The legal hurdles to interstate shipping continue to disintegrate, state by state.
As the Supreme Court readies itself to pass judgment on the critical Tennessee Wine and Spirits Retailers Association vs. Blair case, which could be interpreted widely enough to actually allow retailers to ship into more states, a handful of other states are taking their own steps forward. And even if the latest decision in Kentucky only involves wineries, it could set an important precedent.
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Kentucky has long been one of the most conservative states in terms of its interstate alcohol-shipping laws. For a significant amount of time shipments from wineries in other states into the state of Kentucky have been prohibited. The status quo was particularly irksome to the state's thriving Bourbon industry, which longed to be able to ship product across state lines to the rest of the country. House Bill 400, which passed last April, resolved the shipping Bourbon out of state issue.
So it is no surprise that Kentucky legislators, in the state's Senate, have passed a bill slated to allow wineries to ship into the state with an eye to help continuing to grow its successful Bourbon industry throughout the country. "Kentucky is one of the few states that does not allow direct shipping of wine [to its residents] and it is time for it to change," shares Morgan McGarvey, a member of the Kentucky Senate. He adds that the state's laws are outdated and need to change. The bill was slated to go to the house this week.
He shares his belief that the bill, if passed, is not likely to harm local retailers as "wine enthusiasts are most likely to take advantage of the law and still go to local stores. This law will be used by people who really enjoy wine and want to have access to less-accessible wines."
The bigger question is if the bill will beget further legislation, finally allowing retailers to ship into the state of Kentucky and perhaps even into other states. John Dechant, the shipping manager of Kahn's Fine Wines in Indianapolis, Indiana said that interstate shipping makes up for a good part of the store's revenue. He added that many of the previous wine legislation laws were implemented in effect "to protect local business and did a disservice to consumers".
Gary Fisch, the owner and CEO of four New Jersey-based Gary's Wine & Marketplace shops, adds that the new bill may not "help us [as retailers] but one could argue that once wineries start shipping it could open the door to retail". However he adds that he is "not optimistic".
Most industry attorneys, analysts and retailers think the bill is a welcome move. "This is part of a broader shift towards making wine more accessible across the country. This Kentucky law is intended to clarify rules passed last year that would allow wine and spirits to be shipped into state," said Bourcard Nesin, a beverage analyst at New York's Rabobank.
"The Kentucky bill is good news for Kentucky wine drinkers who have no interest whatsoever in French, Italian, Spanish, German, Austrian, New Zealand, Australian, or any other imported wines," shared Tom Wark, the executive director of the Sacramento-based National Association of Wine Retailers Association (NAWR).
"The Kentucky bill only allows out-of-state wineries to ship wine to consumers: …[However] the bill does not allow shipping permits to be issued to out-of-state retailers, internet wine stores, wine-of-the-month clubs or auction houses."
He adde that "the bill is a step in the right direction. However it's less than a half measure where wine lovers are concerned and it discriminates against imported wines by barring retailers from shipping in [to the state of Kentucky]."
Other industry sources supported Wark's conclusion. "While Kentucky's proposed adoption of a winery-only, direct-shipping statute is a good first step, it continues to discriminate against out of state retailers, importers and auction houses who market and sell fine and rare wine from around the country and around the world. Kentucky consumers continue to be treated as second class citizens by this bill," said John Hinman, a partner in the San Francisco-based law firm of Hinman & Carmichael.
Looking forwards – while the Supreme Court still debates the crucial outcome of Blair – the Kentucky bill "will probably not have much of an effect on other states", says Sean O'Leary the Chicago-based president of the O'Leary Legal and Policy Group.
"For retailers it does not move the needle because a ban on out-of-state retail shipments is still in place."
While this may be a major step forward, the wine business will clearly still need to take additional ones to move forward with opening the interstate-shipping market to all interested parties, including retailers.
