The Internet Wine Retailers Are Coming

IcareaboutwineThe courts are not the only avenue through which the decaying and withering three-tier system is being challenged. The ginned up support for protecting middlemen from having to compete by stifling competition is also being addressed in legislatures and in the media and in the academy. However, as the National Law Journal notes, the efforts to use the courts to address the issue are moving along swimmingly.

“Growth in recent years in the online shopping industry has led to new innovations in the wine retail space: the existence of a multitude of internet wine retailers, wine-of-the-month clubs and mobile wine delivery apps offers consumers greater access to wine. Many states—and courts—though, are now grappling with the legalities surrounding direct shipping of wine by retailers, as well as the role of unlicensed third parties in such transactions. Some states prohibit retailers from directly shipping wine to consumers altogether, while many others give in-state retailers the right to ship wine directly to consumers while withholding the privilege from out-of-state retailers.

Most recently, in January 2017 Michigan enacted legislation allowing in-state retailers to ship wine to in-state consumers, but prohibiting out-of-state retailers from making such shipments.

The legislation does not go into effect until March 29, 2017, but already litigation involving the new law has commenced. In late January 2017, an Indiana retailer and several Michigan consumers sued Michigan’s governor and attorney general and the head of the Michigan Liquor Control Commission in federal court, alleging the statute violates the US Constitution’s Commerce Clause and Privileges and Immunities Clause. Similar lawsuits are pending in Illinois and Missouri.

The vast majority of court decisions concerning how the Commerce Clause and the Granholm ruling apply to wine retailers and wine wholesalers have been sloppy and cowardly. This is partly due to the way the Granholm ruling was written and partly due to decades of propaganda suggesting some sort of constitutional protection for the three-tier system.

Currently there are three lawsuits challenging the protectionist bans on retailer shipping. The Michigan case cited above and the case challenging Illinois’ protectionist ban on retailer shipping have me most encouraged.

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