Grape Nuts

Posted on January 26, 2006
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A new ruling by a federal court in Washington State may shed light on whether Arizona’s wine laws are constitutional. 

Plaintiffs are asking the federal district court in Phoenix to declare Arizona’s wine distribution system unconstitutional because it discriminates against out-of-state wineries. 

Arizona wine regulations force out-of-state wineries to ship to wholesalers if they want to do business in Arizona while local wineries can sell directly to consumers.  That’s a problem for budding out-of-state wineries. Lacking brand recognition, they often can’t convince wholesalers to carry their wines. This limits consumer wine choices.

In the Washington case, Costco v. Hoen, the federal court declared Washington’s wine distribution system unconstitutional and gave its legislature time to come up with a solution.  It has two choices ’" open the system up and let all wineries ship directly to consumers or discriminate against all wineries, local and national, forcing everyone to ship only to wholesalers. 

The situation facing Washington will likely happen here. Arizona may have to choose between an open system embracing free trade and a closed system forcing all wine shipments to go through wholesaler middlemen.  The answer to this policy question is easy: reducing barriers to commerce is the right thing to do.  

Key Links:

-Goldwater Institute: “Trading Grapes:  The Case for Direct Wine Shipments in Arizona”
- East Valley Tribune: “Wine case may put a cork into trade restraints”
-United States Supreme Court: Granholm v. Heald

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