The Cost of Consumer Disregard

Posted by Tom Wark on Jun 7, 2007

HB 429 is a bill moving through the Illinois legislature that will have disastrous effects not only for consumer but also for the state of Illinois.

The bill proposes to strip Illinois consumers of their long held right to purchase wine from out-of-state wine stores. While creating a permit that out-of-state wineries can obtain that allows them to ship to Illinois consumers, HB 429 will actually reduce choice and raise costs for Illinois wine lovers. Among the negative consequences of HB 429 are:

1. Illinois Consumer would no longer be allowed to legally purchase and have shipped to them wine from out-of-state wine stores, a right they’ve had for 15 years

2. Thousands of imported and California wines would no longer be accessible to Illinois consumers

3. The thousands of IL consumers that belong to wine store-based wine clubs will be forced to cancel their memberships

4. IL tax payers, just like those in other states where similar laws have been passed, will quite likely be saddled with a legal bill in the millions of dollars as the state is forced to defend the new law from legal challenges to its unconstitutional discrimination against out-of-state wine stores

5. Illinois consumers will no longer be able to access on-line wine stores to search for the best price on thousands of wines, leading to higher prices for the wines they want

6. Illinois consumers will no longer have access to the world’s greatest wines auctioned at out-of-state auction houses  as they have been able to for 15 years

7. Illinois residents will not benefit from the taxes that would have been paid to the state by out-of-state wine stores had they, like out-of-state wineries, been included in HB 429’s plan to tax those who sell wine to Illinoisans.

8. Illinois wineries and wine stores could lose access to out-of-state markets that will see HB 429 as an attack on their own wine retailers and retaliate by shutting off shipping of wine into their own states.

The Specialty Wine Retailers Association, for whom I work as executive director, has opposed this bill from the beginning. SWRA, which is an association of wine merchants nationwide, has become the primary advocate of wine consumers in Illinois. There is an irony in the fact that it takes mainly out-of-state wineries to stand up for Illinois wine lovers.

HB 429 is blatantly unconstitutional as it allows in-state Illinois wine stores to ship to Illinoisans yet prohibits out-of-state wine stores from doing the same. This view is borne out by the words written by U.S. Supreme Court Justice Kennedy in his 2005 Granholm v. Heald Supreme Court decision:

“This Court has long held that, in all but the narrowest circumstances, state laws violate the Commerce Clause if they mandate ‘differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter’… States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses….The Twenty-first Amendment does not supersede other provisions of the Constitution and, in particular, does not displace the rule that States may not give a discriminatory preference to their own producers….If a State chooses to allow direct shipment of wine, it must do so on evenhanded terms…”

HB 429 passed through the Illinois House early this week. It is set to be acted on by the Illinois Senate.