Raise a glass: Internet wine sales now OK
May 16, 2005 11:23 AM   Subscribe

Raise a glass! Today the Supreme Court struck down laws in Michigan and New York (and by extension, probably those of 22 other states) that forbid interstate sales of wine. The ruling is based on the Commerce Clause, which allows only congress to regulate interstate trade, and which today is held to trump the 21st Amendment. Though some allege that online sales make it easier for minors to buy liquor, the majority found little evidence that this is a major problem. Will protectionist liquor sales laws be felled by this ruling, too? Time (and further litigation) will tell. [MI]
posted by rkent (30 comments total)
Details: the case is Granholm v. Heald (PDF link to Supreme Court slip opinion: 73 pages!).

Majority: Kennedy, with Scalia, Souter, Ginsburg, and Breyer.

Dissent: Thomas, with Rehnquist, Stevens, and O'Connor.
posted by rkent at 11:26 AM on May 16, 2005

Rehnquist, O'Connor, Thomas, and Stevens dissent. Strange bedfellows.

SCOTUSblog has links to the decision and its parts.
posted by Kwantsar at 11:30 AM on May 16, 2005

I would gladly raise a glass my favorite winery would ship my beverage of choice to me.

Previously, I've purchased a case of wine while visiting my favorite winery and had no problems with them shipping it to me. Apparently, a rogue employee who no longer works there should never have taken my order when I asked for the wine to be shipped out of state. Today, I called to see if I could order another case and was politely turned down. The winery stated that they will not handle such purchases until their shipper, UPS, tells them it is acceptable.

Apparently, they have not kept up to date with the changes in the various state laws. Maybe I need to call them back...
posted by onhazier at 11:30 AM on May 16, 2005

This is going to be really great for a lot of the little family owned wine operations. A lot of them are located in the boonies, and it will be nice for them to be able to sell their products online, or ship them to people who visited in the past and want more of their products.

And a fun fact for anyone who didn’t know: the largest contiguous stretch of grapes (outside of California) is actually located through New York, Pennsylvania, and Ohio, which is why New York was so involved in this case. Most states have a few odd wineries here and there though (for example, Idaho is quickly becoming a place where a lot of fine wine is made, and Minnesota grape breeders have some really nice cold-hardy wine grape varieties.)

As for me, I prefer grape juice, which is the primary product made from those NY, PA, and OH grapes I mentioned earlier.
posted by Nematoda at 11:34 AM on May 16, 2005

Onhazier, it doesn't matter what the state law is if you can't get a shipper to accept the package. I can't tell you how many times I have banged my head against the wall over that one.

This ruling does not actually allow out-of-state wineries to ship to MI and NY, it just says that whatever laws apply to in-state wineries have to be applied to out-of-state ones. What's huge about this is the ruling that the Commerce Clause supercedes the 21st amendment.
posted by cali at 11:40 AM on May 16, 2005

The Wine Institute is a good resource for information on state shipping laws. FYI, it's the California wine industry's main lobbying group, so not exactly unbiased.
posted by cali at 11:55 AM on May 16, 2005

Bah!! All you winers!! I suppose you'll want some cheese with your wine?
posted by Balisong at 12:06 PM on May 16, 2005

Maybe now I can get some Two Buck Chuck shipped to Tennessee! Hooray!
posted by absalom at 12:12 PM on May 16, 2005

Excellent! It has been nearly impossible to buy Virginia wine in Maryland. I hope this ruling changes that for the better. If it does, I'll seek out Swedenburg for my first bottle.
posted by grateful at 12:12 PM on May 16, 2005

I live in Virginia and have had the winery in question ship to me before via UPS. Direct shipping became legal for Virginia in 2002 or 2003. I suspect that one employee knew it was fine and another did not.

Either way, I've sent a request to UPS for clarification and found a copy of the pertinent state ruling. I will try again.
posted by onhazier at 12:21 PM on May 16, 2005

Just for some historical perspective; this is what killed the initial start-up of WINE.COM; they had to partner with entrenched old-school liquor/beverage shippers because they couldn't just send stuff directly to you, like an Amazon.com or a Netflix. So their profit margins were razor-thin.

Well, that and the fact that they barrelled forward with their business plan after this speedbump hit them.
posted by jscott at 12:46 PM on May 16, 2005

What I don't understand is how the Commerce Clause can trump an later amendment. Logically, if an amendment and a clause in the original conflict, the original is no longer meaningful, since the amendment changes it -- and the 21st Amendment clearly gave states the right to control, or bar, transport of alcohol over thier borders.

Ahh. They're hinging it on the fact that in-state wineries operate under different rules, and that isn't allowed by the 21st. I think, on the face, that's silly. I think the Majority has erred, and Justice Stevens' dissent is correct -- the laws are, on the face, a clear violation of the Commerce Clause, but the 21st Amendment clearly allows such when alcohol is involved.

Logical extension: It is now illegal to have a dry county, vis the Commerce Clause, since you can now order wine, et. al., across state lines, and barring such would be a similar violation of the commerce clause.

Of course, 5 beat 4, and thus, we now have a (weak) precedent that implicit editing of the Constitution does not happen.

So, future emenders, remember such phrases as "notwithstanding the provision of....", or simply write amendments to actually delete phrases from the text. (For example, the 21st Amendment explicitly repeals the entire 18th, thus, any reference to the 18th is not legal precedent.)

IANAL, I'm just this guy.

As to the underlying issue. Cool, let 'em ship wine interstate. I disagree with the logic -- if we want to get rid of the 2nd clause of the 21st Amendment, I'm all for it -- but I dislike the idea of amendments being trumped by older texts. It's supposed to be the other way around. I've got no problem with shipping booze about.
posted by eriko at 12:48 PM on May 16, 2005

This reminds me of the whole Wirtz Law deal in Illinois. It was declared unconstitutional and repealed in 2002, but not before some major price gouging by distributors.
posted by SisterHavana at 1:54 PM on May 16, 2005

eriko: A county can still declare itself dry if it wishes. A dry county has NO booze (or severely restricts its sale), which doesn't discriminate between in-state and out-of-state suppliers.

That said, dry counties are lame, so I wouldn't be upset if they were now illegal.
posted by brain_drain at 2:25 PM on May 16, 2005

Does anyone know how this applies to ordering spirits from out-of-state suppliers? If it's the same, I'm surprised that all the news stories speak only of wine.

this is what killed the initial start-up of WINE.COM

And I thought it was when I took advantage of their pricing error on Martell XO cognac!

posted by Zurishaddai at 2:50 PM on May 16, 2005

Prediction: This will come to be known as the Sideways Decision.
posted by ParisParamus at 2:52 PM on May 16, 2005

Zuri: good question. To be a law dork about it, the way the case was decided (commerce clause prohibits disparate treatment of out-of-state suppliers in wine sales, overriding 21st Amendment liquor rules), it seems it should apply to any liquor sale. But the underlying policies of the decision (emergence of small wineries, importance of direct sales to their viability as businesses) don't necessarily apply to liquor companies. But they don't necessarily NOT apply, especially for small-batch producers. So... we'll see. Someone else needs to sue to reach that issue, basically.
posted by rkent at 3:00 PM on May 16, 2005

Amazon launches partnership with Wine.com [The Associated Press | May 04, 2005].
posted by ericb at 3:06 PM on May 16, 2005

Upon closer reading, the issue as the majority conceives it, and the issue upon which they granted cert, is:

"Does a State's regulatory scheme that permits in-state wineries directly to ship alcohol to consumers but restricts the ability of out-of-state wineries to do so violate the dormant Commerce Clause in light of §2 of the Twenty-first Amendment?"

So under the majority's logic, yes, it applies to liquor sales as well. I still say there needs to be more litigation.
posted by rkent at 3:07 PM on May 16, 2005

Free The Grapes!
posted by ericb at 3:08 PM on May 16, 2005

There go those activist judges, again!
posted by ericb at 3:18 PM on May 16, 2005

""Does a State's regulatory scheme that permits in-state wineries directly to ship alcohol to consumers but restricts the ability of out-of-state wineries to do so violate the dormant Commerce Clause in light of §2 of the Twenty-first Amendment?""

So, with enough dysfunctional lobbying, Albany could ban all direct shipments?

Also, nothing activist about this decision.
posted by ParisParamus at 3:30 PM on May 16, 2005

The notion is not (obviously) that older texts in the Constitution trump newer ones. With the possible rare exception of Article V, that is never the case, and the newer text rules.

The question is when a new amendment can implicitly overrule older provisions of the Constitution. For example, the Court has previously asked whether the 21st Amendment overrules the 1st Amendment, and allows states to regulate liquor by banning speech (answer, no). Presumably you could ask a similar question about whether the 21st Amendment overrules the 8th Amendment (forbidding cruel and unusual punishments) and therefore allows states to regulate alcohol by providing that anybody who violated state liquor law would be flayed, brutally tortured, and then devoured by fire ants.

There is of course a stronger argument that the 21st Amendment meant to overrule the "dormant Commerce Clause" than there is that it meant to overrule the Bill of Rights, and that is what the historical analysis in the opinions is all about. The relevant laws clearly meant to overrule something but because of the messy and incoherent jurisprudence at the time, it's a little hard to tell exactly what.

[Oh and on preview: yes, a state can ban all direct-shipments if it wants to, or for that matter ban all alcohol altogether, from in- or out- of state. That wasn't the case back in 1890 when the Supreme Court invented something called the Original Package Doctrine, but that's gone now.]
posted by willbaude at 3:34 PM on May 16, 2005

Oh, sorry PP ... I forgot to add the sarcasm tag:

*sarcasm*"...activist judges..." */sarcasm*
posted by ericb at 3:36 PM on May 16, 2005

BTW - this case had some interesting participants: on one side, former U.S. special prosecutor Kenneth Starr, who represented the Coalition for Free Trade; on the other side, former U.S. attorney general and federal judge Robert Bork, who represented the wholesalers.
posted by ericb at 3:44 PM on May 16, 2005

Thanks, rkent, for your reading of the meaning of this.
posted by Zurishaddai at 5:54 PM on May 16, 2005

Damn. Someone's squatting on whine.com
posted by ericbop at 6:38 PM on May 16, 2005

NewsFilter. This has been all over the media and is hardly MeFi-worthy.
posted by Doohickie at 4:15 AM on May 17, 2005

Doohickie -- I read it first on MeFi, and have enjoyed the comments. That's the point of MeFi -- to allow me to filter out all the crap of the media to find stories of interest.
posted by dwivian at 8:25 AM on May 17, 2005

So, with enough dysfunctional lobbying, Albany could ban all direct shipments?

There is a lot of money to be made being a distributor (the middle of three tiers, between the producers and the retailers), particularly if competition is limited (say, by a state licensing distributors).

In the past, the distributors in many state were able to buy-off (so to speak) the wineries in a state by not opposing direct shipments to consumers within a state. The wineries (arguably) were still worse off than with unlimited shipping (because their state laws, by definition, wouldn't allow reciprocity with other states, so wineries could only ship in-state), but in the case of states with lesser (volume, quality) wineries, that wasn't too much of an issue.

Now it's going to be the in-state wineries against the in-state distributors. Wineries in states where the distributors win (revised law: no shipping to homes whatsover) aren't going to be happy about the Supreme Court decision. And, as noted above, the distributors (in most states) have a lot more at stake, and a lot more money, to lobby on this issue than do the wineries, so it's reasonable to predict that a majority of "in-state shipping only" states will become "no shipping whatsover" states.
posted by WestCoaster at 10:20 AM on May 17, 2005

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