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Apr 24, 2010 04:51 PM

HR 5034

Has anyone heard about this bill, HR 5034, currently in the House Judiciary Committee? I got an email from Navarro Vineyards today urging me write my rep. Evidently if passed, it could prevent wineries from shipping across state lines. Navarro says that small familiy wineries like theirs would be threatened. I did a quick read of some articles via internet, but none made clear how the bill would specifically work against consumers like us buying wines online direct from wineries.

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  1. I am in the same boat, but I think that is because no one really knows exactly what would result from the resolution if it became law. It will probably threaten existing openness and make it harder for new challenges to state laws to take place, but each state will be different. And what happens in states that have already changed laws and allow alcohol shipments is another question.

    The text of HR 5034 is pretty short, but it is clear that it aims to put an excessive burden of proof on wineries, other alcohol retailers, trade organizations etc for legal challenges to take place. Essentially, if it became law it would make it very difficult to challenge discriminatory state laws that ban interstate alcohol shipments.

    I thought this Wine Spectator article was pretty good, and I have also linked the text of the HR. it only takes a minute to read.

    1. Here's the Wine Spectator article:

      Each state can set it's own interstate shipment laws and cannot be challenged under the Interstate Commerce Clause. The wholesalers and distributors can go after each state without roadblocks.

      1. I thought Tom Werk's (wine blogger) explanation of the bill and its effects was good:

        I've written to my representative and two senators. (Apparently, I have too much time on my hands.) It seems as if it's a blantant grab by beer and wine wholesalers to control the market, pushing out the little wineries who ship out of state, under the guise of protecting states' rights and consumers. How many 19-year-old kids do we need to stop from buying a $45 bottle of pinot noir online from their favorite Oregon winery? Give me a break.

        1. I can't say that I have all the answers on this bill but I've been reading about it for a week or so. It was written by the Beer Wholesalers group and is fully endorsed by the Wine & Spirits Wholesalers. Every chance they get, both groups spend lots of money trying to keep wineries (and wine retailers) from being able to ship directly to consumers. The reason is simple. When a winery ships directly to consumers the winery makes the profit on the wine that would go to a wholesaler if they sold the wine to the wholesaler, who then sells it to retailers. So the wholesalers lose their profit if the winery ships direct.

          Laws vary on some of this but it is the individual states that can pass laws to regulate how wine is sold (or delivered) within their borders. The wineries organizations (and related groups) keep challenging those laws for obvious reasons. At one point (I know because I was an online retailer at the time) there were laws being sponsored in Illinois, New York, Florida and Texas to make it illegal or at least very complicated and expensive for wineries or retailers to ship direct to consumers in those states. All of these actions were sponsored by the wholesalers.

          Retailers aren't generally included in these cases, but it's only legal for them to ship into 13 states anyway........... and (except for a few wineries that legally ship to retailers now) the wholesalers, as a group, get their profit cut on that wine because most states that have wine retail also have what's called a 3-tier system, which requires a wholesaler in between the winery and the retailer.

          So............ if you've followed this, it's pretty obvious what is going on with this bill. If it becomes law, each state will have the indisputable right to pass laws which could not be challenged in court. If your state says you can't receive wine direct from out-of-state, then that's it....... period.

          There's a lot more to it, but that's my take.