- The Washington Times - Tuesday, May 17, 2005

The U.S. Supreme Court yesterday made it easier for consumers to buy wine directly from out-of-state wineries with a ruling that struck down state restrictions on the sales.

Twenty-four states, including Maryland, have restrictions on out-of-state shipments by the $21.6 billion wine industry.

The ruling is a victory for small winemakers who want to expand their businesses and a defeat for the wholesale distributors that are bypassed when wineries ship directly to consumers. Wine lovers across the country could get access to hundreds, if not thousands, of additional wines.

The 5-4 ruling overturned laws in Michigan and New York as discriminatory because they allow in-state wineries, but not out-of state companies, to ship directly to consumers.

“States have broad power to regulate liquor,” Justice Anthony M. Kennedy wrote for the majority. “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.

“If a state chooses to allow direct shipments of wine, it must do so on evenhanded terms,” he wrote.

Maryland prohibits its wineries from shipping wine to consumers anywhere and bans direct interstate shipments of wine to their residents.

Virginia and the District of Columbia allow limited shipments from out-of-state wineries.

“That’s why we feel this Supreme Court ruling does not affect us,” said Michael Golden, spokesman for the Maryland comptroller’s office, which licenses the state’s 16 wineries.

However, the ruling opens the door for Maryland to eliminate its ban on all shipments, said Kevin Atticks, executive director of the Maryland Wineries Association.

It also leaves open the potential for legislatures to ban both in-state and out-of-state shipments, as Maryland does.

“It affects the consumer as much as it does the wineries,” said Juanita Swedenburg, owner of Swedenburg Estate Vineyard outside Middleburg, Va., one of the three wineries that sued Michigan and New York.

“When they visit a winery, they can ship a bottle of wine home. This is interstate commerce, as it was meant to be.”

Rep. George P. Radanovich, California Republican and co-chairman of the House Wine Caucus, said, “This is a tremendous victory for the consumer and the free market. This decision trumps the distributor lobby for decades who were trying to protect their own wallets.

Critics of out-of-state sales say they are irresponsible and encourage alcohol consumption by minors, such as through Internet sales.

“My recommendation would be to tighten the rules,” said Nida Samona, chairwoman of the Michigan Liquor Control Commission. “Minors must be protected from this product.”

Michigan and New York argued that they had a right to restrict out-of-state shipments under the 21st Amendment, which ended Prohibition in 1933 and gave states the right to regulate alcohol sales. About half the states enacted laws requiring outside wineries to sell wine only through licensed wholesalers within their states.

However, the Constitution forbids states from enforcing laws that discriminate against out-of-state businesses. Both Michigan and New York allow direct shipments for in-state wineries but not out-of-state ones.

Joining the majority opinion were Justices Antonin Scalia, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.

In a dissent, Justice Clarence Thomas said the ruling would overturn regulations intended to protect minors. He also agreed that states have a separate authority to regulate alcohol sales under the 21st Amendment.

Industry groups said the ruling is likely to be expanded beyond wine sales to include beer and other alcoholic beverages regulated through state-licensed wholesalers and retailers.

• Donna De Marco contributed to this report.

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