Supreme Court Boosts Interstate Direct Wine Sales

Posted on May 17, 2005

Wine wholesalers and distributors fought against it, but The Supreme Court struck down the struck down Michigan and New York's bans on interstate wine sales.

By a 5-to-4 vote, the court overturned state liquor laws in New York and Michigan that gave preferential treatment to in-state wineries. Both states permit in-state wineries to ship directly to consumers, bypassing both retailers and wholesalers.
Michigan prohibited direct shipment by out-of-state wineries while New York nominally permitted it for out-of-state wineries that maintain a New York office, a requirement that no out-of-state winery has met and that the majority on Monday found so financially burdensome for small wineries as to amount to a prohibition.
In his majority opinion, Justice Anthony M. Kennedy said both states were engaging in the kind of protectionism that the Commerce Clause of the Constitution forbids and that the 21st Amendment does not excuse. The 21st Amendment repealed Prohibition and granted the states much leeway in regulating alcohol. But "state regulation of alcohol is limited by the nondiscrimination principle of the Commerce Clause," Justice Kennedy said.

So, the bottom line is that it goes back to the states. Each state can either allow direct wine sales to consumers for both in-state and out of state wineries, or it can ban all direct sales to consumers. 15 states now have bans on direct to consumer sales of wine: Alabama, Arkansas, Delaware, Kansas, Kentucky, Maine, Maryland, Mississippi, Montana, New Jersey, Oklahoma, Pennsylvania, South Dakota, Tennessee and Utah. The other states' laws are a confusing patchwork mess, and have all been invalidated by the ruling.

So, look for lots of arguments about wine sales coming soon to your state legislature.