Utah’s Wine Shipping Bill — It’s Kind Of Funny…And Complicated

A funny thing happened on the way to a wine direct shipping bill in Utah.

What’s so funny? The 88% mark up the state wants to place on wines that could be shipped into the state under the bill, HB 157. It’s a funny story.

So, somehow lawmakers in the Utah state legislature got it into their head that maybe it’s time to allow wine lovers in the state to have wine shipped to them. I’ll admit, this idea got into their heads about 25 years ahead of when I thought it would.

Nevertheless, once legislators saw that the proposal would allow consumers to actually receive wine shipments directly at their home, they picked themselves up off the ground, circled the wagons and declared a great big “NO” to that idea. They had a better idea.

Instead of wineries and retailers shipping wine directly to Utah consumers, the Utah Department of Alcohol Beverage Control would create a “Subscription Program” whereby the Department of Alcohol Beverage Control (not consumers) would contract with wineries and retailers to sell them “wine subscription packages” that could then be offered to Utah wine lovers. The Subscription Packages would have to include periodic shipments of wine (no one-time purchases allowed). The Department would buy the subscription in the name of the consumer, receive the shipments at a warehouse in Utah, then deliver the box of wine to a Utah state store for pick up.

Now here’s the really funny thing I alluded to earlier. Each shipment would have an 88% mark-up on it, a $20 handling fee and a sales tax of 4.85%. If you are doing the math, a NY retailer who wants to sell their $100 bottle of Burgundy to a Utah wine lover would be asking them to purchase it for $217.

Same for the winery. But if the winery wanted the customer to be able to buy the wine at anything near their suggested retail price at the winery and at what folks in other states buy it, they’d have to sell the “wine subscription package” to the Utah ABC at FOB pricing. That’s not exactly the model DtC wineries have in mind.

There is a recording of the hearing that was held on this bill last month. At the hearing, the Wine Institute’s Tyler Rudd testifies against the bill, explaining that the complexity of “Subscription Program” along with the 88% mark up means very few people are going to sign up for the program if only because the wines will be too overpriced after the 88% mark-up. He knows this because Pennsylvania tried a similar thing and attracted a whopping 50 subscribers over a few year period.

“Now wait one minute,” says a lawmaker on the committee after the patient Mr. Rudd explains the problems with the bill. “Are you saying you’d rather have no bill and no way to ship wine into the state than this bill,” he asks incredulously. Mr. Rudd confirms, “That’s correct, the bill just won’t work as it is written.”

But then comes the kicker. Mr. Rudd explains that with so few people willing to so overpay for wine under this set up, the state of Utah will never recoup the estimated $1.6 million dollars they say it will take to set up and administer the program. The lawmakers either don’t care or don’t understand and they cut off the good Mr. Rudd.

This bill, HB 157, has passed the House and it is very likely to pass the Senate and become law. Utah is passing a wine shipping bill that will have nearly no users and will cost the state $1.6 million according to their own figures. That’s funny.

Utah is a beautiful place, with really dopey alcohol laws (who can forget the “Zion Curtain”). What’s clear is that there is no one in state government who really thought through what they are doing with this winery/retailer shipping bill. I think the reason something as loopy and guaranteed to fail as HB 157 actually moves forward in Utah is that lawmakers and regulatory officials can’t bring themselves to think outside the “Utah Alcohol Policy” box they’ve all lived within for so long. Being in that bubble makes them impervious to rational thinking on this issue of direct shipping. So, you get these funny and loopy legislative mousetraps.

After the bill becomes law and after the state spends a million dollars implementing these new and unworkable procedures, they will eventually be talking about this issue again. My guess is that it will take about 4 years for them to get the system up and running and to figure out that no one wants to use it. Then someone else from inside the Utah Bubble will come up with a “fix”.

How much you want to bet the fix is to keep the kooky “subscription service” (“hey, we already spent $1 million putting it together), but figure they’ll just lower the mark up to 50%. That’ll do the trick.

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  1. Nicolas Mendiharat - March 5, 2020

    Hence not-so-funny with a 100% import tariff, that Burgundy bottle will be north of $300. Sales taxes over state markups over tariffs, how fun would that be.
    Despite loving how you put together your sarcastic post, I have a hard time seeing how retarded those law makers can be in 2020.

  2. Jim Ruxin - March 5, 2020

    Is Utah a state or a state of mind? Loopy is not the half of it.

    Salt Lake is a very sophisticated and creatively inclined city. Perhaps not as progressive as Portland but absolutely open minded like Denver.

    It’s a disease that is affecting the rest of country, too, and drinking ,more alcohol won’t help their fear of changing traditions while keeping their values intact. It can be done…it just takes a certain amount of imagination and willingness to step outside your fears.

  3. Jeremiah S. - March 6, 2020

    I hope this law will apply to Mormons only.

  4. VVP - March 6, 2020

    Yeah, if this bill passes, then every seller to Utah should also implement 88% markup and $20 handling fee policy on all orders from Utah.

    To be serious, this law will fall under annotation to U.S. Constitution which declares that the Commerce Clause operates with full force whenever one State attempts to regulate the transportation and sale of alcoholic beverages destined for consumption in another State.

  5. Bill St. Croix - March 6, 2020

    Having lived in Utah for over 8 years, I can, unfortunately, attest to the whacky liquor laws. As noted, the Salt Lake valley is quite remarkable in beauty and having gone back last year, for the first time in 11 years, it has grown tremendously. What remains constant is the stranglehold that the Mormon community/religion continues to have on alcohol and their obsession with creating complex and mind-blowing ways to attempt to prevent alcohol consumption.

    Even the high prices in the State stores don’t curb the sales. I believe the markup when I was there was something like 68% (or was it 86%, I can’t remember).

    This will clearly be another failure and the legislature will use it as a token victory of, “Look, we gave them what they asked for and they don’t want it.” They will leaving out the fact that they ‘juiced’ the prices and blew millions implementing what is an obviously flawed program. But also remember, it is meant to be flawed to merely prevent us heathens from imbibing in our beverages of choice.

    My last comment is this. About 90 minutes from SLC is the fine town of Evanston, WY. There is a UPS store right there and they will gladly hold packages for you for a week for a nominal $5 charge (at least they did in the past). It’s a nice drive along I-80….and good to make a few times a year around March and Sept/Oct.

  6. Pete - March 6, 2020

    Hold on. The Twenty-first Amendment does not save the Utah laws from invalidation under the Commerce Clause. That Amendment gives Utah only the authority to control sales of liquor in Utah, and confers no authority to control sales in other States. This bill is already failed.

  7. Terry - March 9, 2020

    Pete, have you read the 21st Amendment? It covers “transportation or importation into” the state, not (directly) sales. As long as they treat in-state wineries the same, it will probably stand up to Commerce Clause challenges.

  8. Jim Ruxin - March 9, 2020

    “Transportation or importation into” the state is just a semantic workaround, so common in the Trump era. The charges for such services NEVER amount to that, and even a strict connstuctionist would be insulted by this assertion.

  9. Pete - March 9, 2020

    Yes Terry, I have read all four sections of it. How many have you read? Wineries in UTAH? How many, 4-5? Why wineries? Never heard of Utah wines, and there is no AVA in Utah, but the bill is about retailers which Utah is not authorized to regulate.

  10. Tom Wark - March 9, 2020

    Pete,

    The bill in Utah is about wineries and retailers. In fact, the drafters of the bill believe it will be primarily wineries that sign up for their system. When told that the way it is written their bill will allow retailer shipping resulted in a deadly silence in the committee hearing. I don’t think they realized this is what they had written into the bill.

  11. Bill St. Croix - March 11, 2020

    In listening to the actual recording of the dialog on HB157, the Utah DABC was not even considering ‘direct to DABC’ let alone ‘Direct to Consumer.’ In the substitute bill that removed direct to consumer and had it go through the DABC, that commentary was that the DABC will have an intermediary that would get the wine from the wineries and aggregate the wines and have them available via subscription, so it is in NO WAY a wine club subscription or anything remotely close to that.

    And then the ‘slippery slope’ in the Rep. Hawkes section of commentary is laughable. Utah never ceases to amaze me at how 19th century they can be.

  12. Peter Ballantine - March 31, 2020

    When will if ever will there be a separation of church and state. If someone wants to get a wine subscription from a winery and not the state of Utah then let them. It’s not like every wine drinking the state is going to do that.


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