Court ruling on wine sales
could impact Indiana
in Indiana, Kentucky
would like to sell to out-of-state retail customers
(July 2005) Some area wineries are anticipating
big changes in the way they do business because of a U.S. Supreme Court
ruling that occurred in May. The court struck down laws in Michigan
and New York that prohibited out-of-state wineries to ship wine directly
to consumers within their borders. The decision reasoned that states
with such laws unfairly discriminate against out-of-state producers
and grant in-state wineries a competitive advantage.
by Levi King
and Steve Palmer, who own
and operate Madison Vineyards, are watching the wine sales ruling
This could affect us tremendously, said Mary
Jane Demaree, who owns and operates the Ridge Winery in Vevay, Ind.,
with her husband, Tom. We have customers from all over the state,
as well as Kentucky and Ohio. We have to turn down orders because we
cant ship them.
Both Indiana and Kentucky have laws that could be affected. Indiana
law makes it a Class A misdemeanor for a person or business who produces
or sells alcohol to ship an alcoholic beverage to a state resident who
does not hold a wholesalers permit. In Kentucky, the violation
is a felony.
In an official statement released after the ruling, Dave Heath, chairman
of the Indiana Alcohol and Tobacco Commission, claimed that the ruling
would not impact Hoosiers. Previous Indiana laws were put in place after
Prohibition and said little about wine shipping, until a 1998 law forbid
wineries from shipping orders placed by phone, fax or Internet. However,
the law made no mention of a winerys ability to ship orders placed
Ironically, the commission seized the high courts ruling as an
opportunity to close this loophole, informing all state wineries that
they were to cease ALL wine shipping. Jim Butler, former president of
the Indiana Winegrowers Guild, says this could cause Hoosier vintners
to lose $2 million to $2.5 million in annual sales. The proprietor of
Butler Winery in Bloomington said, Indiana wineries have been
shipping to customers since the 1970s. Now some are saying this may
put them out of business.
In Kentucky, wineries can only ship within state borders and only if
a customer places an order in person with identification. Wineries and
consumers are anticipating new legislation that would make it legal
for bluegrass wineries to ship in or out-of-state. As specified in the
new ruling, this means out-of-state wineries would be allowed to ship
to Kentuckians as well.
Chuck Smith, a member of the Kentucky Vineyard Societys board
of directors and co-owner of Smith-Berry Winery in New Castle, Ky.,
doesnt foresee an immediate effect from the recent verdict.
by Levi King
Palmer pours a glass of wine
at the tasting room. The couple
hold special events and are opening
a bed & breakfast soon.
Itll still take new legislation, and if it
passes, I dont know if itll have a big impact, he
said. Most of the winerys sales are made face to face. Smith explained
that KVS is not going to push the issue into legislation too soon. Its
all political, and we dont want to get too eager and make anyone
mad, he said.
Hoosier wineries are ready, though. Many have begun rallying their customers
to contact state representatives. However, the next legislative session
would not convene until January. If a bill passes and the governor signs
it into law, it likely will not take effect until July. This could be
too late for small wineries.
Sandy and Steve Palmer, owners of Madison Vineyards, note the importance
of big holiday sales and shipments. People dont want to
drive here from around the state just to purchase a gift, said
In both states, there is sizeable opposition to new legislation, however.
Wholesalers, who must purchase an annual license to sell and distribute
alcohol, are expressing their concerns. Some wholesalers claim that
shipping wine to customers will allow underage persons access to alcohol,
but states that currently allow direct shipments require an adult to
show ID and sign a receipt upon delivery.
Steve Palmer rejected the wholesalers argument. Its
a red herring, and everyone knows it. No teenager is going to order
wine off the Internet; hes going to ask a friend to buy him a
Lawsuits which could overturn the states laws are pending in Kentucky
and Indiana. Immediately following the Supreme Courts decision,
Ted Huber of the Huber Winery in Starlight, Ind., sued the state of
Kentucky to allow him to ship to customers across the Ohio River. Two
of Hubers Louisville customers, tired of the 15-mile drive to
purchase Huber wines in person, are co-plaintiffs in the suit. J. Alexander
Tanford, the attorney who successfully brought the case against Michigan
before the Supreme Court, filed a suit just two days later against the
state of Indiana on behalf of wineries in Illinois and Michigan. The
suit seeks a federal injunction to prohibit Indiana from enforcing its
wine shipment law.
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