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The state of Michigan has asked the U.S. Supreme Court to reaffirm a state’s right to regulate the sale of alcohol within its borders — a critical step in the ongoing war between the states and the wine industry. And Michigan is not alone in its fight. Last month, 36 state attorneys general filed a petition to the Supreme Court on Michigan’s behalf, urging the high court to hear the case and protect the states’ policing powers. Granholm v. Heald, No. 03-1120. At issue is a lower federal court ruling that struck down Michigan’s long-standing ban on direct shipments of alcohol to residents by out-of-state providers, allowing unregulated sales of alcohol into the state, including Internet and phone sales. “The decision by the [lower court] fails to respect the power granted to the States by the 21st Amendment to regulate delivery or use of alcohol within the State,” the supporting states asserted in their recent petition. “The States have a significant interest in exercising their police powers to protect the health, safety and welfare of their citizens in the area of alcohol shipping.” A WINE WAR Former independent counsel Kenneth Starr, who has been at the forefront of a national campaign to dismantle trade barriers for wineries, stressed that the current debate headed to the Supreme Court is about wine, not hard liquor. “This is a wine-specific issue,” said Starr, the legal advisor for the Coalition for Free Trade, a California-based legal foundation seeking to overturn bans on interstate wine shipments. “We would like to see states reform their laws and simply stop their discrimination against out-of-state wineries.” Currently, 26 states ban direct shipments of wines to consumers across state lines. Lawsuits to dismantle local alcohol controls have been filed in 11 states. And, most recently, the 2nd U.S. Circuit Court of Appeals on Feb. 12 upheld New York’s right to regulate alcohol distribution within its borders. Starr said the wine industry is now counting on the Supreme Court to require states that allow in-state direct shipping to permit the same opportunity for out-of-state competitors. That discrimination is what drives Institute for Justice attorney Clint Bolick, who, in championing the rights of mom-and-pop wineries, has also turned to the Supreme Court for help. Bolick, who is representing two small family-owned wineries and three wine consumers in New York, filed a petition for certiorari in February contesting the 2nd Circuit’s ruling that upheld New York’s ban on direct shipments. Swedenburg v. Kelly, No. 03-1274. “It’s both direct sales and Internet sales of wine that are at issue here. They should be legal with appropriate safeguards,” Bolick said. “The state wants to protect the state liquor monopoly but also give a helping hand to their own state’s wineries. And that’s protectionism, plain and simple.” Direct-shipments opponents fear hard alcohol will make its way into the current debate. Matt Davis, spokesman for the Michigan attorney general’s office, which petitioned the Supreme Court, said that the 6th Circuit ruling could push the doors wide open for Internet sales of booze. “The 6th Circuit decision is so broad it can easily be interpreted by the makers of Jack Daniels or Jim Beam that it means them, too. That’s where there needs to be a ruling by the Supreme Court,” Davis said. States are also looking to the high court to resolve conflicts among the federal courts involving the interpretation of the 21st Amendment. For example, the 2nd and 7th circuits have upheld bans on direct shipments, whereas the 5th and 6th circuits have not. At issue is which carries more weight: The 21st Amendment, which repealed prohibition and gave states the authority to regulate alcohol, or the commerce clause, which gives Congress the power to regulate interstate trade? Attorney Robert Epstein, chief counsel for the plaintiffs in the Michigan case, asserted, “We’re simply talking about wine and creating a level playing field. It’s about free trade. It’s about the ability of people all across the country to get wine that otherwise they aren’t able to get.” Epstein, of Epstein, Cohen, Donahoe and Mandes in Indianapolis, is representing two Michigan wine writers who sued to get direct shipments from out-of-state wineries. In 2000, a federal judge ruled against the plaintiffs and upheld Michigan’s ban on direct shipments under the 21st Amendment. But three years later, on Aug. 6, the 6th Circuit overturned that decision.

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