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Saturday, March 15, 2008
Ind. Law - "Wineries lose again: Proposals to loosen Indiana’s distribution system fail"
That is the headline to this comprehensive story today by Jonathan Hiskes in the Indianapolis Business Journal. The story begins:
Oliver Winery considered starting a wine club that would ship to members through UPS, giving them access to boutique wines not available in stores. But the Bloomington business held off because it would have to exclude a key state: its home base, Indiana.The state prohibits its wineries from shipping more than 3,000 cases a year in-state. Oliver is nearly spilling over that limit already, owner Bill Oliver said.
At IBJ press time, the General Assembly was set to close another session last week without significant change to the state’s complex alcohol distribution system, ensuring another year of wrangling between wineries and wholesalers.
A proposal to raise the direct shipping limit to 10,000 cases failed. So did a broader deregulation bill brought by a new Indiana wine drinker’s group, VinSense. * * *
State wineries grew 78 percent between 2000 and 2005, according to the Indiana Wine Grape Council. But growth has been more difficult since 2005, when the U.S. Supreme Court struck down Michigan’s practice of allowing in-state wineries, but not out-of-state ones, to ship directly to consumers. State legislatures, like Indiana’s, that had been giving their home wineries the same advantage had a choice: Loosen restrictions for out-of-state wineries or tighten them for in-state ones.
Indiana’s Legislature responded in 2006 with a series of new restrictions. One required buyers to complete a face-to-face transaction at a winery before having wine shipped to them. Another prevented wineries from shipping directly if they had their own wholesaler permit. This effectively kept all California, Oregon and Washington wineries from shipping to Indiana, because those states give their wineries wholesaler permits automatically. A lawsuit challenging the 2006 changes is pending in the 7th U.S. Circuit Court of Appeals in Chicago.
Through the disputes, wineries found themselves opposed by wholesalers, who had an interest in defending the “three-tier” producer-distributor-retailer system established at the end of Prohibition to thwart bootleggers.
Posted by Marcia Oddi on March 15, 2008 08:14 AM
Posted to Indiana Law