And a case of Md. wine for the Supreme Court

Vintners prefer a product that has interstate legs

December 08, 2004|By Jamie Smith Hopkins and Lorraine Mirabella | Jamie Smith Hopkins and Lorraine Mirabella,SUN STAFF

You can order everything from used cars to fine works of art online and have them delivered to your doorstep in Maryland - but not wine.

A case the Supreme Court began hearing yesterday might change that, in Maryland and 23 other states that now ban direct interstate wine shipments in one form or another.

The justices listened to arguments yesterday on three appeals of laws in Michigan and New York. Out-of-state wineries have argued that they should be allowed to sell to consumers in those states by phone or computer. Their supporters were delighted yesterday by the justices' pointed questions about the bans.

The issue pits vintners against wholesalers, consumers against regulators, and a 71-year-old amendment to the U.S. Constitution against the modernity of e-business.

The list of groups lining up to take a stand range from the Michigan Association of Secondary School Principals, which contends that states can't stop illegal sales to minors if they can't control direct shipping, to FedEx and eBay, which favor open commerce for the bottled reds and whites.

The states banning online wine sales base their law on the 21st Amendment, which repealed Prohibition in 1933 and gave states the right to regulate the sale of alcohol.

Some that ban out-of-state shipments do allow online sales within state lines; some, like Maryland, bar such direct purchases whether the winery is in New Market or Napa Valley.

"When you have ... the UPS driver pulling up to a door, they're not looking to make sure it's someone over 21 who's taking delivery," said Gerald Langbaum, an assistant attorney general and counsel for the Maryland comptroller's office.

But proponents of the change argue that the Constitution also implicitly prohibits states from passing laws that discriminate against out-of-state businesses.

Many of the 24 states that bar wine shipment from out-of-state sources - including Connecticut, Massachusetts and New Jersey - are populous, affluent places that would be prime for vintners who want to sell online nationwide. The U.S. wine industry already has sales of more than $21 billion a year.

"Maryland is a great market," said Jaimie M. Douglas, executive director of the Sonoma County Wineries Association, a California group that is trying to help overturn the anti-shipping laws. "The demographics that are there - they appreciate wines."

Wine producers say the ability to ship their beverages directly to customers is critical no matter where the buyer lives because many of the 3,700 wineries in the United States are too small to get a distributor.

Online shipment to states that allow it - and an unknown amount of illegal trade to those that don't - is already a booming business for wineries. Total sales have been estimated at $500 million to $1 billion a year, said David P. Sloane, president of WineAmerica, a national trade association. "Wine of the month" clubs are everywhere on the Internet.

Douglas said wineries frequently hear from frustrated consumers in nonshipping states who don't understand why they can't order a specialty Chardonnay or Zinfandel while others can. Sometimes, the bottle they want can't be had any other way, she said.

"This wine is not available to people in Maryland - top-of-the-line, boutique wines desired by collectors," said Jay Miller, co-owner of Bin 604 Wine Sellers in Inner Harbor East. "I'd love to get it shipped to me for my own personal uses."

Now, he says, he has to have the wine sent to a post office box in West Virginia, which permits interstate shipping, and travel there to pick it up.

Wine collector Rick Cullen of Annapolis used to have bottles sent to him while he lived in California and figures he'd be tempted to buy online now if he were allowed to do so.

"I see nothing wrong with it, so long as they can keep the minors from ordering this stuff," said Cullen, 60, who has a teenage daughter.

Right now, Maryland wine enthusiasts who aren't as dedicated as Miller have to buy from one of the nearly 7,000 local retailers - liquor stores, restaurants and other licensed businesses. The retailers buy from wholesalers, who buy from the producers. The wholesalers and most retailers, concerned about business jumping online, don't want to see this three-tiered system changed.

"We think it works well, and it allows enforcement," said Jane Springer, executive director of the Maryland State Licensed Beverage Association in Glen Burnie.

Not only state laws but a bevy of local laws also regulate alcohol sales, including prohibiting sales outright in some "dry" areas, she said: "I don't know how you would try and answer all those concerns through something like Internet delivery."

Maryland legislators passed a law two years ago that allows residents to special-order through out-of-state wineries and pick up the bottles from a local retailer. That option was seen as a way to deal with concerns about specialty products being cut out of the market while ensuring that taxes are collected and buyers get carded.

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