Two-Way Traffic Jam For Wine Sales
By Chuck Sudo in Food on Jun 7, 2007 3:58PM
The State House passed legislation on Tuesday designed to bring Illinois into compliance with a 2005 U.S. Supreme Court ruling by limiting the amount of sales an Illinois winery can directly ship to a customer to 12 cases a year. The 5-4 decision in Granholm v. Heald ruled that laws in Michigan and New York permitting the direct sale and shipping of wine produced in state to customers while prohibiting out-of-state wineries from doing the same were violations of the 21st Amendment to the Constitution repealing Prohibition.
The approved bill, HB 429, is designed to bring the state in compliance with Granholm v. Heald while protecting both Illinois' growing wine industry and the three-tier distribution system that benefits wholesalers. We wrote back in January of last year that the distributors and wineries were at odds on this very issue before a meeting of the minds resulted in the compromise. However, that bill stalled in the House last year when the Illinois Retail Merchants Association raised objections to it. This time around, the IRMA is aboard, but HB 429 is facing opposition - and the threat of a lawsuit - from the Specialty Wine Retailers Association, which claims that even though HB 429 will bring Illinois in compliance with Granholm v. Heald, it's doing so to the detriment of out-of-state small acreage, boutique wineries.
Illinois is already one of eight states in the country that allows for reciprocity of wine sales. It may leave a bitter taste in some mouths, but this legislation appears on the surface to be beneficial to all involved parties, albeit just enough to say that it is. The state wine industry can still sell its wine directly to customers, the wholesalers protect their turf and still get to deal with restaurants, bars, and clubs directly while maintaining the integrity of the three-tier system, the retail merchant lobby is satisfied that both in-state and out-of-state wineries are on an equal playing field, and the state legislature is no longer in violation of the 21st Amendment. Still, the best analogy we can come up with for this is to imagine access to and from the city via the expressway system and Lake Shore Drive being reduced to one lane, both ways. It may work, but it still could be better.