Calwineries

Another Victory for Direct Shipping

On December 27th, 2006, U.S. District Court Judge Charles R. Simpson III ruled that a Kentucky law banning direct wine sales to consumers who did not physically visit a winery was unconstitutional.

In May of 2005, The Huber Orchard and Winery, an Indiana-based producer, initially filed the lawsuit against Kentucky’s wine shipping statutes. Huber eventually dropped out of the suit, but Cherry Hill Vineyards, an Oregon winery, took over as Plaintiff. Cherry Hill successfully argued that the “in-person requirement” discriminated against out-of-state wineries.

Simpson’s ruling effectively allows small, out-of-state wineries that produce less than 50,000 annual cases to ship directly to consumers in Kentucky. But it is likely that the State of Kentucky will appeal the ruling in the 6th U.S. Circuit Court of Appeals.

Direct wine shipping lawsuits have frequently been in the news lately, begging the question of when this issue will be settled. The short answer is no time soon. At its core, this is a conflict between the Commerce Clause of the U.S. Constitution and the 21st amendment.

The Commerce Clause was written to help remedy the highly ineffective Articles of Confederation in the early years of the United States. From an economic standpoint, many states were acting like sovereign nations implementing tariffs and other protectionist measures. The Commerce Clause made it unconstitutional for individual states to discriminate against another’s economic goods.

It should have been just that simple, but then the 18th amendment was passed and Prohibition was enacted. Although the 21st amendment repealed Prohibition about a decade later, it gave states the right to continue to ban alcohol as well as regulate distribution and sales if it was permitted. The result is the legal confusion and complexity that we see today.