Thursday, June 03, 2010

Fredricksburg Free-Lance Star Condemns Federal Law Giving States Rights to Limit Alcohol Shipping to Individuals

Vintners see bill as bad idea
Virginia wineries fear House bill 5034 would limit their direct-to-consumer sales in other states.

Barboursville Vineyards ships about $45,000 worth of wine a year directly to customers in other states.

But a proposed federal law that strengthens states' right to control alcohol sales could turn that revenue stream into a trickle.

"The perception is that it is not likely to proceed, but it could seriously impact not just Virginia wine producers, but wine producers across the United States," said Luca Paschina, Barboursville's wine maker.

If passed, House Bill 5034--known as the Comprehensive Alcohol Regulatory Effectiveness, or CARE, Act of 2010--would allow states to limit or cut off direct-to-consumer sales of wine and other alcoholic beverages from other states. This would force producers to go through distributors, which could be economically prohibitive for smaller operations and would limit consumers' choices.

The bill also would trump the Constitution's interstate commerce clause that gives the federal government control of sales between states, and make it harder for consumers and wineries to sue state governments for the right to ship their products directly to consumers instead of going through a wholesale distributor.

Two Virginia congressmen, U.S. Rep. Glenn C. Nye, D-Virginia Beach, and U.S. Rep. Gerald E. Connolly, D-Fairfax, have signed on as sponsors of the bill. It was crafted by the National Beer Wholesalers Association and has the backing of the Wine and Spirits Wholesalers Association. Both are trade groups that represent wholesale distributors.

"Even though this would give Virginia easier authority to pass a law that would be less likely to be challenged in court to protect our own wine industry, the industry doesn't think it is a good idea because of the potential domino effect," said Patrick Cushing, a former Spotsylvania County resident who is director of the Virginia Wine Council.

Currently, Virginia, the District of Columbia and 36 other states allow out-of-state wineries and other producers of alcoholic beverages to ship directly to residents. This bypasses the three-tier distribution system of producer, wholesale distributor and retailer established after Prohibition was repealed.

"What this bill does is leave the door open for other states to eliminate direct shipping," Cushing said. "If that happens, it would be very bad for the industry. The real danger is losing access to customers because another state wants to protect its own wine industry."

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