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The sound of popping corks across the country has quieted considerably since the U.S. Supreme Court’s ruling in May that found bans on direct-to-consumer wine shipments are unconstitutional unless those restrictions apply to in-state wineries as well. Despite the court’s decision and the celebration surrounding the case, a number of states are declining their invitation to the “Vintner’s Ball” and instead are opting to restrict their own in-state wineries from shipping directly to residents rather than open up their borders to outsiders. Such a move would bring those states into compliance with the Supreme Court’s ruling, albeit not in the way many in the wine industry had hoped. Justice Anthony M. Kennedy’s opinion in Granholm v. Healdobserved that “[t]ime and time again this Court has held that, in all but the narrowest circumstances, state laws violate the Commerce Clause if they mandate ‘differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.’ “ While states argued they maintain the right to do as they please with alcoholic beverages under the 21st Amendment, Kennedy was quick to point out that “straightforward attempts to discriminate in favor of local producers [are] not saved by the Twenty-first Amendment.” One of the problems associated with bans on commerce, according to Kennedy, is that they “deprive citizens of their right to have access to the markets of other states on equal terms.” That notion of equality is central to the constitutional issue. If states treat their home businesses the same way as they do out-of-staters, that’s just fine under the commerce clause. That type of reasoning is just what is driving those jurisdictions that want to maintain the status quo. It is troubling to think that states would punish their home wineries just to maintain the chokehold they have had over the wine and spirits industry since Prohibition ended in 1933. But given the revenue generated from the system that has long been in place, it’s not surprising. At a time when other agricultural businesses are struggling, wineries have experienced a boom. Wineries can be found in every state, and new ones are cropping up each year. To be competitive, however, small wineries-typically family-operated businesses-need the ability to ship directly to consumers. In many cases, it is cost-prohibitive for them to participate in the tripartite system of distributors, wholesalers and retailers that has made a lot of folks rich for a very long time.
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