NCPA - National Center for Policy Analysis

Wine-Shipment Laws Protect Wholesalers' Monopolies

February 7, 2000

A New York law which forbids the direct shipment of wines from other states is being challenged in court on the grounds that it violates the Constitution's interstate commerce clause and the First Amendment freedom of speech. The suit -- filed in federal district court in Manhattan last week -- is being brought by two out-of-state wineries and three New York wine consumers.

  • New York is just one of 30 states that ban direct shipments of wine from out-of-state wineries to residents within their borders.
  • Twelve other states permit shipments only from states that allow reciprocal treatment.
  • Advertising in prohibitionist states is also illegal, making Internet wine retailers outlaws merely for posting prices and wineries outlaws simply for inviting people to visit and try their wines -- provisions that bring into play the free-speech issue.
  • Any winery, Internet retailer or shipper that violates the laws faces severe sanctions, including jail.

Defenders of the laws argue that minors must be protected from ordering wine over the Internet. State officials deplore the loss of sales taxes.

But opponents say the real driving force behind the laws is protectionism -- specifically, protection of wholesalers. As middle-men between wineries and retailers, wholesalers collect between 18 percent and 25 percent of the cost to retailers. The nation's largest wholesaler, Miami-based Southern Wine and Spirits, alone reaps $2.3 billion in annual revenue.

Source: Clint Bolick (Institute for Justice), "Wine Wars: Lift the Ban on Out-of-State Sales," Wall Street Journal, February 7, 2000.


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