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From the bougainvillea-draped adobe walls of Santa Barbara, Calif., offices to the suites overlooking grape vineyards in Napa’s St. Helena, wine country lawyers aren’t popping corks yet over the Supreme Court’s direct-sales decision. Although the ruling in Granholm v. Heald, No. 03-1274, knocked down as discriminatory the ban on direct interstate sales of wine to consumers in New York and Michigan, “the balkanization that liquor laws bring to commerce is alive and well,” said R. Corbin Houchins of Seattle’s Graham & Dunn, whose wine practice extends from the Northwest to California and Texas. “I think any ecstasy right after the decision may be misplaced,” said Frank E. Farella of San Francisco’s Farella Braun + Martel. “There is at least the probable scenario that it will be worse for small producers to ship to other states.” He attributes this to the powerful forces arrayed by large alcohol distributors that he predicts will try to block direct shipment through new legislation. Farella, who began making wine at age 8 on his Italian grandfather’s farm, bought his own Napa winery in 1977 before land prices skyrocketed. He now makes Farella-Park wines, and his law firm boasts nearly 100 winery and grape-growing clients. The high court struck down bans on direct interstate wine shipment based on the theory that the laws discriminate against out-of-state wineries if in-state vintners are allowed to make direct sales to consumers. While 27 states allow direct shipping to consumers, many others limit purchases only to state-licensed distributors, and that cuts into wine sales by boutique vintners who can’t interest large distribution chains. Distributors may go for “the New Jersey solution” by barring all direct shipment of wine to consumers whether inside or outside a particular state, and that would eliminate the discrimination basis of the ruling, Farella said. Houchins said that Michigan, in the wake of Granholm, appears to be preparing “to close the pool to everyone rather than let everyone swim in it.” New York Governor George Pataki included a wine-shipment measure in his last budget, but it died. New York may produce legislation, but it is unclear which way the state is leaning. Farella said, “We are all waiting for the other shoe to fall.” Richard Mendelson of Dickenson, Peatman & Fogarty, a Napa, Calif., firm specializing in the wine industry, said the strong desire for direct shipment by consumers and small wineries unable to attract large distributors could overcome the opposition. But he warned, “some states may open and some states may close to all direct shipment inside and out. The patchwork will change, and [lawyers] will just have to keep up,” he said.

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