Winery Vs. Retailer: What’s the Difference?
Here’s an interesting question:
When you buy a case of wine over the Internet from a winery website and when you buy a case of wine over the Internet from a wine shop website, are the two transactions different in any substantial way?
We are finding that both wine distributors and state alcohol regulators are attempting to make the case that they are substantially different transactions. In fact, according to these two groups, these two transaction are so different that the retailer transaction should be banned.
In states across the country legislators are redefining their direct wine shipment laws as a result of the 2005 Supreme Court decision, "Granholm v. Heald". In most cases these states are creating "permit systems" by which an out of state entity wishing to ship to consumers in that state need to pay for a permit do do so, submit themselves to that state’s jurisdiction, pay appropriate taxes and abide by a variety of laws.
Yet, there is a move to treat transactions different if the consumers is buying from a winery versus a retailer. In fact, there is a move among some in these states to bar the retail transaction all together.
Both Oregon and Illinois have bills being considered now that would allow out-of-state wineries to ship to folks in these states but prohibit out-of-state retailers to do the same.
Now, I’ll admit upfront that I’m no genius. I get things wrong often. So I need someone to show me how a wine purchase from a winery isn’t a RETAIL transaction in the same way it is a RETAIL transaction when it happens with a wine shop.
It’s true that states issue different types of permits to wineries and retailers that confer different privileges upon these two sorts of businesses. In every state a retail permitee is not allowed to PRODUCE wine. And in many states a winery is not allowed to SELL wine to a retailer, but rather must sell their wine to a wholesaler.
But, when the winery and retailer sell wine direct to the consumer, whether at winery or wine shop or via the Internet the transactions are identical.
In some cases the opponents of retail to consumer, cross border wine sales have argued that allowing retailers from across the country to ship into a state will open floodgates. While the evidence from across the country doesn’t prove this out, the question remains, OK….and that’s a problem why?
If anyone is watching the direct shipping wars closely, they’ll note that wineries seem to have won their battle: states are no longer attempting in any great measure to prevent out-of-state wineries from shipping. They may put up odd restrictions. But for the most part the move to prohibit such sales by wineries just isn’t happening anymore.
Today the battle has shifted to two fronts: Winery direct sales to retailers and cross-border sales of retailer to consumer. Both these kinds of transactions are being fought tooth and nail by distributors almost everywhere and by regulators in many states.
In order to bar retailers from shipping into a state, distributors and alcohol regulators must make the case that a winery-to-consumer sale is substantially different than a retailer-to-consumer sale. I simply don’t know how this argument is made. Yet, it is made.