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Florida Legislature Mulls Direct Wine Shipments … Again

Direct-to-consumer shipping remained legal after legislature couldn't come to a decision last year--and a stalemate is possible yet again with this year's session soon to close

Eric Arnold
Posted: April 17, 2007

Florida consumers who've been enjoying direct shipments of wine to their homes for the past year or so could finally see favorable laws written into state law in the days ahead. Or if the state's wholesalers have their way, direct shipping could remain legal, yet highly restrictive. With the legislative session ending in a few weeks and no compromise in sight, advocates and opponents of direct shipping alike are scratching their heads as to what will happen next.

The clock is ticking especially loud because the Florida Department of Business and Professional Regulation announced that it would remove from its website instructions for wineries on how they can ship directly to Florida residents. It's not that direct shipping to Florida residents will no longer be permitted, it's that no one will quite know what the rules and regulations are--or if there are any at all. And last week, as a direct-shipping bill was being considered by a House of Representatives Council in Tallahassee, the bill failed after a series of questionable voice votes. A blogger on the Orlando Sentinel website even called the vote "fishy."

"It was a little strange, and I think it's safe to say that nobody involved in this issue, on any side of it, was entirely certain what had happened and why," said Hunter Limbaugh, lobbyist for the Wine Institute, a group of California wine producers. "We all knew what happened, but what it all means and what's likely to happen next is unclear to anyone."

Since a judge's 2005 ruling, direct shipping to Florida residents has been legal. However, "Currently, there are no laws in place that give the department the authority to track, audit and collect taxes on direct wine shipments from wineries outside of the state," said Florida Department of Business and Professional Regulation Secretary Holly Benson. "As a result, there are discrepancies in the treatment of Florida wineries versus out-of-state wineries, the department cannot collect taxes on the wine that is shipped directly to consumers, and the department is unable to enforce underage drinking laws."

The reason Florida's elected officials are stuck in neutral, though, is that at least two of the bills under consideration contain a provision that only allow wineries that produce under 250,000 gallons of wine per year to ship to Florida residents. This is similar to the bill in Massachusetts that was vetoed, then passed with an override. After the passage of Massachusetts' bill, which capped direct shipping for wineries at 30,000 gallons, two Massachusetts consumers and the Family Winemakers of California sued the state in federal court, claiming that the law is actually framed in a way to prevent direct shipping altogether, since in major winegrowing states such as California, even small wineries tend to produce more than 30,000 gallons per year. Similar bills have since passed in other states, most recently in Georgia, though in 2006 bills with production caps failed in Illinois, as well as in Florida. So now the state is right back where it left off at the end of the last session.

So just like last year, there will be more council and committee hearings, more votes, more discussions and more lobbying in the few weeks remaining in the state's legislative session--with out-of-state wineries and consumer-advocacy groups such as Free the Grapes! entrenched on one side, and lobbyists for wholesaler Southern Wine & Spirits, which is based in Florida, on the other.

Southern, which did not respond to several calls seeking comment, has been actively lobbying in favor of the volume cap. "They're the home team," said Limbaugh. "Not only are they the home team, they're the home team that has lots and lots of money. And they spend it in the political system, which is their right, but it makes our job harder."

The question this time, though, is what will happen if no compromise is reached by the session's end for a second year in a row. Secretary Benson isn't saying, but she did say that she believes the house and senate will come to an agreement and pass legislation. One thing is for sure--Floridians love wine. It's the second-largest wine market in the country. Though the reports aren't entirely accurate, since the Department of Business and Professional Regulation has no legal authority to track wine shipments, the department's reports show that in the month of February 2007, Floridians ordered roughly just over 3,500 cases of wine. None of which, of course, wholesalers such as Southern Wine & Spirits were able to take a cut of the profits from, as they do when wine travels through the normal distribution channels.

Due to the lack of tracking information, Benson wouldn't say if there have been any violations of the law while direct-shipping has been legal since the judge's ruling, such as failure to pay taxes or shipments to minors. Limbaugh, however, said he had heard of no such problems, at least not from California wineries that are members of the Wine Institute. So for now, the argument is simply over whether a production cap of 250,000 gallons is pro-wholesaler, anti-consumer or even Constitutional.

"It's been a tough battle for two or three years in Florida," Limbaugh said, "and it continues to be a tough one."

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