State by State

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The New York Sun

You have doubtless heard by now that, on Monday, the United States Supreme Court struck down laws held by a number of states that allow in-state shipping by local wineries and retailers but simultaneously prohibit out-of-state wineries or retailers from sending wines to consumers in these states.


It’s essential to recognize that what the Supreme Court did not do was declare, or even suggest, that direct-to-consumer wines sales from out-of-state suppliers is a constitutional right under the Commerce Clause. Instead, it declared only that a state cannot offer preferential treatment to in-state shippers while simultaneously prohibiting or inhibiting shipment of wines to consumers from out-of-state suppliers.


Indeed, New York’s complicated and highly discriminatory wine shipping laws are cited and analyzed at length in the decision. According to the court:


“The New York regulatory scheme … does not ban direct shipments altogether. Out-of-state wineries are instead required to establish a distribution operation in New York in order to gain the privilege of direct shipment to New York. This, though, is just an indirect way of subjecting outof-state wineries, but not local ones, to the three-tier system.”


Furthermore:


“All wine must be sold through a licensee fully accountable to New York; it just so happens that in order to become a licensee, a winery must have a physical presence in the State. … New York’s argument, in any event, is unconvincing. … For most wineries, the expense of establishing a bricks-and-mortar distribution operation in one State, let alone all 50, is prohibitive. It comes as no surprise that not a single out-of-state winery has availed itself of New York’s direct shipping privilege. … New York’s instate presence requirement runs contrary to our admonition that States cannot require an out-of-state firm to become a resident in order to compete on equal terms.”


Why do I point all this out at such length? Simply to underscore that, although this Supreme Court decision is most welcome, it does not automatically “free the grapes,” as one pro-shipping organization calls itself.


So what will happen now? And, more to the point, what’s in it for wine thirsty New Yorkers who would like to avail themselves of small production, hard-to-get West Coast wines? Here’s how it looks to this observer: The battle will now be fought state by state. Wine wholesalers, who have ably secured and protected their legislatively mandated privileges since the end of Prohibition, will not simply back down. Instead, we will likely see – depending on the state – wine wholesalers and their allies (various evangelical organizations; Mothers Against Drunk Driving) plumping for either a total ban on direct wine shipping to consumers or a statutory requirement that all wines shipped to consumers, either from in-state or interstate, be run through a wholesale licensee.


Keep in mind that according to Wine Institute, a winery trade organization, 15 states already ban in-state shipping of wine to consumers. (New Jersey is one, for example.) So in states where wineries are few in number and consequently have little legislative clout, a wholesaler push to ban all shipping outright is by no means unlikely.


Alternatively, wholesalers will seek to require that all shipments be run through them. This three-tier option (importer-wholesaler-retailer) is less clear-cut but could be an effective measure to irritate, slow, or even derail interstate shipments. Whether wholesalers can convince a state legislature to side with them will depend upon the clout of that state’s retailers, who would of course prefer to be able to ship directly.


The only Supreme Court requirement is fairhandedness, which is achievable either by the scorched-earth approach of banning all wine shipments outright or by requiring a wholesale license for shipping purposes for both in- and out-of-state shipments.


And what about now? Ah, here lies the opportunity. The opposition forces are in disarray, as military historians like to say. New York’s current laws are patently unconstitutional. And until the state legislature creates new laws that comply with the Supreme Court ruling it would appear to this non-lawyer that a window of opportunity is wide open for New Yorkers to enjoy the benefits of direct-to-consumer shipping. This means that you can buy wines from either out-of-state retailers or wineries, at least in those states that permit shipping.


HERE ‘ S THE (DIRECT SHIPMENT) DEAL


Hungry – or rather, thirsty – for some wine action? Before you leap onto the Internet or to the phone, remember that shipping from the West Coast to New York will add about $33 in shipping (UPS Ground) plus about $10 for the cost of the Styrofoam wine shipper. As for taxes, well, nobody knows. Maybe wineries or retailers will play it safe and charge you New York taxes and maybe not. It’s hazy at the moment, but still clearly an opportunity, too. I’d investigate the following opportunities.


MAJOR CALIFORNIA RETAILERS THAT DISCOUNT


Wine Exchange, www.winex.com: Look for good, deeply discounted selections on Australian, Californian, and Italian wines, as well as deals on wine accessories. Wine Club, www.thewineclub.com: One of the best sources for big-name Bordeaux at discounted prices, as well as many Californian wines. K &L Wine Merchants, www.klwines.com: One of the big Bordeaux discounters. Strong on Italian and California wines. Premier Cru, www.premiercru.net: A major discounter of big-name Burgundies, Bordeaux, and high-end Californian wines. Many wines are purchased in Europe, as well as from private cellars. Liner & Elsen, www.linerandelsen.com: A leading source of Oregon wines, as well as an extensive selection of high-end Italian wines from small producers not often shipped to other markets.


BUYING DIRECT FROM WEST COAST WINERIES


The lists that I’d get on are small producers whose wines are sold almost entirely either direct or just locally – they can be real bargains. David Coffaro Winery, www.davidcoffaro.com: An insider’s delight. Based in Sonoma County’s Dry Creek Valley, David Coffaro is an original sort who makes terrific red wines from Dry Creek Valley grapes and sells them for much less than his competitors. He believes that Californian wines are way overpriced. Really, you can’t go wrong with almost anything he offers, especially since he sells his wines on futures for as little as $15 a bottle. Casa Nuestra Winery, www.casanuestra.com: One of Napa Valley’s quirkiest little wineries. The quality of Casa Nuestra’s dry chenin blanc (98 cases total; $15) and their field-blend red wine called Tinto Classico (171 cases total; $37) is superb. Unfortunately both are sold out. But get on the list for next year. Wing Canyon Vineyard, 707-265-8798: A tiny (10-acre) vineyard in Napa Valley’s Mount Veeder appellation, Wing Canyon Vineyard makes superb cabernet sauvignon. Rarely seen, but unforgettable when tasted. Cameron Winery, www.cameronwinery.com: A small Oregon winery issuing exceptional, reasonably priced pinot noir as well as various pleasing white wine blends. Idiosyncratic yet superb, Cameron Winery has a cult following in Oregon. Look especially for their 2003 Dundee Hills pinot noir, which is a steal at $18 a bottle.


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