have been illegally shipping wine directly to Ohio consumers. Under the Buckeye State's shipping laws, consumers can only order wine from in-state merchants. The sellers named in the injunction include Wine.com, Winc, Pacific Wine & Spirits, Cocktail Courier and Wine Country Gift Baskets, among others. Yost announced last week that he intends to halt the shipments via injunction and the rarely exercised 21st Amendment Enforcement Act.
"We are not aware of any other [attorney general] who has sued using the 21st Amendment Enforcement Act," David O'Neil, a spokesperson for Yost's office, told Wine Spectator via email. The act permits state attorneys general to bring a civil action against any person believed to be violating their state's laws on importing and transporting alcohol.
According to a statement from Yost's office, investigators with Ohio's Division of Liquor Control gathered evidence in May to file an injunction by using pseudonyms to successfully purchase products from the named sellers, having them shipped to the division's offices. The investigators also reviewed common-carrier shipping reports for evidence of alcohol being sent from out of state. "It's safe to say tens of thousands [of illegal shipments] take place every year," O'Neil alleged, noting that Yost's office believes such sales have been ongoing for many years.
Where can you order wine from? Check out Wine Spectator's comprehensive guide to state shipping laws.
Yost says that these allegedly illegal sales are not properly taxed and take business away from in-state retailers. Pete Minotti, who owns three wine and spirits stores in Ohio, echoed that sentiment. "I'd like to keep all of the wine and liquor business that is available in Ohio, in Ohio," he said.
Other voices in the U.S. retail sector say the legal maneuver punishes Ohio consumers. Tom Wark, executive director of the National Association of Wine Retailers, a pro-shipping group, argues that the ban on out-of-state shipments hinders Ohioans from purchasing bottles they're unable to find in local stores. "No one is harmed by consumers purchasing and receiving wine from out-of-state retailers," he said. "If Ohio is concerned with collecting tax revenue on wine sales," said Wark, "the best way of doing so is to create a legal path for out-of-state retailers to ship wine to Ohioans that also requires the remittance of sales taxes."
Wark also points out that Yost has received campaign donations from Ohio alcohol wholesalers, who oppose shipping by out-of-state retailers.
Chicago-based lawyer Sean O'Leary, who has participated in several cases involving wine and interstate commerce, argues that Ohio's shipping laws are unconstitutional. "Ohio's law discriminates against out-of-state wine retailers in violation of the Dormant Commerce Clause," he said, "[Its] law allows its own retailers to ship to Ohio customers and does not allow out-of-state retailers this same privilege."
The Ohio attorney general’s injunction request comes just three months after the Sixth Circuit Court's Lebamoff Enterprises v. Whitmer decision, which ruled that Michigan may permit in-state shipments while prohibiting out-of-state deliveries. That decision is being appealed in light of a monumental Supreme Court decision in 2019. In Tennessee Wine and Spirits Retailers Association v. Russell F. Thomas, the country’s highest court found that states’ 21st Amendment rights do not trump laws barring economic protectionism if no legitimate alcohol-regulation purpose is served.
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According to O'Leary, the Ohio attorney general’s office may become increasingly assertive by looking into carrier records and taking more legal action against suspected violators. If Ohio succeeds, other states may follow suit. "But keep in mind there will be pushback, and this is not an open-and-shut case," O'Leary said. "[It] also allows consumers to challenge Ohio's shipping laws as discriminatory."
Constitutional questions aside, at least two of the online retailers have indicated that they will cooperate with the state. Rich Bergsund, CEO of Wine.com, told Wine Spectator that the company is now working in good faith with Yost's office to resolve the issue.
Executives at Winc believe their company was incorrectly named in Yost's lawsuit, as it has paid taxes to the state and holds all permits necessary to send wine into Ohio. "We look forward to resolving this matter with the Ohio attorney general's office as quickly as possible," said Tracey Bakun, the company's brand manager, "so that we can continue to serve Ohioans for years to come."
