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Media Update on Retailer Wine Shipping From
The National Association of Wine Retailers
August 24, 2020
The State of Retailer DTC Shipping in the U.S
The value of the retailer DTC wine shipping channel is difficult to estimate. The best conservative estimates place the value at between $1.5 and $3 billion annually. The COVID-19 pandemic has led to an increase in retailer wine shipments as consumers have been forced to switch much of their purchasing from on-premise to off-premise outlets.

The National Association of Wine Retailers is the only trade organization in America actively seeking to expand consumer access to wines and retailer access to consumers by changing state retailer shipping laws. Among those industry organizations actively opposing retailer to consumer interstate shipments are: The Wine & Spirit Wholesalers Association, all state-based wine and spirit wholesaler trade associations, The National Beer Wholesalers Association, and The American Beverage Licensees (a national retailer trade association), and the vast majority of state-based retailer trade associations.
Retailer Wine Shipping Landscape
Today, 15 years post-Granholm v Heald, wine retailers have the explicit legal right to ship to 16 states. This is compared to the 45 states to which wineries may legally ship. The last two states to allow wine retailer shipping were Connecticut and Florida. The map to the right identifies those states that permit the shipment of wine from out-of-state wine retailers in one form or another.
Unconstitutional Discrimination in State Retailer Wine Shipping Laws
In the 2005 Granholm v Heald decision, the Supreme Court declared a state violates the Constitution when it allows its in-state wineries to ship wine to state residents, but bars out-of-state wineries from doing the same. In the 2019 Tennessee Wine v Thomas Supreme Court decision, the Court said this non-discrimination principle applies to retailers as well as wineries. The map to the right identifies those states that continue to discriminate against out-of-state wine retailers in their state wine shipping laws.
Retailer Wine Shipping and the Courts
The Shipping Lawsuits
The map to the left identifies those states where federal lawsuits have been filed challenging laws that discriminate against out-of-state wine retailers by banning them from shipping to consumers in the state, while allowing in-state retailers to ship wine to the state's consumers.
Current Lawsuits

KENTUCKY
Tannins of Indianapolis v. Taylor (Western District Federal Court of Kentucky, Louisville Division)
Kentucky law allows its retailers to ship wine and spirits directly to Kentucky residents, yet bars the same from out-of-state retailers. Tannins, an Indianapolis retailer is suing the state of Kentucky. STATUS: Briefs have been filed in the case and we are awaiting a decision from the Judge on Summary Judgement.

ILLINOIS
Lebamoff Enterprises et al. v. O’Connell (United States District Court for the Northern District of Illinois, Eastern Division)
Filed in 2016 in Illinois Federal District Court, this case was originally dismissed on the grounds that Lebamoff Enterprises, an Indiana retailer barred from shipping to Illinoisans, was challenging the validity of the "Three Tier System", which the judge ruled could not be challenged due to its "unquestionably legitimate" status according to the Supreme Court and due to the fact, in the Judge's opinion, the Granholm v Heald Supreme Court decision only applies to producers of alcohol, while retailers may be discriminated against in state law. The case was appealed up to the Seventh Circuit Court of Appeals. In that ruling, Chief Judge Diane Wood found the Illinois ban to be discriminatory and in response to the argument that Granholm's non-discrimination principles did not apply to wine retailers replied in her decision, "we are not persueded." STATUS: The case was remanded back to the original District Court where it was originally dismissed. There will be arguments presented in the case at the District Court and the judge will take his lead from the comments made by Chief Judge Wood in the Seven Circuit Court of Appeals.

INDIANA
Chicago Wine Co. v Holcomb (Federal District Court of the Southern Division of Indiana)
Chicago Wine Company, a well established vendor of fine and rare wine, sued Indiana where in-state retailers may ship wine to residents, but out-of-state retailers may not. STATUS: The case is in its early stages with cross motions for summary judgement filed by Chicago Wine Company and the State of Indiana.

MISSOURI
Sarasota Wine Market et al. v. Schmitt (Eighth Circuit Court of Appeals)
Missouri, which recently rescinded the right of out-of-state retailers to ship into the state, now bars that practice, while allowing its own retailers to ship to Missouri residents. Sarasota Wine Market in Florida sued the state claiming the law violates the non-discrimination principles outlined in the 2005 Granholm Supreme Court decision. The Federal District Court disagreed and dismissed the case ruling for the state. The case was appealed to the Eight Circuit Court of Appeals. In the interim, the Supreme Court ruled in Tennessee Wine v Thomas that the non-discrimination principles of Granholm DID apply to retailers as well as wineries. STATUS: Oral arguments at the Eighth Circuit Court of Appeals will occur on September 24, 2020.

NEW JERSEY
Freeman v Graziano (U.S. District Court of New Jersey)
New Jersey allows its retailers to ship wine to New Jersey residents but bars out-of-state retailers from doing the same. STATUS: The case is moving slowiy and is currently in discovery, during which both parties present facts and expert testimony.

NORTH CAROLINA
B-21 Wines v Guy (Federal District Court, Western District of North Carolina)
North Carolina allows in-state retailers to ship wine to consumers in North Carolina, but denies out-of-state retailers the right to ship to NC consumers, violating the Commerce Clause of the Constitution. STATUS: The state's motion to dismiss the case was denied and the case is currently pending cross motions for summary judgment.

OHIO
Block v Canepa (Federal District Court, Southern District)
After the state of Ohio sued four out-of-state retailers asking the court to deliver an injunction forcing the retailers to stop shipping, the state of Ohio was sued on the claim that its laws violate the Commerce Clause of the Constitution. Ohio bars out-of-state retailers from shipping into the state, while allowing their own retailer to ship to Ohioans. STATUS: The two lawsuits, filed by the state and filed by the retailer, were consolidated. The Court is awaiting a response from the state.

RHODE ISLAND
Anvar v Tanner (Federal District Court of Rhode Island)
Rhode Island allows in-state retailers ship to Rhode Island consumers but prohibit out-of-state retailers from shipping into the state. STATUS: The case is in its early stages and is currently in discovery.
Michigan & the Supreme Court
Lebamoff v Whitmer
In 2016, Michigan changed its law to bar out-of-state retailers from shipping into the state, while allowing their own retailer to ship to Michigan residents. At the time, NAWR told lawmakers the law was unconstitutional and if passed the state would be sued. NAWR suggested a better solution was to allow all retailers to ship to Michiganders. The state passed the law and they were immediately sued.

The state argued that the 2005 Granholm v Heald decision barring discrimination against out-of-state wineries did not apply to retailers, that the 21st Amendment gave states the right to discriminate against out-of-state retailers, but not wineries.

In 2018, the Michigan Federal District Court ruled the law unconstitutional, saying it violated the non-discrimination principles of the Commerce Clause as laid out in Granholm v Heald in 2005. (Click for the District Court Decision). The state of Michigan appealed the case to the Sixth Circuit Court of Appeals.

In 2019, the Supreme Court ruled in a different case, Tennessee Wine v Thomas, that the non-discrimination principles outlined in Granholm v Heald DID apply to retailers as well as wineries. Writing for the Court, Justice Samuel Alito said:

"Although it [the Tennessee wine retailers association] concedes (as it must under Granholm) that §2 [the 21st Amendment] does not give the States the power to discriminate against out-of-state alcohol products and producers, the Association presses the argument, echoed by the dissent, that a different rule applies to state laws that regulate in-state alcohol distribution. There is no sound basis for this distinction."

This holding in the Tennessee Wine case invalidated Michigan's argument that the state could discriminate against out-of-state retailers.

Nevertheless, in April 2020, the Sixth Circuit Court of Appeals overruled the Michigan District Court and held that Michigan's anti-retailer shipping law was constitutional, despite the ruling in Tennessee Wine, surprising nearly everyone.

In July 2020, the case was appealed to the U.S. Supreme Court. The Supreme Court will determine in October if they take the case of Lebamoff v Whitmer


The Supreme Court will decide whether or not to hear the case in October 2020.
RETAILER DIRECT SHIPPING LEGISLATION
ILLINOIS
Sponsor: S. Sara Feigenholtz
Would allow Illinois consumers to receive up to 12 cases annually from any out-of-state retailers, require sales tax remittance to IL, require reqular reports submitted to Illinois and would require and adult signature upon delivery.
STATUS: AWAITING COMMITTEE HEARING


MICHIGAN
House Bill 5579, Sponsored by R. Steven Johnson
Senate Bill 819. Sponsored by S. Mallory McMorrow
Would allow out-of-state retailers to ship up to 1,500 cases of wine into Michigan annually, required sales tax remittance, require reports sent to the state and require adult signature upon delivery.
STATUS: BOTH BILLS HAVE BEEN ASSIGNED TO COMMITTEE AND AWAIT A HEARING.

NEW YORK
Assembly Bill 8899. Sponsored by R. Amy Paulin
Would allow the annual shipment of up to 36 cases of wine from an out-of-state retailer to a New York resident, require remittance of sales tax, require remittance of reports to the state and require an adult signature at the time of delivery.
STATUS: ASSIGNED TO COMMITTEE, AWAITING HEARING
ABOUT THE NATIONAL ASSOCIATION OF WINE RETAILERS
NAWR was founded in 2006 by a collection of wine retailers intent on leveling the playing field for retailers and changing protectionist state laws that bar interstate wine shipments. Its members include brick and mortar retailers, internet retailers, wine clubs, auction houses and supporters from various elements of the alcohol beverage industry

Learn more: http://www.nawr.org
Contact: Tom Wark, Executive Director
971-332-5057 • [email protected]