Winery Direct Shipping Coming to Massachusetts Residents

In confirmation of 2008 ruling, U.S. Court of Appeals rules Bay State’s cap-limit shipping law unconstitutional
Jan 15, 2010

Massachusetts residents may finally gain access to boutique wines not carried by the state’s wholesalers in the near future. The U.S. Court of Appeals for the First Circuit ruled yesterday that the state’s 30,000-gallon cap limit on wineries permitted to ship wine directly to Massachusetts residents is unconstitutional, confirming a lower-court ruling from 2008.

The winery cap law in Massachusetts had been in place since 2006, when it was passed by the state legislature, overriding a veto by then-governor Mitt Romney. The law allowed any winery making less than 30,000 gallons of grape wine a year to ship to Massachusetts residents, defining those wineries as “small” wineries. Under that definition, 98 percent of wine made in the United States was ineligible for direct shipment. But, all wineries within Massachusetts were under the cap, allowing them to continue shipping direct. It was the first winery direct-shipping law to institute volume caps on wineries eligible to ship to residents, and it started a trend among state legislatures across the country.

The sponsor of the bill, State Sen. Michael Morrissey, testified during senate debate that "with the limitations that we are suggesting in the legislation, we are really still giving an inherent advantage to the local wineries," suggesting that those who drafted the bill were well aware it did not provide equal footing for in-state and out-of-state wineries as required by the U.S. Constitution's commerce clause.

In 2008, a district court agreed with the Family Winemakers of California that the law was discriminatory, and the appellate court has now confirmed the decision. In a statement released today by Family Winemakers of California, lead attorney for the Kirkland & Ellis firm Tracy Genesen, who argued the case, called the decision “a milestone for wineries and consumers in breaking down barriers to discriminatory interstate commerce.” Family Winemakers of California president Paul Kronenberg said, “The decision allows access to the whole wine market for Massachusetts consumers. Protectionist state laws run counter to the concept of free trade within the nation.”

Judge Gerard Lynch, supporting last year’s district court ruling by Judge Rya Zobel, agreed that Massachusetts’ wine-shipping law was unconstitutional, in violation of the Commerce Clause, the ruling factor in 2005’s landmark Granholm decision issued by the Supreme Court. Judge Lynch’s ruling stated, “The ultimate effect of [the cap law] is to artificially limit the playing field in this market in a way that enables Massachusetts' wineries to gain market share against their out-of-state competitors.”

Massachusetts attorney general Martha Coakley declined to comment for this article.

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