Arizona Gets a Wine Law

Posted by Tom Wark on Jun 1, 2006

Arizonans got their new wine shipping law today when their governor signed a bill that is a near perfect representation of the type of legislation being considered in one from or another across the country.

The new Arizona wine shipping law allows any winery in Arizona or elsewhere to ship directly to both residents or retailers in the state with the caveat that the winery doing the shipping produces less than 20,000 gallons per year. This is the equivalent of roughly 8.400 cases per year.

The question is who won’t be able to sell wine direct to Arizona residents under this new law but rather WHO WILL?

WHOLESALER PROTECTION
On the one hand it is very gratifying to see the Arizona State Legislature open up the state to direct winery-to-retail distribution, a wholesaler-bypassing privilege that only Arizona wineries have had previously. And it’s encouraging to see that the state is opened up now for out-of-state wineries to ship direct to consumers.

However, it’s disturbing to see at the very same time another state legislature give in to the pressure of the wine wholesaler lobby. the 8,400 case size limit effectively keeps 1000s of American wineries out of the direct-to-Arizona market for the purpose of propping up an antiquated, state-mandated system by which wine wholesalers are given extraordinary privileges and near monopoly status in the distribution of wine.  Bottom line: it’s a corrupt system.

HOPE FOR A REMEDY
However, Attorney James Tanford, a leader in the fight against corrupt wholesaler mandated schemes across the country holds out hope that the limit on the size of the winery that can direct ship into Arizona will be found unconstitutional. According to an Arizona Star story:

"He said that makes the legislation appear to comply with the U.S.
Supreme Court ruling ‘whereas, in reality, you maintain a market that
is substantially closed to out-of-state wine.’ Tanford called those
limits just a ‘pretext….It’s always an open question whether the courts will accept a state’s
explanation at face value or whether they will hold the state to a
higher standard of justification, that is, some proof that there is a
real legitimate reason for setting the cutoff at 20,000 rather than
30,000, rather than 40,000, rather than 50,000,’ he said."

I can’t figure out what the state’s "pre-text" would be for limiting the number of wineries that can ship into Arizona other than satisfying politicians need for campaign contributions from wine wholesalers. Does anyone doubt that if Arizona wineries were able to mount a huge campaign to raise money for politicians that the bill just signed would be different?

ARIZONA WINERIES WIN…OTHERS PAY A PRICE
Arizona wineries are of course quite happy. It appears they got nearly everything they could want from this law. They all can ship to Arizonans as well as directly to Arizona retailers and restaurants, bypassing the wholesaler and keeping the extra 30% they deserve to keep. Yet they got it at the expense of wineries across the U.S.

The limitation on the size of wineries that can ship direct that is being included in bills across the country  will eventually be challenged in court. Perhaps that is when Arizona and other state legislators will be held to a higher standard.