After weeks of outcry from Michigan wine lovers triggered by the introduction of a bill that would have banned all direct-to-consumer wine shipments, the state's House of Representatives has passed a compromise version of a new bill that would allow limited shipments from wineries. But few, if any, of the parties involved in the debate--consumers, producers or wholesalers--appear entirely happy with the measure. Passed on Aug. 31, House Bill 4959 moves next to a senate committee for review, along with a package of four other direct-shipping bills introduced by Sen. Michelle McManus (R).
Michigan has been a key battleground in the direct-shipping debate. The U.S. Supreme Court found in May that the state's shipping laws and those of New York were unconstitutional. The justices ruled that the states had to treat in-state and out-of-state wineries equally and could not allow local wineries to ship to residents while banning other U.S. producers from doing so.
Treating all wineries equally has been the sticking point in Michigan's effort to pass a new law. For 31 years, the state has allowed its local producers to sell their wine directly to consumers, as well as to retailers and restaurants. Rather than allowing all out-of-state wineries the same access, which would have let them bypass the state's distribution system, wholesalers and many legislators got behind HB 4959. The original version, introduced by Rep. Chris Ward (R) in June, would have banned all direct shipments and sales. But local wineries claimed that would severely hurt their business, and wine lovers formed Wine Consumers Across Michigan (WineCAM) to lobby against the measure.
The new version of HB 4959 would allow direct shipments from all U.S. wineries, though it limits each winery to selling a maximum of 500 cases to Michigan consumers per year. The bill would also take away the right of Michigan wineries to sell directly to retailers and restaurants and require them to go through a wholesaler.
"I'm happy that I'll be able to order wines from out of state, which will be nice for me as a consumer. As a winemaker, I'm disappointed," said Bryan Ulbrich, winemaker at Peninsula Cellars in Traverse City. "It's unfortunate that they're taking away our rights to distribute our wines to retailers and restaurants. It will be detrimental to the growth of our industry."
Wholesalers claim that their opposition to direct shipping is to prevent sales to minors, not to ban small wineries from acting as their own distributors. "We have strong reservations about Internet sales of alcohol, period," said Michael Lashbrook, president of the Michigan Beer and Wine Wholesalers Association, which still supports an outright ban. However, he called HB 4959 a "reasonable compromise."
But WineCAM members are unhappy with the new measure, which they complain was introduced with no advance notice during an early-evening session and passed within a couple hours. Mike Brenton, a WineCAM member and a lawyer, believes the bill's language is vague, and leaves issues such as licenses, taxes and fees up to the discretion of the state's liquor control commission.
Nida Samona, the head of the department, has been outspoken in her opposition to direct shipping in the past, so in theory, Brenton said, she could establish high fees for wineries that want to ship. Most troubling, Brenton pointed out, is language in the bill stating that if any portion of it is found to be unconstitutional or invalid, the rest of the bill "shall also be invalid and it is the intent of the legislature that the direct shipment of wine be prohibited."
After studying the details of the bill, Brenton concluded, "It looks like it's setting up a regulatory scheme that is designed to make it difficult for wineries to participate."
Sen. McManus agrees. "It still represents what I call virtually a ban on direct wine shipping in Michigan," she said. "I think it's a first step, but really a token compromise. It still benefits the wholesalers, and it still leaves Michigan wineries and consumers out in the cold."
McManus has introduced her own package of four bills to the state Senate, which will soon be discussed alongside HB 4959 by the Senate Committee on Government Operations. McManus' Senate Bills 625 through 628, which are backed by several cosponsors and groups such as WineCAM, require that wineries buy a $100 permit annually, as well as pay an initial $100 application fee, in order to ship wine to adult Michigan consumers, who will each be limited to 24 cases per year. The bills were introduced separately so as to involve more legislators in the hands-on crafting of a direct-shipping program for Michigan--unlike Ward's HB 4959, which was one bill with multiple cosponsors.
"I think [the bills] are pretty succinct in that they deal just with the issues that are necessary. The purpose is not to take away the rights [wineries] already have. Instead of trying to remake 4959, we'll probably deal with 625 through 628," McManus said of the committee discussions. "We have a little ways to go to get to the point that the wineries would be feeling good about something they could work with."
McManus has been meeting with the Liquor Control Commission, as well as the wholesalers and the wineries, to lobby them on the bills ahead of the committee hearings, which have yet to be scheduled. And she acknowledged that some bills in her package could pass while others may not, or that HB 4959 could pass the Senate, along with some of her measures. "Any combination is possible," she admitted.
So while one bill may have passed the House, for now the state of direct-shipping of wine in Michigan is far from decided.