Trading Grapes Report Recommends Lifting Ban on Direct Shipment of Out-of-State Wine

Posted on November 18, 2003 | Type: Press Release
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PHOENIX-In a policy report released today, Goldwater Institute constitutional studies director Mark Brnovich urges Arizona to lift its ban prohibiting direct shipment of out-of-state wine to Arizona consumers. In his report, Trading Grapes: The Case for Direct Wine Shipments in Arizona, Brnovich explains how Arizona's ban violates the Commerce Clause of the U.S. Constitution, raises prices, and hurts Arizona's domestic wine industry. The report is available online.

Under Arizona's three-tiered distribution system, out-of-state wine producers must sell their products to licensed wholesalers (tier 1), who sell to retailers (tier 2), who then select the beverages available for sale to consumers (tier 3). Under Arizona law, an out-of-state producer's failure to use a licensed wholesaler is illegal.

Because of Arizona's prohibition on direct shipping of wines from other states, several states prohibit the direct import of Arizona wines. Those states include California, Colorado, Hawaii, Idaho, Illinois, Iowa, Minnesota, Missouri, New Mexico, Oregon, Washington, West Virginia and Wisconsin. "Freeing up trade in wine would be a win-win situation," Brnovich concludes. "Arizona vineyards will be able to ship directly to consumers in other states, and Arizona consumers will benefit from a greater variety of wine, lower costs, and the convenience of home delivery."

The U.S. Supreme Court has held that protecting in-state interests at the expense of out-of-state parties violates the U.S. Constitution. Recently, advocates for the free flow of commerce between states have achieved significant victories. Statutes in Michigan, New York, North Carolina, Virginia and Texas have been struck down as violations of the Commerce Clause, and the Institute for Justice has recently filed a challenge to Arizona's distribution system.

Brnovich also argues against the proposition put forward by wholesalers and other proponents of the current structure that the Twenty-First Amendment provides protection for the current statutory scheme. "That position is not supported by historical or legal precedent," Brnovich said.

Last year, Sen. Barbara Leff (R-Paradise Valley) introduced legislation to allow out-of-state wineries to ship directly to Arizona consumers. But the final version of the bill authorized only consumers who are physically present at an out-of-state winery to purchase up to two cases of wine and have them shipped to their homes. "That reform is a step in the right direction," Brnovich said, "but that reform falls far short of allowing for the free movement of interstate commerce in wine."

Author contact: Mark Brnovich, Director, Center for Constitutional Government, (602) 462-5000 x 232

Press contact: Tom Jenney, Director of Communications, (602) 712-1257

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