Informal Coalition to
Preserve Consumer Access to Wine
M E M O R A N D U M
DATE: September 14, 2000
TO: MEMBERS AND FRIENDS OF THE INFORMAL COALITION TO PRESERVE CONSUMER ACCESS TO WINE
RE: Appeals Court Upholds Wine Wholesaler Monopoly
The 7th Circuit Court of Appeals reversed the district court and upheld an Indiana State law forbidding the direct shipment of wine to Indiana consumers by out of state wineries without a valid wholesaler permit. The Court thus upheld what it called Indiana’s "elaborate regulatory regime" for controlling all alcohol distribution and limiting consumer choice.
In the court’s view, the Twenty-first Amendment grants states the power to give wholesalers a monopoly over the distribution of wine in a state, as long as in-state and out-of-state wine must pass through the same regulatory system. The court was not under any illusion about the purported purposes of Indiana’s law--"reducing competition and facilitating tax collection."
The court similarly recognized that the Indiana State law is "hard to justify as a temperance measure." The only "social goods" the law promotes are, as the court said, reducing competition and facilitating tax collection. The court gave short shrift to recent Supreme Court decisions examining the applicability of the Commerce Clause to protectionist state laws. Instead, the court characterized the issue as one of State authority to require collection of taxes from out-of-state shippers.
The Coalition believes that wine consumers should have access to all markets, not merely that fraction accessible through the wholesale monopoly granted to wine wholesalers. Consumers should not be forced to buy their wine in a market that excludes small wineries and restricts their ability to use the Internet to find these products. With the constitutionality of five other State laws currently being challenged in the New York, Virginia, Texas, Florida, and North Carolina, the 7th Circuit opinion will certainly not be the last word on this issue.