The last few years have seen the US increasingly relax over direct shipping, now that could all slip away.
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| Like the Trojan Horse dreamt up by Odysseus to conquer Troy, the ULC could spell misery for wine producers and consumers alike,
A vote this week in Chicago by an unelected group of lawyers who know nothing about wine could eventually result in preventing you from ordering wine.
The Uniform Law Commission was founded in 1892. Its mission is to write model laws that states can adopt, so that every aspect of American life isn’t ruled by a hodgepodge of different state laws. Its members are lawyers appointed by state governments. It’s a well-meaning organization that deals with legal minutiae below the radar of just about everyone, including media and businesses that might be affected by new laws.
But wine distributors noticed the ULC and apparently thought, hey, what if we use this commission to get rid of wine direct shipping?
In 2019, the ULC started working on drafting an act that would change state direct shipping laws. According to a scathing letter written by Wine Institute and WineAmerica, the ULC started off by considering writing a law to regulate the shipping of beer and spirits, which few states allowed direct shipment of, but switched to wine without telling anyone from the winery side of the industry.
“The initial draft was created without winery involvement, primarily with input from wine wholesalers,” Wine Institute’s letter reads. “The same wine wholesalers have vigorously objected in every state to legislation enabling direct wine shipping and continue to initiate litigation in federal court to shut it down once passed.”
Once it realized what was going on, Wine Institute sent forth its lobbying team and, according to the letter, “successive drafts limited the scope and removed the most troublesome language.”
It’s here that I want to interject that I’m one of the few journalists in the US who pays attention to wine shipping – sometimes I’m the only one – and until February I had never heard of the ULC or this intense backroom effort to overturn the shipping laws of 47 states. It seemed complicated and farfetched in February – come on, no unelected group of lawyers is going to be able to do that, right? – so I let it drop. Nobody else covered it either except for Chicago beverage alcohol attorney Sean O’Leary. O’Leary blogged about it but no other media paid attention.
A Trojan Horse hoves into view
Well, here we are: the vote to create what Wine Institute and WineAmerica call a “Trojan Horse” law could come as soon as today. There’s a lesson in this: your rights can disappear before you even notice.
Now, to be clear, if the ULC votes to approve the model Act under consideration, it doesn’t mean any state will adopt it. But it would immediately put wine producers on the defense in state legislatures where they had already spent many years working to open up the market to direct shipping.
The National Association of Wine Retailers also wrote a letter opposing the draft legislation. NAWR executive director Tom Wark says the proposed act is unconstitutional.
“It’s not a uniform law for wine shipping, but rather a uniform law addressing wine shipping punishments,” Wark said.
Wark says that the proposed Act would call on states to punish wineries and wine stores in their own state if they are believed to have violated another state’s laws. In other words, if a winery or store in California ships to a customer in Kansas and it is believed to have violated Kansas’ law, the state of California could take away that winery or store’s license to do business – whether or not the California business had finished its appeals (“due process”) in Kansas.
Also, the proposed Act would require licensing of fulfillment houses. These are companies that exist to facilitate orders from wineries. For example, if you live in Maryland and order wine from Willamette Valley, the winery may have already placed the wine ahead of time in a fulfillment house in, say, Ohio, mostly because it’s easier for wineries to outsource fulfilling orders but also because the wine is closer to more customers. Currently fulfillment houses are not licensed: you order the wine from Oregon; the transaction takes place in Oregon and Maryland. Requiring fulfillment houses to be licensed for every winery and to every state they deliver might eliminate that sector of the business and would make some wineries rethink whether they want to ship wine to your state.
“Most wineries don’t have room to do the fulfillment process,” Wark said.
Letter of the law
Wine Institute would not speak to me for this story, standing behind its letter of objection. It’s good.
“This is the first time the ULC has undertaken review of an alcohol law and the exercise demonstrated the unique complexities of state alcohol laws and current limitations in extraterritorial enforcement of such laws under the 21st Amendment,” the letter reads. “This proposed Act does nothing to address those limitations. We wryly observe that the 21st Amendment was ratified by states precisely to prevent national uniformity of laws governing the sale and transportation of alcohol across state lines.
“In fact, this effort has caught the ULC up in ongoing state-by-state, intra-industry political fights over progress made toward lawful alcohol shipping,” the letter continues. “The ULC has been persuaded to choose sides in hard-fought state political battles and classically demonstrates the theory of unintended consequences. However well-intentioned this effort is, we expect the Act will become a Trojan Horse that will serve to curtail existing wine shipping privileges.”
Wark says that the real key with the ULC model Act is what happens next. The commissioners appointed to the ULC by their states will report back that a model Act has been written. But will the ULC lobby for it in the states? Will the Wine and Spirits Wholesalers Association (WSWA) push for it? (Probably.) One thing that is certain is that Wine Institute, WineAmerica and NAWR will have to fight against it, state-by-state.
“If any state introduces this bill, based on the Uniform Law Commission proposed legislation, we’ll oppose it. Because it’s unconstitutional,” Wark said. “If the three of us decide to make an effort, it can make a difference.”
If you like ordering wine, you’d better hope so.
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