Consumers, Wine Industry Toast Ruling; Supreme Court Tosses Bans on Out-of-State Wineries Shipping Directly to Consumers

Article excerpt

Byline: DAN MACDONALD

Wine consumers are toasting a victory after the U.S. Supreme Court ruled that they may buy directly from out-of-state wineries.

Prior to Monday's 5-4 decision, Florida and 23 other states prohibited direct shipments of wine from outside their borders. Wineries had to contract with in-state distributors, who acted as a third party to pass the wine to the customer.

The court's ruling requires states to treat all wineries equally. Affected states could continue to limit out-of-state wine if they tighten in-state wine sales laws. Florida could require both in-state and out-of-state wineries to go through distributors.

If Florida passes new legislation to allow out-of-state sales, experts say connoisseurs and small wineries have the most to gain and the distributors the most to lose.

The state most likely will address tax collection and other issues such as shipment size and how containers are to be marked, according to the Coalition for Free Trade.

The Supreme Court specifically overturned laws in New York and Michigan. The case pitted two parts of the U.S. Constitution against each other. The 21st Amendment says states may regulate the sale of alcohol. However, the Constitution also bars states from discriminating against businesses from other states.

"States have broad power to regulate liquor. . . . This power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers," Justice Anthony Kennedy wrote in the majority opinion.

Joining Kennedy in the majority were Justices Antonin Scalia, David Souter, Ruth Bader Ginsburg and Stephen Breyer.

Justice Clarence Thomas wrote for the minority: "The court does this nation no service by ignoring the textural commands of the Constitution and acts of Congress."

Chief Justice William Rehnquist and Justices Sandra Day O'Connor and John Paul Stevens joined Thomas.

Wholesale wine distributors fought the law change because they stand to lose the most. The area's three largest wine distributors -- Premier Beverages, National Distributing Co. …

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