On May 16, the U.S. Supreme Court struck a great blow in favor of the winegrowers and winelovers of the world. The 5-4 decision – which struck down existing laws in New York and Michigan and has potential for immediate impact on 22 other states – held that discrimination against out-of-state wineries is in violation of the Commerce Clause of the U.S. Constitution, which allocates regulation of interstate commerce to Congress.
“Laws such as those at issue contradict the principles underlying this rule by depriving citizens of their right to have access to other states’ markets on equal terms,” the majority held, in an opinion by Justice Anthony M. Kennedy. He called the result of such laws a “low-level trade war.”
The laws in Michigan and New York allow in-state wineries the right to direct distribution to their customers, while out-of-state wineries must sell first to distributors, who then sell to retail outlets. This provides profits for redundant middlemen and allows these states to tax wines twice, or thrice in places with sales taxes (upon entering the state, upon sale to retailers, and upon sale to patrons). Lawyers from the two states argued that the wording of the 21st Amendment, which struck down Prohibition, gave states a degree of control over alcohol distribution that trumped the Commerce Clause.
The emotional fa�ade of their argument, however, was “protecting the children.” The idea is that in states that allow direct distribution minors gain easy, ID-less access to wine by ordering online or by phone and having it delivered. Postal workers would be unable to police this process, and thus legally unfettered gallons of wine will be pouring down the throats of 15-year-olds across the country, with, presumably, the inevitable teen pregnancies and bloody car wrecks that would come from such irresponsibility.
Justice Kennedy, however, was unconvinced. He pointed out that there is no evidence of such problems with minors having wine delivered in the 23 states that do allow direct distribution, such as California and Colorado. He said that the real aim of New York and Michigan’s argument was to maintain a competitive advantage in favor of their own states’ produce, portraying the “defense of minors” angle as a smokescreen.
Good for him for seeing the obvious. How many high-school drunks do you know swilling down boutique Bordeaux-style blends from Napa Valley?
I mean, I loved “Sideways,” but are sophomore lettermen from Lansing really clogging the lines by placing frantic orders to Au Bon Climat? This is not the equivalent of the hole-in-the-wall market where you and your crew used to send the hot girls in to buy two half-racks of Natty Lite.
The vast majority of the wines distributed directly are to collectors who hunt to find incredibly small-release cult wines like Screaming Eagle. These wines tend to be $50 or more per bottle, and often are only available by the case. That’s an expensive prom night.
While some states are likely to be unaffected, the impact in Oregon could be a mini-boom in the wine industry. With Oregon wines occupying more and more of the global scene, sales to places like New York and Chicago are providing needed profits to local winegrowers. With a small population, the only chance for Oregon wineries to really see the returns their often excellent wines deserve is by expanding the audience.
Therefore, Oregonians should embrace the Supreme Court’s decision, and hope that it serves as a catalyst to topple a few more of the paranoid barriers and almost atavistic regulations regarding alcohol.
Fine wine is inarguably of an entirely different paradigm than plastic-bottle vodka or MD 20-20. The whole idea of uncontrollably brutal alcoholic frenzies being whipped up by direct distribution or selling beer on Sunday is a hackneyed red herring used to maintain the existing fee schedules and distribution management that are currently lining the pockets of the large-scale distributors who contribute to campaign funds.
Sane, reasoned decisions like this one are hard to come by in today’s political climate. I say good for Justice Kennedy and the majority for having the cojones to stand up (gasp!) for the individual in the face of corporate bullying.
Riggs Fulmer can be reached at [email protected]