A full-bodied vintage trial
SANTA YNEZ VALLEY--As tasting room manager for Melville Winery, Barbara Satterfield can spin poetry out of the intricacies and nuances of this boutique vintner's pinot noirs, syrahs, and chardonnays. She is equally adept at detailing the intricacies of the Homeland Security Act, state liquor rules, and the vagaries of alcohol consumption in, say, Texas and Georgia.
The problem arises when Satterfield has to do both--when she has had to explain to out-of-state visitors why she couldn't ship a case of the winery's 2003 Estate Viognier or 2003 Estate Pinot Noir back home because "they live in the wrong states," as she puts it. The "right states," which include Oregon and Illinois, are those that have agreements with California and allow wine to be shipped directly to consumers. Currently, there are 24 of them. The other 26, including Florida, New York, and Massachusetts, allow their own in-state wineries to ship to consumers but have criminal statutes banning direct interstate shipments. Should Satterfield slip up on which is which, she could go to jail.
But this week, the U.S. Supreme Court is set to hear a case that could change the way wine is sold and marketed across state lines and eventually bring the number of so-called right states to the magic 50. For the nation's thousands of small, mostly upscale wineries like Melville, a change in the law could translate to a much-needed new source of income and exposure. For consumers, who are increasingly shopping and learning about faraway wineries on the Internet, it could mean more variety and lower prices. "We turn down buyers every day," says Ashley Rice, whose family operates Sunstone Winery, which produces certified organic merlots and syrahs in the vineyard-lined hills here above Santa Barbara. "They don't understand why they can't buy our wine, and they get mad at us. All I can do is hand them a pamphlet."
At the heart of the case is the clash between the 21st Amendment (which gives states the right to regulate alcohol within their borders) and the U.S. Constitution's commerce clause (which empowers the feds to regulate interstate trade). Small wineries in California and elsewhere, which must deal with the resulting mishmash of state regulations and policies, have long argued that they are just a way to keep outsiders from competing with in-state wine producers.
Status quo. On the other side of the issue is a powerful group of wholesalers and distributors, represented by the Wine and Spirits Wholesalers of America, who make money on every ounce of alcohol that passes through their warehouses. Maintaining the system set up under the 21st Amendment is in their economic interest. The WSWA also contends that without current restrictions, states could not ensure that taxes are paid and spirits don't fall into the hands of minors. "Out-of-state wineries have to be present and accountable to the state, just like in-state wineries," says Randy Mastro, an attorney for Gibson, Dunn & Crutcher in New York, who is representing New York State wine distributors. A July 2003 study by the Federal Trade Commission, however, found that the states that allow interstate shipments reported "few or no problems" with shipments to minors and had few if any problems with tax collection.
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