(IMBIBE+BLOG)

As the U.S. government looks for ways to save the U.S. Postal Service, a recent bill passed the senate that includes provisions allowing the USPS to ship wine, beer, and spirits.  Private carriers have been shipping wine for decades, but the USPS has been banned from doing so for over one hundred years.  18 U.S.C. § 1716(f), the 1909 law that prohibits the USPS from shipping “all spirituous, vinous, malted, fermented or other intoxicating liquors of any kind” remains on the books.  That law pre-dates prohibition by ten years, and has never been repealed.  That would change if Senate Bill 1789 becomes law.  The bill was passed in the senate on April 25, 2012, and Section 405 provides that wine, beer, and distilled spirits are considered “mailable” by the USPS as long as a) it is consistent with the laws of the states where the shipment is initiated and where delivery is to be made, b) the addressee is at least 21 years of age, and c) the addressee provides a signature and a valid government-issued photo identification upon delivery.

In order to become law, Senate Bill 1789 still needs to pass through the House of Representatives.  The bill was designed to address the moratorium on post office closures that expired on May 15, 2012, which had already been delayed from an original deadline of last December.  Since no law was passed by the May 15 deadline, the USPS is moving forward with a modified plan for post office closures.  48 post offices are currently scheduled to close in August, 2012, 92 in 2013, and another 89 in 2014.  The impending August closures put pressure on the House to pass a bill as soon as possible if they are going to save those post offices.  We’ll keep you posted on their progress and whether permitting the USPS to ship alcohol remains a part of the proposed legislation.

At long last, as of May 1, 2012, applications for Out-of-State Winery licenses are being accepted in New Jersey, which will permit out-of-state wineries to ship wine directly to New Jersey consumers.  As discussed in earlier posts, including here, New Jersey’s law was passed early in 2012, and makes New Jersey the 39^th state to allow winery direct shipping.  The law permits wineries producing no more than 250,000 gallons of wine per year to ship wine directly to consumers in the state.  License holders may ship no more than 12 cases of wine each year per consumer for personal use.  The license also includes limited privileges for holders to sell wine directly to retailers, and for tasting room privileges within New Jersey.

No regulations were promulgated to go along with the direct shipping statute, but earlier this week, the New Jersey Division of Alcoholic Beverage Control released instructions and application forms for Out-of-State Winery licenses that provide more information about direct shipping, and which can be found here.  First, the Out-of-State Winery license will be the most expensive direct shipping license in the county, with tiered pricing depending on the amount of wine produced, but costing $938 annually for wineries producing between 50,000 and 250,000 each year.   Additionally, the instructions clarify that wine shipped must be manufactured by the Out-of-State Winery license holder.  Other details of interest to potential applicants include: a) all applicants must register with the Secretary of state; b) a bond is required; c) all applicants must register with the Division of Taxation; and d) all brands must be registered before they can be shipped into the state. Each of these requirements comes with additional fees, so wineries should make sure the anticipated sales volumes warrant the costs of getting set-up.

Please feel free to contact one of our attorneys if you are interested in more information about direct winery shipping in New Jersey.

In 2005, when Granholm v. Heald was decided by the Supreme Court, the doors to direct shipping wine to consumers opened wider than ever before. But the principles behind Granholm may open more than just the direct shipping avenue. Recently, a California winery stepped down this expanded path by opening a tasting room in Pennsylvania. Several states allow licensed wineries to operate satellite tasting rooms within the state. In Pennsylvania, limited wineries may operate, separately or in conjunction with other limited wineries, up to five additional tasting and off-premises sales locations within the state. No production or bottling is required at those five separate facilities. 47 Pa. Cons. Stat. § 5-505.2(a)(3). Virginia has a similar provision allowing licensed farm wineries to sell wine for on- and off-premises consumption at up to five additional retail locations. Va. Code Ann. § 4.1-207(5).

In order to become a licensed limited winery in Pennsylvania a winery must be producing wine from agricultural products grown in Pennsylvania. While this requirement seems to preclude an out-of-state winery from opening a tasting room in Pennsylvania, the Granholm court addressed this issue when it examined New York’s former requirement that only farm wineries, which can only produce wine from agricultural products grown in New York, were allowed the most direct avenue to ship wine to New York consumers. Granholm v. Heald, 544 U.S. 460, 476 (2005). In its decision the Court stated, “States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state business.” Id. at 472. Thus, predicating the ability to open a tasting facility where direct sales are allowed on the production of wine solely from in-state grown agricultural products violates the principles of Granholm. In 2010 this exact issue came to heard in New Jersey when a law that allowed in-state wineries to sell directly to consumers from up to six salesrooms apart from the winery premises, while prohibiting out-of-state wineries from similar direct sales activities, was found to violate the dormant Commerce Clause. Freeman v. Corzine, 629 F. 3d 146, 159 (2010). While opening up facilities in other states is a large investment of time and capital that likely would not suit many wineries, it may be a viable strategy for some. Given the rapid changes over the last few years in new paths to consumers, keeping an open mind about ways to grow sales is always a good idea.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Late Monday night, on the last day of New Jersey’s legislative session, the state Assembly voted 51-18-4 in favor of Bill A-4336, New Jersey’s wine direct shipping bill.  The companion bill, S-3172, passed the New Jersey Senate last month, and now only the governor’s approval stands in the way of New Jersey becoming the 39^th state to allow some form of direct shipping.  Under the bill, New Jersey Farm Wineries, New Jersey Plenary Wineries that produce 250,000 gallons or less of wine a year, and out-of-state wineries that produce 250,000 gallons of wine or less each year and that obtain an out-of-state shipping license will be able to ship up to 12 cases of wine per year to any New Jersey consumer.  If the bill is signed by New Jersey Governor Christie as expected, the law will go into effect in May, 2012.  To see our earlier posts on this topic, check here and here.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Updating our post of late last week, the New Jersey Senate last Thursday voted 23 to 13 in favor of Bill S-3172, permitting wineries to ship directly to New Jersey consumers.  Now that it has passed the Senate, the New Jersey Assembly has to vote on the bill by January 9, 2012, the last day of the legislative session.  Under the bill, New Jersey Farm Wineries, New Jersey Plenary Wineries that produce 250,000 gallons or less of wine a year, and out-of-state wineries that produce 250,000 gallons of wine or less each year and that obtain an out-of-state shipping license would be able to ship up to 12 cases of wine per year to any New Jersey consumer.  If passed, New Jersey would become the 39^th state to allow direct shipping.  Check back in early 2012 for an update!

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·

The New Jersey Senate will vote on a direct shipping bill this Thursday, December 15, 2011, called S-3172 in its current form.  If passed into law, New Jersey Farm Wineries, New Jersey Plenary Wineries that produce 250,000 gallons or less of wine a year, and out-of-state wineries that produce 250,000 gallons of wine or less each year and that obtain an out-of-state shipping license would be able to ship up to 12 cases of wine per year to any New Jersey consumer.   With passage of the bill, New Jersey would join the 38 states that currently allow direct wine shipping to consumers in some form, including Maryland and New Mexico as of earlier this year.  However, the “capacity cap” for out-of-state wineries of 250,000 gallons per year remains a point of contention, as that limit would preclude the majority of California wineries from shipping to New Jersey consumers.  Stay tuned to find out how the New Jersey Senate votes!

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·

The Texas Alcoholic Beverage Commission (TABC) issued a press release on Friday, June 3^rd advising that it has entered into agreements with FedEx and UPS to halt the shipment of wine by out of state retailers to Texas consumers.

The direct shipping situation in Texas has been in a state of flux for years following the seminal Granholm v. Heald decision, which opened up many states to direct shipment of wine by wineries in 2005. Following Granholm, plaintiffs in a number of states have filed lawsuits to determine the scope of the court’s ruling, particularly whether it applied to retailers or only wineries.

Lawsuits filed in Texas alleged that Texas laws preventing direct to consumer sales by out of state retailers violated the commerce clause of the U.S. Constitution because retailers within Texas were permitted to make such shipments. The cases were decided last year on appeal to the Fifth Circuit Court of Appeals, which ruled that Texas was not required to allow out of state retailers to ship wine to Texas consumers, but could continue to permit in-state retailers to do so.

Following the Court of Appeals’ ruling, the TABC began notifying retailers that shipments to consumers in Texas were not legal. More recently, the TABC has provided FedEx and UPS with the names of out of state retailers who have recently shipped wine to Texas consumers (TABC has not said how it came to identify such retailers.) FedEx and UPS in turn have agreed to notify the listed retailers that such shipments violate the retailers’ shipping agreements with the companies and may lead the shippers to refuse to ship packages for the involved retailers. For its part, TABC says it will contact the retailers directly and may also contact the alcoholic beverage control agencies in the retailers’ home states in cases where the retailers fail to comply with the TABC’s requests.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

New Mexico Senate Bill 445 was signed by Governor Martinez earlier this month making New Mexico a permit state, as opposed to a reciprocal state, for winery direct shipping purposes. New Mexico was the last remaining reciprocal state and the change brings the state into compliance with the U.S. Supreme Court’s Granholm v. Heald ruling in 2005. The law becomes effective on July 1, 2011. The new law only applies to wineries, not retailers. It allows them to ship up to two nine-liter cases of wine per month to a New Mexico consumer, provided the winery has the required shipping permit. The permit will have an annual fee of $50 and be valid from July 1 to June 30 of the following year.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

As mentioned earlier this week, there has been a lot of action on the alcoholic beverage industry legislative scene over the last few weeks without even considering the direct shipping related legislation that has been on the scene in Florida, Maryland, Massachusetts, and New Jersey (for a summary of such legislation see freethegrapes.org). Below is a look at some of the major pieces of state proposed legislation.

Georgia, SB 10 – On March 16, 2011, the Georgia Senate passed SB 10, which would allow for take-away sales of wine and beer on Sundays from 12:30 p.m. to 11:30 p.m. at eligible retailers. Connecticut, Indiana, and Georgia are the only three states that still have complete bans on all alcohol sales from off-premises retailers on Sundays. More frequently States ban sales of distilled spirits and/or wine on Sundays, if there is a ban at all. If the Bill passes, such alcohol sales would be determined on a local level rather than the state issued ban.

Washington, I-1157, SB 5111 – Privatization efforts are back in full swing in Washington State, which sells distilled spirits only through state run liquor stores. On March 18, 2011, Stefan Scharkansky filed Initiative 1157, the text of which is available here. The Initiative is extensive but overall, it would allow stores that currently sell beer and wine and have no record of safety violations to sell liquor as well. The bill’s author purports that Initiative 1157 is better than Initiatives 1100 (which Scharkansky helped author) and 1105, which were voted down last November, because it would require tighter control of liquor sales than the prior initiatives and also maintain tax revenues. Mr. Scharkansky is not the only one dipping his toes into the waters of Washington privatization. Tom Luce, a business consultant has floated the idea of a private-state partnership where a private company takes over the distribution piece of the liquor business and the state maintains the retail portion. All this action is on top of Senate Bill 5111, introduced by Senators Sheldon, Rockefeller, King, Hobbs, and Litzow, which we covered previously.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

The pins and needles many in the alcoholic beverage industry were on this morning remain, as the Supreme Court’s orders list issued this morningwas silent on the certiorari decision for Wine Country Gift Baskets.com, et.al., v. John T. Steen, Jr., et.al.Cases are typically distributed among the Supreme Court Justices on Fridays for their conferences, during which they discuss whether or not to grant certiorari. Orders are then typically issued the following Monday. If a case that goes to conference on a Friday is not among the order list published on the following Monday, it usually means the case is being discussed among the Justices, with a few but not a majority, arguing for the grant of certiorari. However, once a case has gone to conference more than once without a subsequent order being issued, it tends to mean that the votes for the certiorari grant are not and will not be there. This is now the second time Wine County Gift Baskets.com, et.al., v. John T. Steen, Jr., et.al. has gone to conference (first on February 18, 2011 and second on February 25, 2011) and not been included in the following Monday’s orders. Thus, it is unlikely that the case will be granted certiorari, although not impossible. If the case is denied certiorari, the Fifth Circuit’s decision will stand.  For a summary of the Fifth Circuit’s decision, see our prior post here.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·