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Monday, March 05, 2007

Ind. Law - Review of status of Indiana wineries [Updated]

The Terre Haute Tribune-Star had a long article this weekend on the status of Indiana wineries. The story by Arthur E. Foulkes begins:

TERRE HAUTE — Indiana’s wineries and wine wholesalers are locked in a legal and legislative battle over how Hoosiers can legally buy wine in the state.

One recent casualty in this war was Rockville-based Terre Vin Winery, said the winery’s owner, David Gahimer. Gahimer closed Terre Vin at the end of 2006. New legislation passed in Indianapolis last year was “almost 100 percent” of the reason the winery closed, Gahimer said.

The Indiana Legislature “cost us 42 accounts in one day,” Gahimer said of a law passed last year that prohibited small wineries from skipping wholesalers and selling directly to retailers.

“The final [law] was not good for the industry,” Gahimer said. “We cut our losses and quit.”

I haven't read of any new wine-related legislation moving in this session, but here is a list of alcoholic beverage bills intorduced.

Later in the story, which covers a lot of ground:

The 2005 Supreme Court decision banning discrimination against out-of-state wineries was initially seen as a victory by the wineries and the consumer groups, but now battles are being waged in the different state legislatures — including Indiana’s. Other challenges to the three-tier system, such as a federal lawsuit filed by retail giant Costco to allow retailers to buy directly from producers (skipping wholesalers completely), could bring about even greater change.

In Indiana, the General Assembly wrangled in 2006 primarily over two different bills, one favored by wineries and the other by wholesalers. The result was a compromise package of bills that left both sides “equally happy or unhappy,” WSWI’s Purucker said, although he said he was not sure what changes in the law Indiana’s wholesalers would seek.

“In the art of compromise I think the Legislature did a pretty good job,” Purucker said.

In addition to the Costco case, “a new crop of litigation is fermenting across the nation” regarding wine shipping laws and regulations, according to a recent article in the National Law Journal. One such case, filed in a federal district court in southern Indiana, challenges the requirement that customers wanting wine shipped to their homes first must go to the winery from which they want to order.

James Tanford, an Indiana University law professor who has brought more than 20 suits on behalf of wineries, argues that the in-person requirements for ordering wine discriminates against wineries in distant states, the National Law Journal reports.

Little legislative action is expected in 2007, observers on both sides of the debate have said, but wineries and consumer groups seem less happy with the status quo than the wine wholesalers.

“We have a system where we passed laws … at the end of prohibition [and] ever since [new laws] have been tacked on like Band-Aid on top of Band-Aid,” Butler said. “It’s a very convoluted system. Most of the legislators do not understand it.”

The “web of confusion” created by the shipping requirements in the state have precluded shipping as a cost-effective option for Hoosier wineries, Bill Oliver said. “It’s a tangled up mess right now.”

A list of earlier ILB entries on wine shipping may be found here.

[Updated 3/8/07] A new grass-roots organization, VinSense Inc., "aiming to open Hoosier markets to wines" is announced in this press release, and its main page is here.

Posted by Marcia Oddi on March 5, 2007 08:24 AM
Posted to Indiana Law