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Wineries Fight Direct To Consumer Regulations

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Sonora, CA– A recent poll showed overwhelming support to allow wineries to ship directly to consumers.

Wine is of course a major industry in the Mother Lode.

According Gladys Horiuchi, manager of communications at the Wine Institute in San Francisco, as reported in the Napa Valley register, “Direct shipping is only one percent of wine sales nationwide, but that one percent is vital source of revenue for small wineries.”

Direct-to-consumer wine shipping lawsuits had been growing in number since the 2005 Supreme Court Granholm decision, which ruled that states cannot discriminate between in- and out-of-state wineries in matters of direct-to-consumer wine shipping.

The Granholm decision argued that the 21st Amendment, which ended Prohibition and put states in charge of alcohol regulation, does not trump the Constitution’s Commerce Clause, which prevents states from restricting interstate trade. Direct-to-consumer wine shipping is now legal in several states including California.

The Department of Alcoholic Beverage Control holds the authority to label a district as a “Dry area”, banning any shipment of wine to an associated address.

In 2011 the Alcohol & Tobacco Tax & Trade Bureau operated on a budget of $100 million, but collected nearly $11 billion in alcohol beverage excise taxes. Nearly $1 billion comes from wineries alone.

The bureau and its predecessor, the Bureau of Alcohol, Tobacco & Firearms, has overseen a massive transformation of the wine industry, from a relatively concentrated group of wineries to a highly diffuse industry with thousands of smaller wineries.

HR 1161 was introduced to Congress this spring as the Community Alcohol Regulatory Effectiveness (CARE) Act of 2011.

It has been labeled by opponents as the “Wholesaler Protection Act” because of its backing from the National Beer Wholesalers of America and the Wine & Wholesalers of America. If passed, the act could harm direct mail wine clubs, which could devastate many smaller wineries like those found in Calaveras and Tuolumne County.

HR 1161 was stopped from advancing in 2011. The bill remains alive and may still get a hearing in 2012.

To view a pdf version of a letter to Congress on behalf of more than 3,500 breweries, wineries, and distilleries opposed to HR 1161 click here.

Most recently in October 2011 the California Alcoholic Beverage Control issued an Industry Advosory. It states “Although the Department remains concerned that certain activities by Third Party Providers may violate California law… the Department believes that licensees and Third Party Providers can form business relationships that facilitate lawful transactions for sales of alcoholic beverages over the Internet.”

The informal Mother Lode poll showed strong support for allowing direct-to-consumer shipping.