© 1997 JDM Enterprises LEGAL PRECEDENTby Jerry D. MeadYou have probably read, seen or heard, something, in recent weeks, about the problems with the interstate shipping of wine. The story has been covered by every form of media, from national newspapers like Wall Street Journal and USA Today, to suburban dailies via AP wire stories, to network television and CNN. National Public Radio is working on a report. With all due respect, all these powerful media are way late in getting to the story. We've been reporting on the issue of state bans on interstate shipping of wine for more than 25 years. I bring this up now because you are going to be reading even more on the subject due to a recent decision made in a Florida courtroom, where the judge ruled that state laws banning locals from ordering wine from California and Illinois merchants was unconstitutional. Here's a little background information to help make a little more sense out of not only this report but other stories you'll be reading on the subject. The thing is, most people have no idea that while it is perfectly legal to order every conceivable kind of product via the mails, internet, or telephone, including legal drugs and narcotics via mail order pharmacies, Vidalia onions from Georgia, beefsteaks from Omaha, even cancer-causing cigarettes and cigars, that it is almost impossible to legally have a bottle of fermented grape juice, or a 6-pack of craft-brewed beer, shipped from a state other than the one in which you live. Almost every state has laws banning individuals from importing wine from another state...even California, the state responsible for 90 percent of the commercially produced wine in the U.S. To the Golden State's everlasting shame, it is legal to bring back a "reasonable" number of cases of wine from a foreign nation, but not a single bottle from neighboring Nevada. All of these laws date back to the Repeal of Prohibition in 1934. They use as justification a section of the 21st Amendment that grants states the right to ban transportation of adult beverages into or through their borders. The intent of Congress at the time was to allow the states to remain "dry" after Repeal, if they wished. The states have instead used that wording to justify total control over licensed beverages, saying wine can be shipped through certain channels, but not through others and so on, thus placing themselves in direct conflict with the Commerce Clauses of the Constitution which guarantee free trade between the states. As previously mentioned, most states have laws banning interstate shipments of wine, though they really had not been enforced for the past 60 years, and were in fact pretty much unenforceable. They were misdemeanors, and in a free society how do you stop someone in another state from shipping something, and how do you know when a local recipient is receiving said illegal shipment? What has caused these laws to break into mainstream news is that with the advent of the Internet and other mass national and international mail order marketing methods, several states have started making serious efforts to curtail the shipments. New Jersey confiscated a truck full of wine on its way to other states via a UPS distribution point during the holiday season 1994. Shortly thereafter, the state of Kentucky made its misdemeanor law into a felony. Shipping a bottle of wine to a consumer in Louisville could now get you 2-5 in the state penitentiary and a ridiculous fine. Several other states added felony provisions, including Florida, Georgia, Tennessee and North and South Carolina, notably all in the bible belt south. The interesting thing, though, is that these laws were being driven not by anti-alcohol forces or neo-Prohibitionists, but by the liquor wholesalers in each state. Why? Trying to protect one of the few legally sanctioned monopolies remaining in U.S. business. You see, every state operates with what is called a three-tier system. By law, producers must sell only to a licensed wholesaler, who then sells to a licensed retailer, who then sells to the consumer, which means wholesalers are guaranteed a serious mark-up on every bottle of wine, beer and spirits sold in their state. The idea that someone might be receiving a "Wine of the Month" shipment without them getting a piece of the action upsets those wholesalers. To justify these felony laws, consumers are told they are being passed to prevent the state from being cheated out of taxes that the small farm wineries and wine clubs in other states aren't paying, and to prevent minors from buying wine by mail. Both arguments are bunk. The wineries have volunteered to pay the taxes, excise and sales (which no other mail order products do pay, by the way), but the states have no provision for accepting the payments. And the sales to minors via the mails or Internet is also ridiculous. First the kid has to have a credit card, be willing to spend a couple of hundred bucks on wine (the average price of a case of wine by mail), know it will be delivered when he/she is home but mommy or daddy won't be, and can count on the UPS driver not asking for i.d. The only documented cases of sales to minors by mail have been government stings involving minors assisted in their crime by an adult instigator. Two very dramatic things have happened in recent weeks. A court in Florida ruled the state's efforts to prosecute merchants in other states unconstitutional, both on grounds of inhibiting interstate commerce and the Due Process clause saying a defendant in one state can't be hauled into court in another without "minimum contact." All felony and misdemeanor laws banning shipping are now of questionable validity. And the state of Louisiana became the first state to provide a method for out of state merchants to license themselves, pay appropriate taxes and legally ship direct to consumers there. Similar legislation will be proposed in California and several other states in the coming year. You're going to be reading and hearing more about this issue in coming weeks and months as appeals and new lawsuits work their way through the courts. I predict that free trade will prevail. The Wine of the Week will be back next week.
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