Maryland's wine stewardship

Our view: Comptroller's report reveals absurdity of past objections to direct shipment of wine to consumers but still draws some wrong conclusions

December 25, 2010

The expression In vino veritas roughly translates from Latin into "in wine, there is truth." Pliny the Elder, the Roman author who first turned the phrase, was observing how alcohol can loosen the tongue and cause people to reveal things they might not have intended.

One might also note that allegedly independent reports on wine shipping can be revealing too. Comptroller Peter Franchot's lengthy missive on the topic — released last week — reveals not only how nonsensical are many of the objections to direct shipment to Maryland consumers, but also how resistant his own agency is to endorsing needed reforms.

First, the good news. Remember how liquor industry lobbyists and sympathetic lawmakers in Annapolis objected to direct shipment of wine from producer to consumer because it would: a) lead to rampant underage drinking; b) make tax collection impossible; and c) ruin business for Maryland-based retailers?

Well, the comptroller's survey of states (a whopping 37 of which, along with the District of Columbia, allow direct shipment) found none of the above. Reasonable precautions can prevent any of these potential adverse effects. The threatened loss of mom-and-pop liquor stores is particularly laughable, as even in states where direct shipment is possible, it's a tiny segment of the overall market for alcoholic beverages.

Indeed, the study raises an important point. People who order wine to be shipped directly to their homes aren't looking for "Two-Buck Chuck" or even a jug of Ernest and Julio's Hearty Burgundy. On average, they are buying wine that is three times more expensive than the average sale at a Maryland liquor store — and that's before shipping costs are factored in.

The reality is that legalizing direct shipment is about making it possible for wine lovers to purchase varieties that aren't available on store shelves. And opposition has been fueled not by people concerned about kids or tax receipts — or even by many of the retailers themselves — but by liquor wholesalers who profit from Maryland's Prohibition-era, three-tiered regulatory system.

That brings us to the bad news. While the report is fact-based, some of its conclusions are not. The most glaring is an observation that legalizing direct shipment from out-of-state retailers would do damage to Maryland-based retailers and wholesalers.

That's absurd. If the ban on out-of-state retail shipment is maintained, that means a Maryland resident who wants to order a gift wine basket or join a wine-of-the-month club or order an imported wine could well be out of luck. Those services are commonly provided by retailers based in places like California or New York.

Most consumers can't very well order wine from a vineyard in Italy or France. The shipping costs would be astronomical. But they might order an imported bottle not available on Maryland store shelves through an out-of-state specialty retailer.

Why not simply level the competitive playing field for the benefit of consumers? The comptroller's office says retail sales decisions are based on price. But that's simply not true of direct shipping — as the report's own survey of consumers and retailers demonstrates. Even retailers support direct shipment from out-of-state retailers; only wholesalers (and perhaps not even all of them) are dead-set against it.

Demand for premium wine grows when consumers have a chance to explore and sample the best of what wineries elsewhere have to offer. The more people understand and appreciate wine, the more they'll show up at local wine stores, where more than 9 out of 10 purchases of wine will be made even if direct shipment is approved.

Nevertheless, it's clear the comptroller's staff continue to be true believers in the three-tiered system and preserving the advantages carved out for wholesalers. No matter what reforms are pursued in Annapolis, that's probably not going to change.

But the danger is that the report's conclusions may influence lawmakers to water down a direct-shipment bill to the detriment of consumers. In addition to banning shipments from out-of-state retailers, the report suggests limiting all direct shipment to 12 cases per year — despite acknowledging that most states allow significantly more and finding no fault with that practice.

What the Maryland General Assembly must realize is that this is the 21st century and not 1933. It's time the interests of consumers held sway over those in the politically influential liquor industry that oppose free-market reforms. There are simply no arguments against direct shipment reasonable enough to pass the sniff test (let alone that of taste).

The comptroller's findings are helpful, but to quote another Pliny the Elder observation, they need to be taken "with a grain of salt." Lawmakers would be wise to heed the observations of another noted philosopher, Wells Discount Liquors owner Mike Hyatt, who told a reporter for this newspaper, "anything that promotes the wine business has got to be a very good thing long term for everyone."

Here's hoping the New Year brings some of that common sense to Maryland's wine laws.

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