The Wine Protection Racket

by Karen De Coster
Nov. 16, 2011

In the past, I have blogged about state laws that prohibit or make difficult the purchase of wine from out-of-state retailers because the states are under pressure to preserve profits and non-competition for in-state wine sellers. Tons of bucks are thrown at the issue by special interests that lobby to take away your right to freely transact with sellers of your choice. I am writing about this issue because the wine protection racket prevails in many states, not just Michigan.

In 2008, I had blogged about a ruling by the U.S. District Court for the Eastern District of Michigan that declared it unconstitutional to prohibit out-of-state retailers from selling wine to Michigan consumers. In October 2008, The Wine Spectator ran a nice piece explaining the history of the fight over wine in Michigan, and the overall implications of the ruling. Immediately, wine anarchy (or rather, the lack of totalitarian laws) ensued, and I was able to receive shipments from online retailers such as Wine.com.

"We're already serving Michigan customers," said Wine.com CEO Rich Bergsund after the ruling was handed down. That Michigan residents can now legally receive wine shipments from out-of-state retailers is "absolutely our interpretation [of the ruling]. This is a federal court finding that it's unconstitutional to treat outside retailers differently from in-state retailers on direct shipping," he said. (Wine.com is one of the few online retailers that does set up a brick-and-mortar warehouse in many of the states to which it ships, though it did not ship to Michigan residents prior to the Sept. 30 ruling.)

Shortly thereafter, Governor Granholm, whose political coffers were being filled by such powerful lobbies as the Michigan Beer and Wine Wholesalers Association, immediately signed a law prohibiting out-of-state retailers from shipping wine directly to consumers, and the law specifically banned UPS and FedEx, and other third-party delivery services, from shipping this wine. Online sellers, such as Wine.com, immediately discontinued doing business with Michigan residents. Wine.com writes that:

States have been mixed on the issue of direct shipping of wine to consumers by retailers. While 30 states currently allow out-of-state wineries to ship to their residents, only 15 states allow the same from out-of-state retailers. Wine.com ships to 80% of the U.S. population by maintaining a network of licensed, in-state stores in order to comply with state laws. But in Michigan, not even an in-state store would help, because the company uses UPS and FedEx to deliver its wine.

The reason is always the same - the laws are to protect the poor children who would be victimized by free trade in wine.

"if hundreds of thousands of unregulated out-of-state retailers are permitted to ship beer and wine to Michigan residents, there's a likelihood that alcohol will be delivered to underage customers."

Ken Wozniak, Director of Executive Services, Michigan Liquor control commission.

This is in spite of the fact that shippers require an adult to be present and sign for the package.

Back in October 2010, I went to Pasa Robles, California and had a chance to visit one of my favorite wineries for the first time - Four Vines Winery. Prior to my visit, I had blogged about the origin of its Anarchy wine. Four Vines also makes a fantastic Heretic wine (Petite Sirah), as well as a wine called Monarchy, a Petite Verdot, Malbec, and Tempranillo blend. Things have changed, recently, with a change of ownership to Cypher Winery, but still, the winery makes the same terrific wine. So last fall, I joined the winery's wine club.

Just a few weeks ago, I cancelled my wine membership with Four Vines, now Cypher Winery, and of course, the folks selling the wine wanted to know why they are losing a customer. My first reason is that it is just too expensive with shipping costs. I can buy it for much less locally because I am right near the #1 wine retailer in Michigan - Champane's in Warren - where the prices are amazingly low and I am buds with the wine buyer. In my return email to the winery, I noted that I will continue to buy the wine, especially the Anarchy wine (I now have Butler Shaffer hooked on this, by the way).

But mostly, I noted in my email that it is too frustrating for one who works a lot of hours to receive wine via shipment. Because an adult signature is required, and because no one is ever home when they try to ship, we (me and UPS) play cat-and-mouse until I call and arrange to have the package kept at the depot, then I have to wait until a Saturday to make the long drive to pick it up at the depot. Funny how I can order all the liquid sugar in a bottle, donuts, chips, onions rings, and processed chemicals-in-a-box that I want (if I wanted) and eat it all in public on a street corner, but I am stigmatized and harassed and taxed and impeded from buying a fresh, made-from-nature, healthy, and fermented beverage to enjoy in the privacy of my own home. By requiring signatures, the government nannies and their prohibition state make it far too difficult for one to order wine. So I am no longer getting any wine club memberships. And this is exactly what I told the winery was my main reason for cutting off their quarterly deliveries.

As usual, our totalitarian government/regulatory state is so beneficial for the business environment.