This is the lesson that a number of people might want to take away from bad direct shipping legislation in California and Illinois that brought with it unintended consequences.

ILLINOIS RETAILERS
In the case of Illinois, that state’s recent ban on out of state retailers being able to ship to Illinois residents has the unintended consequence of preventing Illinois’ own retailers from being able to ship into Missouri and California.

Missouri has a reciprocity law in place for retailers that explains if another state allows MO’s wine retailers to ship in, MO will allow that state’s retailers to ship wine direct to consumers in MO. Now that Illinois has banned out-of-state retailers from shipping to Illinois residents, the reciprocal arrangement the two states had shared up until June 1st is no longer in existence. The Illinois legislature just cut off its own retailers from a lucrative neighboring market.

Illinois retailers will face the same fate with regard to CA come January 1, 2009. That’s the date when an agreement between the CA Attorney General and litigants in a lawsuit will no longer be in force. The agreement had the California ABC NOT enforcing a ban on shipping into the state by out-of-state retailers through 2008. The CA ban was put into effect with the passage of California Senate Bill 118 passed in 2005. The law kept reciprocity in place for retail sales. Like in Missouri, Illinois’ ban on out-of-state retailers shipping into the state will lead to Illinois retailers being completely shut out of the CA market.

 CALIFORNIA WINEMAKERS SHUT OUT OF IL
Then there is the issue of CA winemakers being prohibited from shipping into Illinois. Illinois’ new anti-retailer shipping bill provides that only those winemakers in other states licensed to “produce” wine are eligible for the state’s new wine shipping permit. The intention of this bill was to protect Illinois wholesalers as much as possible from competition while not prohibiting its own wineries from shipping wine direct. In order to allow its own Illinois wineries to ship wine to Illinois resident, the state must give the same privilege to out-of-state wineries. There was no way Illinois wholesalers would make a stand against its own in-state wineries so they exacted a price for their support: ban retailers from shipping into Illinois even though they had been allowed to for 15 years.

However, it turns out that hundreds of CA winemakers don’t have a license to produce wine. That is, they don’t hold a “Type 02″ producers licenses. Rather, their wine is produced at an off-site facility and these “virtual wineries” receive “Type 17″ and “Type 20″ licenses. These licenses are essentially licenses to retail and distribute wine. They are the same combination of licenses that many Internet retailers and brick and mortar retailers receive. As a result of not having the “Type 02″ license, these winemakers will be shut out from the Illinois shipping market because they are not eligible for the new Illinois Wine Shipping License.

RETALIATORY CONSEQUENCES
Finally, there is the unintended consequence of retaliation. When California was in the process of banning out of state retailers from shipping into the state via SB 118 in 2005, legislators and others were told that other states would retaliate by passing laws that banned CA’s own substantial number of retailers from shipping into their states. During the debate over the Illinois anti-shipping legislation, HB 429, legislators and advocates of the ban brought up the fact that, “Well, doesn’t California ban out-of-state retailers from shipping into their state?!?”

California’s own legislators and those who backed the bill that banned out-of-state retailers from shipping into the state effectively played a key role in seeing millions of dollars in wine sales lost from California’s fine wine retailers and hundreds of its winemakers.

The Lesson: There are unintended consequences to poorly written, poorly thought-out and discriminatory laws.

For some reason, the state legislature decided that Illinoisans should not be allowed to have wine shipped to them from Internet wine shops and out-of-state wine stores. On June 1, the law will strip Illinois wine lovers of the right to buy wine from out-of-state wine stores; that’s a right they’ve had for 15 years.

It turns out that in the course of losing your right to access the wines you want so distributors can have their profits protected, Illinois has given up millions of dollars in tax revenue that would have come from taxing Internet sales of wine. Hey, who needs a few roads fixed any way? And who needs more funding for schools? Priorities, you know?

READ THE REST HERE...

Find more information about the Illinois Anti-Shipping law here

In October 2007, Illinois Governor Rod Blagojevich signed HB 429 into law. Taking effect June 1, 2008, the new law prohibited Illinois consumers from buying and having shipped to them wine from out-of-state wine merchants and on-line wine stores. The new law stripped consumers of a right they had for the past 15 years. HB 429, however, explicitly gave Illinois-based wine merchants, Illinois wineries and out-of-state wineries the right to ship to Illinoisans.

The restrictions on buying wine from out-of-state retailers was demanded most ardently by Illinois wholesalers, who have given more than $6.3 million to Illinois legislators since 2000 and who benefit financially from forcing all retail sales of wine in Illinois to result from a transaction that starts with them. However, the law was also supported by most wineries inside and outside Illinois as well as Free the Grapes and the California Wine Institute. Despite being informed that the new law violated the U.S. Constitution and despite being contacted by hundreds of Illinois consumers who opposed the new restriction on consumer freedoms, the Illinois legislature passed the law anyway.

THE CONSEQUENCES
-Illinois Wine Lovers will lose access to thousands of wines that Illinois’ wholesalers do not bring into the state .

-Illinoisans will lose access to wines that might have sold out in Illinois, but are still readily available from other wine merchants across the country

-Illinoisans will lose access to thousands of wines produced by California’s virtual wineries that do not hold “producer licenses”

-Illinoisans will no longer be able to have shipped to them wines they’ve purchased at most wine auction houses across the country

-Illinoisans will have to stop purchasing wine from most retail wine clubs across the country.

-The state of Illinois has lost out on millions of dollars in tax revenue that would have resulted from taxing the sale of wine from out-of-state retailers, a condition retailers were happy to comply with.

-The state of Illinois and its residents will be exposed to the prospect of extraordinarily costly litigation in order to rectify the unconstitutional nature of the law.

WHO DID AND DID NOT SUPPORT HB 429

Supporters of the Unconstitutional and Anti-Consumer HB 429
Associated Beer Distributors of Illinois
Wine & Spirit Distributors of Illinois
California Wine Institute
Free The Grapes
Beverage Retailers Alliance of Illinois
Illinois Grape Growers and Vintners Association

Opposition to the Unconstitutional and Anti-Consumer HB 429
Specialty Wine Retailers Association
Illinois Winemakers Alliance
Consumers
Rep. Julie Hamos
Sen. John Cullerton

WHY IS HB 429 UNCONSTITUTIONAL
In 2005, the Supreme Court of the United States reconfirmed its long history of enforcing the economic non-discrimination principle of the U.S. Constitution’s Commerce Clause when it wrote in Granholm v. Heald:

“Time and again this Court has held that, in all but the narrowest circumstances, state laws violate the Commerce Clause if they mandate “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter…This rule is essential to the foundations of the Union. The mere fact of nonresidence should not foreclose a producer in one State from access to markets in other States…States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses.”—Justice Anthony Kennedy writing for the Court in Granholm v. Heald (2005)

The basic principle of the Constitution’s Commerce Clause is that at state may not favor in-state business by discriminating against out-of-state business. This is exactly the situation that exists in Illinois after HB 429, which allows in-state wine retailers to ship wine to Illinois residents but prohibits out of state retailers from doing the same.

The principle of non-discrimination was most recently upheld by Federal Judge Stanley Fitzwater in Texas who struck down an identical anti-wine retailer scheme in that state. Judge Fitzwater relied on the ruling in Granholm v. Heald to overturn the protectionist laws in Texas.
HOW DID A LAW AS BAD AS HB 429 EVER GET PASSED?

Money.

Since 2000, Illinois wholesalers have contributed more than $6.3 million to Illinois state political campaigns. Among the 15 co-sponsors of HB 429 in the Illinois House and Senate, 13 of them count the Associated Beer Distributors of Illinois as among their top campaign contributors in 2006.

According to “FollowTheMoney.Org”, which tracks state campaign contributions, the lead sponsor of HB 429 in the House, Representative Edward Acevedo, has received $32,000 from alcohol wholesalers since 2000, including $10,000 since the legislation was introduced last year. One Senate sponsor of HB 429, James Clayborne, Jr., has received $85,000 from alcohol wholesaler interests since 2000, including $15,000 since the legislation was introduced. The lead sponsor of HB 429 in the Illinois Senate, Ira Silverstein, could count the Associated Beer Distributors of Illinois as his most generous sponsor during his last election in 2004. Since 2002, Governor Rod Blagojevich, who signed HB 429, has received more than $500,000 just from alcohol wholesalers in Illinois.

HOW TO MAKE YOUR VOICE HEARD:

There are various ways to make your voice heard. For example, you might contact any of the following who supported HB 429 and voice you distaste:

Associated Beer Distributors of Illinois: info@abdi.org
California Wine Institute: http://www.wineinstitute.org/contact
Free The Grapes: Fedup@freethegrapes.org
HB 429 House Sponsor: Edward Acevedo: eacevedoed@ilga.gov
HB 429 Senate Sponsor, Ira Silverstein: silverstein@senatedem.state.il.us

You can also find your own Representative or Senator in Illinois by going here (click on “by address”): http://www.elections.state.il.us/DistrictLocator/SelectSearchType.aspx

In a number of states consumers may have wine shipped to them from American wineries across the country, but they are prohibited from purchasing wine from retailers across the country. This leaves wine lovers with an extremely limited choice in the area of imported wines. They are able to purchase only those imported wines that wholesalers in their respective states choose to carry and sell to brick and mortar retailers.

Those anti-consumer states include: WA, ID, AZ, CO, KS, MN, IA, WI, MI, IN, KY, GA, FL, SC, NC PA, NY, VT, CT, RI and soon IL.

While the number of domestic wineries has increased significantly over the past 20 years, so too have the number of wine brands imported into America. As well as the traditional wine exporting nations of France, Italy, Spain and Germany, today thousands of brands arrive on American shores from Australia, New Zealand, South Africa, Austria, Hungary, Chile, Argentina, Canada and other counties. While thousands of brands are imported into America, discriminatory state laws concerning retailer-to-consumer shipping assure that consumers only have access to a tiny percent of the wines available.

The reason for this kind of discrimination is well established: wine wholesalers have purchased legislative protection against competition.

It should be noted that this kind of discrimination against imported wines might indeed violate American treaties. Consider the principle of “National Treatment” embodied in the World Trade Organization:

“National treatment: Treating foreigners and locals equally
Imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle of “national treatment” (giving others the same treatment as one’s own nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these.” (Click Here For More Info on WTO Trading Principles)

In those cases where states allow their in-state wine retailers to ship to residents but prohibit out of state retailers from shipping there is a clear violation of the U.S. Constitution’s Commerce Clause.  However, It may also be that not only in these blatantly discriminatory cases but also in those cases where only American wineries are allowed to ship into the state that there are violations of international treaties.

In the course of the talk I gave I made the point that retailer-to-consumer shipping was likely to come about through litigation, rather than legislation. The reason for this and the reason for telling them that SWRA or another organization would likely be coming to their state with a threat to sue them is because America’s wholesaler’s appear to have a stranglehold on each and ever legislature across the country that results from $50 million being spent in this decade alone on contributions to state political campaigns.

That kind of political largess, I told the folks in the room, results in a lot of favors and a lot of legislative deference.

If anyone needs to see what I mean by this all one had to do is look at what happened recently in the State of Maryland.

In Maryland the legislature was considering a bill that would have allowed direct to consumer shipping for both retailers and wineries whether in-state and out-of-state. If passed into law, Maryland consumers would have much greater access to wine, the state would have collected considerably more taxes on the sale of alcohol and this would have occurred with no harm done to the three tier system.

The bill was killed in committee…even though considerably numbers of legislators, consumers and industry folk supported it.

Allow me to quote liberally from an article on this fiasco from the Maryland Gazette:

“The proposals met heavy resistance from distributors and their lobbyists, who argued the state’s three-tiered system linking producers, distributors and retailers would suffer if consumers could purchase wine directly from wineries.

Wholesalers argued that wine would be more available to minors through Internet sales, and would be less profitable for the state and less regulated.”

It’s important to be very clear about the character of the claims that were made by those who opposed this legislation: They are lies. Not only would the three tier system in Maryland have been effected in no way whatsoever, but minors would not begin buying wine via the Internet. They never do.  But of course, these issues were not the main issues in play. Even the wholesalers admitted as much:

‘‘Of course it would have a direct impact on the distribution business,” said Nicholas G. Manis, deputy director of the Maryland Beer Wholesalers Association. Give Mr. Manis credit for admitting publicly that the real concerns is not for consumers or proper and appropriate regulation, but rather for the financial interests of the wholesalers.

The fact of the matter is that the wholesaler lobbyists didn’t even need to show up to these hearings. They made their appearance in front of the legislature long before when they delivered checks, a great many of them, to the lawmakers who vote on these issues.

So while it seems that in reality nothing has or will happened in Maryland on the issue of Direct Shipping, the killing of this bill does have consequences:

1. Marylanders will pay higher prices for wine.
2. Marylanders will have a diminished selection of wine to choose from.
3. The State of Maryland will not benefit from increased tax revenue.
4. The environmental benefits that flow from direct shipment vs. the Three Tier System will not accrue to the state.

Maine is a a case in point.

Yesterday the Veteran and Legal Affairs Committee of the Maine Legislature heard testimony on LD 1987, a bill that would allow Maine residents to purchase and have shipped to them wine from out-of-state wineries and retailers. The provisions of the bill are:

1. The state will issues shipping permits to out-of-state wineries, importers, distributors and retailers.
2. Wine can only be delivered to a person 21 and older and the package must display the following language: “CONTAINS ALCOHOL: SIGNATURE OF PERSON 21 YEARS OF AGE OR OLDER REQUIRED FOR DELIVERY.”
3. The annual cost of the shippers permit is $100.
4. Shippers must pay Maine taxes and file an annual report on its shipments.
5. Shippers must submit to Maine-initiated audits as well as Maine legal jurisdiction.

It’s a standard direct shipping bill.

Yet, State police Lt. David Bowler was able to say this at the hearing:

“A credit card and a few key strokes is all that would be required for an underage person to acquire alcohol if this bill passes.”

This is of course untrue. The underage person would not only have to have a credit card, but they’d also have to be at home when the wine arrives, have access to identification that demonstrates they are 21 and they’d had to be able to do this either with the consent of their parents or when their parents are not at home. Whether Lt. Bowler was simply mistaken or leaving out the crucial information in his testimony is unknown. What is known is that that he was mistaken.

Then there was the comment of Scott Solman, the owner of Maine Distributors, who said the bill would “give out-of-state companies a competitive advantage over Maine companies (that) abide by the laws and regulations that govern our industry.”

I’m unsure how a retailer who might be 3000 miles from Maine and who must charge shipping to the recipient is somehow at an advantage over Maine companies that sell wine and who are within driving distance for the purchaser. Perhaps Mr. Solman was suggesting that Maine companies will follow the law while out-of-state companies will not. This latter possibility is certainly not the case. Whether Mr. Soloman was simply mistaken or whether he choose not to explain the whole story is unclear. What is clear is that his testimony was mistaken.

Finally, the sponsor of the bill, Lynn Bromley, was mistaken in her assertion that, “in addition to benefiting Maine consumers, [the bill] would expand the out-of-state market for Maine wines. Noting that most states allow their residents to have wine delivered, Bromley said some of those states bar shipments from Maine wineries because of Maine’s shipping ban.”

Senator Bromley is referring to the notion of “reciprocity”, a system that has largely gone out of use in the U.S. and whereby states passed laws allowing other states’ companies to ship their wines as long as those states allowed the other state to ship its wines. Today, no more than 3 states have reciprocity agreements in place.

The state of Maine has attempted many times to pass a Wine Shipping Permit Bill. Whether this one will pass is unknown. What is known is that more than anything else, legislators and interested parties need to be educated on the issue of direct shipping.

The question has been raised, does this ruling mean that a state may not require a signature for wine deliveries?

The answer is NO and here’s why:

In the various direct shipping permit regulations and laws that exist across the country, the requirement to have to get a signature before the delivery of wine is placed on the winery or retailer who sold the wine, not on the common carrier, as was the case with the Maine law. Retailers and wineries contract with the common carrier to obtain the signature.

Here’s the bottom line: The Supreme Court, properly, made no comment on whether a private company can contract with private company to obtain a signature at the door step.

The above is the rational explanation of this recent Supreme Court decision. Below is the irrational, fear mongering explanation of the decision:

What we have as a result of this decision is basically the Wild West with regard to direct shipping, because every law out there with this particular age check component is now rendered unenforceable. The sellers of these products are not being held responsible, and now the courts have said the carriers cannot be held responsible either.  So how exactly are states going to ensure that alcohol shipped direct does not wind up in the hands of minors?  This opinion calls the practice of direct shipping into question entirely, because it creates an environment lacking any kind of control and accountability.”
Craig Wolf, Wine & Spirit Wholesalers Association

You might want to give the Wine & Spirit Wholesalers Association a pass for such a comment assuming that they are simply ignorant. But assuming they are not ignorant about the actually meaning of this case, then you have to ask yourself why they want to deliberately mislead alcohol regulators, lawmakers and consumers?

This would not be the first time the WSWA has misled due to either ignorance or purposefulness. It’s probably best to recognize that when a deceptive argument like this is made it is done so simply because no rational argument is available.

One must be struck by the extraordinary disregard some people have for their own integrity.

On Monday, the state of Maryland heard testimony in committee on HB 1260, a bill that would allow wineries and retailers both inside Maryland and outside Maryland to sell and ship wine directly to Marylanders. The bill is being pushed by Scott Ehlers, executive director of Marylanders for Better Beer and Wine Laws and the bill’s sponsor Senator Sen. Jamie B. Raskin.

The usual course of a bill is that it is heard by a committee. The Committee votes on whether to send the bill on to the full legislature for a vote. When bills don’t become laws it’s usually because they “die” in committee either because they don’t come to a vote or the committee votes not to send it to the legislature for a vote.

This is why it’s most often in these committees where you hear the most extreme sort of rhetoric from opponents and proponents of a bill. This committee hearing was no exception.

Before commenting on the accusation of greed by wineries made by Bruce C. Bereano, a lobbyist for Licensed Beverage Distributors of Maryland, let’s first review the situation in Maryland.

In Maryland it is illegal for any wine to be sold that does not first go through the hands of a Maryland distributor. Put another way, a very small set of private company’s are in a position of authorizing who may do business in Maryland. Usually it is the state that issues things like permits or licenses for people to do business. In Maryland, it’s distributors who have complete say as to which wineries may do business in the state and which wines a Marylander may purchase. (no, believe it or not, this isn’t the part about “greed”).

Put another way, if Maryland distributors don’t want to carry a wine from an out of state winery, that winery may not do business in the state because it may not sell its wines directly to consumers, to retailer or to consumers, no matter how much their wines may be desired. I wonder when Maryland decided that it would cede its oversight of alcohol sales to distributors?

One would think that if you are going to give a very small, but powerful cartel of distributors total say over alcohol distribution in the state, if you are going to guarantee that this cartel get a 33% cut of every bottle of alcohol sold in the state whether they do anything to earn it, you might at least mandate that wholesalers be required to accept do business with any winery anywhere that wants to do business in the state. Not the case.

So imagine when the distributors cartel’s paid flunky gets up in front of the Maryland committee and says, “They don’t give a damn about the state of Maryland. All they care about is their own greed, about selling wine.”

The retailers and wineries in and outside Maryland aren’t asking for a free pass. Maryland consumers, whose choice in wine is terrible due to the distributors’ inability and unwillingness to sell even a fraction of what is available, to bypass paying taxes. All that’s being requested is that Wineries and Retailers be able to do business directly with one another, that they each be able to remit taxes to the state and that they each accept restrictions on how much they can sell and buy.

Meanwhile, Bruce and his distributors are demanding that every single bottle of alcohol sold in the state of Maryland only be sold if they get a cut. They are demanding that they have complete control over which wines are sold in the state.

Now, who is the greedy one?

The state of Maryland has a long history of not merely caving in to the craven greed of the distributor cartel but of doing the dirty work for them. Early on back in the 1990s when the direct shipping issue came to the fore, Maryland actually passed a law making it a FELONY for winemakers to sell a bottle of wine to a consumer. A Felony. Just like Rape, Murder, and Kidnapping.

Who are the greedy ones?

SB 6384 died in committee.

This was not for lack of consumer support. In fact, the chair of the committee in which the bill was heard noted publicly that she had received more positive email on this piece of legislation than on any other bill under consideration this year.

So why did SB 6384 die?

Washington Wineries had the bill killed. More specifically, it was the Washington Wine Institute that worked to kill the bill.

Intuitively, one understands that retailer shipping is good for Washington wineries. The more outlets there are to sell Washington wines, the more Washington wine that gets sold.

Nevertheless, the Washington Wine Institute did everything they could to kill Washington wine lovers’ access to wine.

The reason, according to insiders, is the issue of reciprocity. Apparently the WA wine institute does not like the fact that there is no law in CA that allows Washington retailers to ship to CA consumers. Furthermore, it appear that the WA wine institute does not like the fact that CA, like Washington, does not allow CA retailers to buy direct from out-of-state wineries. This was enough for the WA Wine Institute to stick it to Washington consumers.

Yet, consider that CA retailers spent very good money, time and effort working out an agreement with the state of CA that has been in place for over a year and runs through the end of this year that assures the state of CA will not enforce any laws against out-of-state retailers shipping into CA. This fact however wasn’t enough to overcome the pettiness that exists inside the Washington Wine Institute.

Nor was the fact that Washington is clearly out of compliance with the U.S. Constitution when since it discriminates against out-of-state retailers since it allows its own retailers to ship to Washingtonians but prohibits out of state retailers from doing the same. The least we can say is that principles are not taken in to consideration when WA Wine Institute politics are in play.

It should also be known that a good many consumers and companies worked hard to educate everyone involved in this bill. SWRA spoke with every member of the committee involved in passing this legislation and/or their representatives. Wine.com worked tirelessly to try to get this bill passed. The CA Wine Institute worked hard on passing this bill. As did Costco. And, again, WA consumers weighed in on this bill in droves, supporting it wholeheartedly.

The lessons of SB 6384 are clear:

1. Never assume wineries have the best interests of consumers at heart when it comes to access to wine

2. Only progressive retailers can be counted on to always support the interests of wine lovers

3. Forcing litigation, that will cost the state and citizens of WA and other states hundreds of thousands, if not millions, of dollars is preferred by pettier folks to doing the right thing.

A great deal of late has been said of retailers shipping into Washington State. This bill would have allowed consumers to obtain the wines they obviously want, provide the state with needed revenue and put the state back in compliance with the U.S. Constitution. But instead, pettiness wins out over common sense.

Anyone interested contacting the Washington Wine Institute and voicing their opinion on this issue can do so this way:

Washington Wine Institute
Ms. Jean Leonard, Executive Director
call: 360.352.1557
email: info@washingtonwineinstitute.org

1. CONSTITUTIONAL ISSUES CONCERNING DIRECT SHIPMENT OF WINE & RETAILERS
-According to the Supreme Court in Granholm v. Heald (2005), “States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses.”

-According to the U.S. District Court of Northern Texas in Siesta v. Perry, the state “cannot prohibit consumers from purchasing wine from out-of-state retailers who comply with the Code3 and TABC regulations. Accordingly, the challenged ban on consumer imports of wine…is also unconstitutional.”

Conclusion: STATES MAY NOT PROHIBIT OUT-OF-STATE RETAILERS FROM SHIPPING INTO A STATE IF IT ALLOWS ITS IN-STATE RETAILERS TO SHIP WITHIN THE STATE.

2. THE FISCAL IMPACT OF RETAILER-TO-CONSUMER SHIPPING
-There is no evidence to support the notion that allowing out-of-state retailers to ship into a state will result in a loss of tax revenue.

-In fact, the experience of New Hampshire, Nebraska, North Dakota and Wyoming is that allowing retailer shipping results in increased tax revenue.

-Consumers use out-of-state resources when they cannot obtain the wines they want locally.

Conclusion: STATES THAT ISSUE PERMITS TO OUT-OF-STATE RETAILERS CAN EXPECT AN INCREASE IN TAX REVENUE AS A RESULT.

3. ESTIMATION OF NUMBER OF RETAILER SHIPPERS
-When shipping permits are issued to both out-of-state retailers and wineries, the vast majority of permits will be issued to wineries, not retailers.

-According to a survey of those states that issue permits to both retailers and wineries, retailers represent 15-20% of the permits.

-Most retailers in America serve a local market, not a national shipping market.

Conclusion: STATES THAT ISSUE PERMITS TO OUT-OF-STATE RETAILERS CAN EXPECT ONLY A MINIMAL NUMBER OF OUT-OF-STATE RETAILERS TO SHIP INTO A STATE RELATIVE TO THE NUMBER OF WINERIES THAT SHIP INTO THE STATE.

4. WHO BUYS FROM OUT-OF-STATE RETAILERS AND WHY?
-The vast majority of wine is purchased on-premise. It is much more convenient for consumers as well as less expensive since shipping costs can range from $25 to $60 to ship a case of wine.

-Out-of-state sources tend to be used only when the specific, specialty wine desired is not available locally.

-America now hosts 5,000 wineries with thousands of more specialty wines imported from Europe, Australia and South America.

Conclusion: CONSUMERS BUY LOCALLY, AND ONLY LOOK ELSEWHERE WHEN THEY CAN NOT FIND IN LOCAL STORES ONE OF THE 1000S OF WINES THAT ARE NOW AVAILABLE IN THE UNITED STATES

5. MINOR ACCESS VIA SHIPPING
-Supreme Court of the United States, the Federal Trade Commission and regulators across the country have admitted that on-line sales to minors are not a problem

-Online age verification systems adopted by retailers, the necessity of using credit cards, the requirement to obtain adult signatures before delivery, and the necessity of minors to have to have wine delivered without parents knowing all conspire to make it far less likely that a minor will obtain wine via the Internet.

-The vast amount of alcohol falling into the hands of minors is obtained from Brick & Mortar stores and from the home.

Conclusion: THE INTERNET IS THE LEAST LIKELY PLACE MINORS WILL LOOK TO OBTAIN ALCOHOL

6. ELEMENTS OF A MODEL RETAILER SHIPPING PERMIT LAW

-In order to assure the state retains regulatory control over out of state retailers, any law allowing shipping should contain:

-A process for issuing annual permits to out-of-state retailers.
-Provisions that require out-of-state retailers to remit taxes to the state
-Provisions that require out-of-state retailers to submit to local legal jurisdiction
-Requirements that out-of-state retailers allow States to audit retailer books
-Requirements that all shipments are marked as containing alcohol and require a signature by an adult 21 or over

Conclusion: LEGISLATION ALLOWING OUT-OF-STATE RETAILERS TO SHIP INTO A STATE CAN BE CRAFTED SO THAT THE STATE RETAINS SIGNIFICANT REGULATORY CONTROL OVER THE RETAILERS AND THEIR ACTIONS