Cases in Transit: The Supreme Court Decision's Impact on MD

While Maryland wine-lovers popped many a cork when the Supreme Court’s wine shipping decision was announced, reality soon set in. The State of Maryland allows neither in-state, nor out-of-state wineries to ship to Maryland consumers. Hence, the state’s ban on wine shipments is perfectly constitutional.

The Supreme Court heard cases from Michigan and New York, two states that allow in-state wineries to ship to in-state citizens, but ban out-of-state wineries from shipping in. Put another way, does a state’s rights under the 21st Amendment allow it to regulate alcohol to the detriment of other states’ rights under the Commerce Clause. The Court, in a razor-thin, five to four decision, stated that states must allow all wineries to ship, or no wineries to ship.

The decision was monumentally in-favor of small, family-owned wineries. These wineries often find themselves in a difficult situation when it comes to selling their wines. In many cases, these wineries are too small to send their wines through a distributor (which then gets the wine to retail stores) or cannot find a distributor interested in selling their wares (either because the winery’s too small, or there’s no perceived market for the wines or wine region).

The justices wrote clearly that while the three-tier system employed by many states – through which wine passes from the producer to a distributor, and on to a retailer – is perfectly constitutional and works well in many instances, it does not always benefit these small wineries. Provisions must be made to allow these wineries to compete in the market place.

At wineries in every state, visitors flock to tasting rooms, taste great wines, then ask where they’re available. In many cases, wines are available at the winery and at surrounding retail stores only. That’s where direct shipping comes in.

There are two important aspects of wine shipping that are important to remember. First, wine weighs a lot. Second, the established distribution system successfully places thousands of sought-after wines on retail shelves. Thus, the wines that consumers would be ordering via shipment would be wines not already available in their market, simply because it will be much less expensive to purchase your favorite distributed wine from a retail store than to have it shipped direct.

A small winery can make 10-15% additional revenue by shipping wines to consumers. And in many direct-ship states, retail stores are also allowed to ship. These stores have quickly found vast new revenue by creating their own wine-of-the-month clubs.

An interesting element of the Supreme Court’s opinion is that it quickly dismissed the two primary concerns about direct shipping – that taxes cannot be collected, and that minors will use the system to obtain alcohol. The justices clearly noted that neither of these concerns are justified, based on years of experience in states that allow the shipping of wine.

The justices also noted that commerce has changed since the repeal of Prohibition – and that Internet, phone and catalog sales have become status quo. States must come to understand this, and let the wine flow across state lines.

So what about Maryland? For now, neither Maryland wineries – nor those from outside our state line – may ship wine to Maryland consumers. While this is likely to change in the coming years under pressure from other states’ wine industries, Maryland wine lovers must log-off the computer, hang up the phone, and stick to the law by purchasing wines the old-fashioned way: with their feet.

Or, be in touch with your legislators and let them know how you feel about the issue.