Cynicism Wins In Oklahoma Wine Question
Oklahomans passed a Constitutional amendment yesterday that should have the opponents of free trade (read: wine distributors) jumping for joy!
The new law allows wineries inside and outside Oklahoma to sell directly to Oklahoma restaurants and retailers without having to get the permission of a distributor and pay enormously overinflated fees for them to carry the box of wine into the stores and restaurants.That's good.
However, wineries only have this privilege if they make 10,000 gallons or less of wine annually. This is the equivalent of around 4,000 cases of wine per year.
But here's the kicker. Those winery deliveries to Oklahoma restaurants and retailers? They may only take place in vehicles owned or leased by the winery. In other words, if you are a CA or TX or WA or OR or IL winery, you are essentially barred from taking advantage of this new law because it is financially impossible to do so.
What we have here is just one more Distributor Protection Act and, I'd venture to suggest, and unconstitutional one at that.
The Ballot Measure, State Question 743, is among the most cynical referendums I've seen this election season. It was put in place for the purpose of protecting the profits of a small group of distributors, but publicized as a pro-winery law. If you have any doubt that the gallonage limit and the requirement that the wine only delivered in vehicles that are owned by the winery, are meant to restrict trade and protect the poweful alcohol wholesalers in Oklahoma, then read this little bit of information attributed to Brad Naifeh, a representative of Central Liquors, an important Oklahoma alcohol distributor, and OK representative Danny Morgan that wrote the proposed (and now passed) constitutional amendment:
"Brad Naifeh of Central Liquor cautioned lawmakers against the bill.
Some large winemakers from other states, such as California's E&J
Gallo, sell wines under hundreds of labels that produce less than 5,000
gallons per year, said Naifeh, and could use the proposed law to flood
the market in Oklahoma without using a wholesaler.
Morgan said the bill requires both in-state and out-of-state
wineries who sell directly to retailers in Oklahoma to transport their
wines in vehicles owned by the winery, and requires such deliveries to
be transferred directly from the winery to the retailer. Such vehicles
must obtain the necessary licensure and permits from the Oklahoma
Alcoholic Beverage Laws Enforcement agency. Morgan questioned if it
would be cost-effective for an out- of-state winery to drive a few
thousand gallons of wine all the way to Oklahoma."
This is a remarkably honest assessment of the measure's actual intent: To limit free trade by creating barriers specifically meant to keep out-of-state wineries from doing business in Oklahoma.
There is also a kill switch written into this amendment. The final part of the amendment reads: "If any part of this measure is found to be unconstitutional, no
winemaker could sell wine directly to retail package stores or
restaurants in Oklahoma."
I'm not cynical by nature, but why do I believe that at this very moment, as I write this, Oklahoma alcohol wholesalers are huddling with their lawyers to figure out which part of the newly passed amendment to the Oklahoma Constitution they want to challenge in court in order to, once again, take complete control of the wine market in Oklahoma by killing self distribution?