It may not be war, but Wine Institute and WineAmerica have vowed to “actively oppose” a proposed law that would significantly tighten direct shipping of alcohol beverages.
And it may be unconstitutional, National Association of Wine Retailers (NAWR) warned.
The Model Act was adopted not by elected officials but by a group of lawyers, judges, legislators and legislative staff and law professors at the Uniform Law Commission (ULC) meeting this week in Philadephia. The ULC seeks to provide state legislatures with well-researched and drafted model acts to bring clarity and stability to critical areas of statutory law across jurisdictions where uniformity is desirable and practical.
“However well-intentioned this effort is,” Steve Gross of Wine Institute and Michael Kaiser of WineAmerica, said, “we expect this Act will become a Trojan Horse that will serve to curtail existing wine shipping privileges.
“Pulling at the threads of an alcohol law already established in 47 states with common provisions that experienced trade groups representing all three tiers meticulously crafted to co-exist with each state’s unique alcohol distribution laws is, we believe, beyond the scope and expertise of the ULC,” they added.
Half the committee that drafted the measure recognized it may be unconstitutional, Tom Wark, of NAWR said. They voted to strip the measure of its fulfillment house provision. The measure would require fulfillment houses, which perform services — mainly storage and packing services — on behalf of wineries and wine retailers, to register and submit to the jurisdiction of another state. The problem with that, Wark said, is that to assert jurisdiction over an entity, that entity must have minimum contacts with the forum state. The fulfillment house only does business at its location and doesn’t derive any income from the customer who ordered the wine in another state.
The only reason the fulfillment house provision remained in the measure is that the chair “decided that his vote as chair in a deadlock situation held sway,” Wark said.
The other problem with the measure, Wark said, is that it would allow a state liquor commission to penalize a local business for a perceived violation of another state’s laws without due process.
The measure itself is pretty turgid. In addition to suppliers, wholesalers and retailers as well as carriers, it also establishes a “fulfillment provider,” which is defined as “a person that acts on behalf of a licensed direct shipper to ship covered alcoholic beverages to a consumer and arranges for transport of covered alcoholic beverages by carrier to the consumer.” The legislation provides that the fulfillment provider must register with every state into which its arranges bev/al to be shipped, is responsible for verifying a direct shipper is licensed, must provide a list of all direct shippers each month to the state ABC, etc.
Just because a fulfillment provider is licensed does not relieve a carrier of the responsibility of making sure the direct shipper is also licensed.
The draft legislation goes on like that for 23 pages. If you really want to read it, it is here. Before passage, Wine Institute and WineAmerica, on behalf of their 11,000 members, expressed “the strongest opposition to ratification of the proposed Uniform Alcohol Direct-Shipping Compliance Act.”
In a letter to Uniform Laws Commission members, Gross, the Wine Institute VP-state government relations, and Kaiser, the Executive VP-government relations for WineAmerica, noted that originally the committee was focused “on the emerging area of DTC shipping of wine and/or beer” but had shifted in2019 to being “focused solely on changing existing state wine shipping laws.” By 2019 direct shipping of wine was lawful into 45 states, and that the initial draft was drafted without input from wineries but with extensive input from wine wholesalers, they said.
Wine Institute and WineAmerica said the benefits of the proposed legislation “are greatly outweighed by the need to protect existing wine shipping statutes from opponents that will seize this opportunity to undermine existing shipping laws.” They noted the 21st Amendment was adoped “precisely to prevent national uniformity of laws governing the sale and transportation of alcohol across state lines.
National Beer Wholesalers Association and Wine & Spirits Wholesalers of America didn’t immediately respond to a request for comment.