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Idaho joins states in uncorking wine shipment legislation
Sunday, February 12, 2006
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BOISE, Idaho -- Idaho has joined several states that are uncorking new laws for wine shipped across state lines, after a U.S. Supreme Court ruling nine months ago forced states to treat local and out-of-state wineries equally.

Under legislation that cleared a House committee Tuesday, Idaho would allow out-of-state wineries to ship up to 24 cases a year directly to customers here for personal consumption -- as long as the wineries buy a $50 Idaho permit. That plan is being promoted across the country by the San Francisco-based Wine Institute, which represents 800 California wineries.
It forbids resale of the wine -- in restaurants, for example.

Idaho wine exporters would be subject to other states' laws.
Last May, the Supreme Court struck down laws in New York and Michigan that allowed domestic wineries to ship directly to in-state consumers -- but prohibited out-of-state businesses from doing the same thing.

In that ruling's wake, the Wine Institute has been pushing new legislation to establish uniform rules that allow direct wine shipments to flow more freely. Measures similar to the Idaho proposal have been adopted by 15 states and are being debated in 11 others, said Roger Seiber, a lobbyist for the group.
"This puts in place a system that's been widely accepted across the United States," Seiber told members of the House State Affairs Committee on Tuesday, when the panel cleared the bill for House-floor debate.

Under the proposal, out-of-state wineries would pay Idaho sales and excise taxes on such transactions. That's about $250,000 annually. The state has not been collecting taxes on out-of-state wine sales.

People over 21 would have to sign for the wine on delivery, and boxes would have to be clearly labeled.

There would be no limit on wine bought directly from Idaho vineyards or wine-tasting rooms, and taken home by the purchaser.

Until now, Idaho has had reciprocal agreements with 23 states, allowing their wineries to ship their bottles directly to private consumers here.

Following the Supreme Court ruling, states including Texas, New York, Michigan and California are abandoning such pacts and replacing them with permit requirements, said Bob Corbell, director of the Idaho Grape Growers & Wine Producers Commission.

And the New York law only allows shipments from states that extend similar privileges to New York vintners.

The proposed Idaho law "would restore our ability to ship wine to states that, following the Supreme Court ruling, established permit requirements," Corbell said.

Shipping wine directly to drinkers -- both in-state and elsewhere in the United States -- is especially important to Idaho's nascent $55 million-a-year wine industry, he said.

For one thing, using a distributor can cost 50 percent of proceeds, making winemaking unprofitable for Idaho's tiny vintners.

And most Idaho wineries are too small to have their bottled beverages shipped through established distributors, said Ron Bitner of Bitner Vineyards in Sunnyslope.

"Once you get below 5,000 cases a year, it's hard" to get the interest of distributors, said Bitner, whose 12-acre, 1,000-case winery offers wines made from Riesling, Cabernet and Syrah grapes. "You can't fill the distributor's pipeline. With the economies of scale, we need to be selling retail."

Under a plan being crafted in the Legislature of neighboring Washington state, neither in-state nor out-of-state producers would be required to use distributors -- even when they sell their wine to stores that plan resale.

That's following a lawsuit brought by Issaquah, Wash.-based Costco Wholesale Corp. The wholesale membership club challenged a state law that allowed in-state vintners to sell directly to retailers, but requiring out-of-state producers to use a Washington distributor.

Idaho's law doesn't attempt to encroach on territory now dominated by distributors.

"With the conservative nature of the state, we wanted to get this as a first step," Seiber said. "We weren't looking to go around the distributor. We weren't looking for broad sweeping changes. We just wanted the wineries to have the opportunity to sell direct to consumers."
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