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Welcome to yet another chapter in the continuing saga of Indiana wine shipping.
Today’s episode stars the federal court of appeals, and – like any great drama – brings both good news and bad news.
Mostly bad news, though.
Here’s the background: Indiana used to allow Indiana wineries to ship wine directly to Indiana customers but forbade out-of-state wineries from doing so. In 2005, the U.S. Supreme Court said it was illegal to have two sets of rules.
Indiana responded by claiming all shipping was illegal. Indiana wineries worked to change the law but in the process ended up with a mess: The state allowed most wineries, in and out of state, to ship directly to Indiana customers, with a few catches. One was that any winery getting an Indiana shipping permit could not also be a wholesaler, which cut out every winery in California, Washington and Oregon. The other was that there had to be a face-to-face transaction with the customer first. So if you wanted to order a bottle of hard-to-find Riesling from the Finger Lakes region of New York, you had to go there first.
The question went to federal court, and the judge threw out those two provisions. But then the state appealed, and here we are today.
The appeals court agreed with the lower court that the wholesaler prohibition part of the law was illegal, and for the record, the state didn’t even defend that part. The liquor wholesalers weighed in on it, but the court dismissed their arguments.
“All the wholesalers can muster in support of the statute is that the three-tier system may help a state collect taxes and monitor the distribution of alcoholic beverages, because there are fewer wholesalers than there are retailers, so state enforcement efforts can focus on the middle layer,” the justices wrote. “The wholesale clause protects Indiana’s wholesalers at the expense of Indiana’s consumers and out-of-state wineries.”
That’s a victory for Indiana’s wine lovers.
But the other issue, the state’s desire for a face-to-face transaction requirement fared better. Much better.
The wine lovers who brought the case argued the requirement amounted to unfair treatment of out-of-state wineries because the cost of traveling increases with the distance from Indiana. So while it’s relatively easy for someone in Fort Wayne to visit Satek Winery in Fremont, it’s much harder and more expensive for him to visit a winery in Napa before he can have wine shipped.
Here’s where the court’s thinking seems to go beyond the letter of the law and into the land of leaps of logic.
Because Indiana’s wineries are spread throughout the state, the court said, it’s not easy to visit many at once. California wineries, though, are close together.
“A connoisseur might well find it easier to visit and sign up at 30 California wineries than at 30 Indiana wineries,” the decision said. “So although it may be more costly for a person living in Indianapolis to satisfy the face-to-face requirement at five Oregon wineries than at five Indiana wineries, it is not necessarily substantially more expensive (per winery) to sign up at a larger number of west-coast wineries than at an equivalent number of Indiana wine producers.”
Talk about trying to twist logic to fit the outcome you want. We calculate that driving to 30 Indiana wineries would cost about $180 in gas at $4 a gallon, plus $300 for three days in hotels and $270 for meals on the road. That’s $750 for 30 wineries.
The cheapest flight we could find from Fort Wayne to Napa was $497 each (that’s with two stops), so you’ve already spent more and you haven’t gotten a hotel room or eaten yet. Driving there is even worse: $818 in gas, nine nights in hotels (just for the drive there and back) and $800 in food while driving. You’re looking at nearly $2,500 and haven’t rented a room in Napa or eaten in a restaurant there.
But even if it is more expensive, the court said, that’s not outweighed by the reduction in underage drinking the face-to-face requirement might make. Note the word might: Despite evidence showing that Internet age-verification techniques were six times more effective than face-to-face transactions, the court said the evidence it might not be very effective does not outweigh Indiana’s desire to keep alcohol away from minors, and overturned the lower court’s decision.
So where does that leave us? Back to Square 3: You can have wine shipped from a winery, whether that winery is in Indiana or elsewhere, directly to your house if:
•The winery has a $100 annual Indiana wine shipping permit. Most wineries don’t, but they will get one if you can convince them it will be worth their while.
•You have been to the winery in person and filled out a form documenting you are old enough to buy alcohol.
It is possible the decision will be appealed to the U.S. Supreme Court. What will happen there – if the court even decides to hear the case – is anyone’s guess. And in the meantime, Indiana’s wineries will keep working to change the law through the legislature, because it’s hurting them, too.
Cheers to the hope their efforts work.
