Who Decides Which Wine You Can Buy?

When it comes to getting a drink, we live in the Divided States of America—50 different governing bodies, each with their own regulatory tangle
Jun 10, 2016

America drinks more wine than any other nation on earth, which is ironic, because we make it so difficult to buy the stuff. When I visit winemakers in other countries, I ask them how sales are in the United States, and they often respond, "Which one?" Thanks to our byzantine, serpentine (sometimes asinine) tapestry of rules governing the sale of alcohol, the United States functions not as one nation, but as 50, each with its own laws, gatekeepers and players. It can drive you to drink—if you're allowed to buy one in your county.

Write about wine long enough and you become numb to it. But every now and then I'm reminded how arbitrarily absurd it is.

A New Orleans sommelier called me last month in distress. Some of his favorite winemakers were telling him he'd no longer have access to their wines, thanks to a change by Louisiana's alcohol commission.

Here's a quick detour into the wine laws of my adopted home: Louisiana passed a law in 2008 allowing limited direct shipping. As interpreted by the then-commissioner, it permitted out-of-state wineries to ship to consumers any wine not carried by a Louisiana wholesaler. The premise was clear (if protectionist): You can sell to Louisianans, but not at the expense of local distributors.

This January, a new commissioner came with a new interpretation: If a winery sold any of its wines through a Louisiana wholesaler, it couldn't sell any of its other wines direct.

Bypassing the middleman and selling direct increases profit margins, so for a small winery that doesn't do much business through Louisiana wholesalers, the choice is obvious. Restaurants, which have to procure those wines through their distributor, were left out in the cold.

In an uncommon act of logic, Louisiana's legislature passed a bill this month reinstating the original interpretation. In return, wineries will pay a higher permit fee to ship direct. (The state has a $600 million deficit right now, so we need the cash.) The measure awaits the governor's signature.

Problem hopefully solved, right? But these red-tape hurdles are ubiquitous in the U.S. Pennsylvania just legalized shipping and wine sales outside state-owned liquor stores.

Both direct shipping and the three-tier system have their benefits for wineries and consumers. But does this thicket of laws serve you, the consumer?

"Regulation is a necessary evil in commerce," Rob McMillan, EVP of Silicon Valley Bank's wine division, told me. (McMillan loans money to wineries, so he wants them to succeed.) "We like rules that level the playing field. Leveling the playing field is the last thing that regulation in wine is solving."

For a winery, it means 50 different mazes to navigate. And for you, it means that your access to the hundreds of thousands of wines sold in this country depends largely on where you live.

"Regulation that levels the playing field and leads to enhanced competition has a predictable outcome on markets," says McMillan. "It lowers the cost to the consumer. Protectionist legislation, on the other hand, increases the cost to the consumer and/or leads to fewer consumer choices."

No matter how wine-friendly the state you live in, there's likely some thicket of regulations that's keeping you from acquiring a wine you'd like. It's time to ask, how did this system evolve? And does it make any sense today?

You can follow Mitch Frank on Instagram and Twitter at @FrankWine.

Legal and Legislative Issues Opinion

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