July 9, 2007
HB 429 and SB 123: The Big Wineries Mount a Counteroffensive
Here at Chicagoist we've been watching the ongoing developments of HB 429, the pending legislation in the state House of Representatives, with a cautious gaze. Readers will remember that HB 429 is intended to bring Illinois in "compliance" with the U.S. Supreme Court's decision in Granholm v. Heald, which stated that non-reciprocal wine shipping laws were a violation of interstate commerce laws and the 21st Amendment to the Constitution repealing Prohibition. If signed into law by Governor Blagojevich, HB 429 brings into balance the number of cases out-of-state wineries and in-state wineries can sell directly to customers by reducing the number of cases an out-of-state winery can sell directly to Illinois consumers.
One of the many concerns of HB 429 is that, if enacted into law, larger Illinois wineries and vineyards fear they will lose a large portion of their customer base because they'll have to sell the rest of their product through the three-tier wholesale system. It's a concern for them because there's no guarantee the state's wine and spirits wholesalers will add wines from Illinois to their already bursting portfolios. The state's two largest wineries, Lynfred Winery in Roselle and Galena Cellars Vineyard & Winery, have broken ranks with the Illinois Grape Growers and Vintners Association to form the Illinois Winemakers Alliance. The Illinois wine industry is a $250 million business; Lynfred and Galena produce one-third of all wine made in Illinois. When they speak, politicians listen.
On a chance encounter, we spoke with Lynfred Winery Marketing Director Christina Anderson-Heller, who with Lynfred Winery President Fred Koehler has been lobbying the state legislature heavy to vote down SB 123, the Senate counterpart legislation soon up for debate. Ms. Anderson-Heller told us that the folks at Lynfred have been keeping tabs on what we've written about HB 429 and SB 123. She even sent us a copy of a recent letter Lynfred sent out to state Senators prior to the Legislature's recess, which you can download here (Adobe PDF). In the letter, Mr. Koehler makes an impassioned plea to vote against SB 123, arguing that passage of SB 123 would reduce tax revenues and ultimately harm the wineries that laid the foundation for the current growth of the state wine industry.
Ms. Anderson-Heller told Chicagoist that sources close to the debate say that SB 123 stands a good chance of being defeated when the bill comes up for ratification. Still, she did add that consumers concerned about the legislation should write or call their state Senator, saying that HB 429 and SB 123 are "beer lobby-driven bills." Chicagoist will keep readers posted on this developing story as new information comes in.
Image courtesy of www.georgenewall.com.
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The purpose of HB429 isn't to "intended to bring Illinois in compliance with the U.S. Supreme Court's decision in Granholm v. Heald", Illinois already is in compliance with the decision. Illinois is a full reciprocity state presently.
The purpose of the law is to limit direct shipment of wine to consumers. If the distributers could get away with banning direct shipment entirely, they would.
Here's a related story:
http://www.winebusiness.com/news/dailynewsarticle.cfm?dataId=48976
I believe the guest's comments are correct: this legislation is designed to limit direct shipment of wine to consumers. Which would be a shame, because wine.woot.com is such a wonderful thing.
How un-American is all this legislation? Reminds me of the Reader story on beer distribution a few months ago that ran Bells out of town.
We are living in corrupt times.
Terrible law, Jersey would not allow any shipping either! I just kept getting distracted while reading the post...Bill should have a bottle (wrapped in brown paper) in his hand.
You mean you didn't read our story on Bell's first, #3.
I meant to write "compliance", as what this legislation does is make it impossible for out-of-state retailers to sell their wines to Illinois residents, and it forces larger wineries in and out of Illinois to use the three-tier wholesale system almost exclusively to market their product. Illinois has long been a reciprocal state, but this legislation at best maintains reciprocity by effectively limiting consumers' options.
HB 429 has passed in the House, so the main hope of maintaining full reciprocity is to call or write your local state senator and ask him or her to vote no to SB 123. You can find your state senator at the State Legislature's web site.
And do not overlook the other significant consequence if HB 429/SB 123 is passed and becomes law: IL consumers would, overnight, be prohibited from buying wine through an online retailer based outside of IL and having that purchase shipped here. Say goodbye to the ease of researching and acquiring wine from multiple retail sources coast to coast. Then comes the fall out: Other states say, "OK, IL, if we can't ship to you, you (wineries and retailers) can't ship to us." Thus, eventually the upside for consumers resulting from the Supreme Court's Granholm ruling would be completely reversed, one state at a time.
HB 429 is anti-consumer in the worst way. By prohibiting Illinoisans from purchasing wine from out-of-state retailer (something they've been able to do for 15 years) the law would be restricting consumers only for the purpose of enriching a very small, but powerful group: Illinois wine distributors.
Over the past 5 years these distributors have "contributed" more than $5.4 million to politicians in order to assure that their interests are considered over consumers.
The legislation could be changed in very simple ways to make it a very good law:
--allow Illinoisans to purchase wine from out of state retailers just like they could from in-state retailers.
--allow ALL Illinois wineries to sell wine directly to retailers and restaurants, rather than restricting that right only to the very tiniest wineries.
This is what consumers should be demanding.