When the U.S. Supreme Court knocks down state laws that have been around for more than 70 years, you'd expect immediate aftershocks. Curiously, reaction to the court's rejection of two states' laws forbidding direct interstate shipment of wine to consumers has generated less press for the decision than the cases got in the run-up to judgment. Even more curiously, a case currently pending before the Washington State Supreme Court may prove to have far broader consequences than the federal suits.
The reason? It's because the Supremes said that states couldn't discriminate between sale of wines from out of state and wines produced within state borders; but as long as state law treats all sales the same way, no problem. In theory, Oklahoma, say, could require that wine be shipped only on alternate Thursdays, as long as that applied to vintners in Omaha (if there are any) as much as vintners in New York.
More rationally, a state could make wine produced inside a state subject to the same distribution rules required of out-of-state producers. Irrelevant to the consumer? Not at all. In Washington state, for instance, winemakers can ship directly to state residents without going through a licensed distributor. Many wineries use distributors anyway, for reasons of convenience and breadth of distribution. But distributors charge for their services, and those charges, for many smaller wineries, might force price increases that would make their wine uncompetitive in the marketplace.
Small wineries produce a tiny percentage of Washington state wine, but they swing disproportionate political clout, so it's unlikely that the Legislature could be persuaded to force them into the existing three-tier distribution system. Far more likely, and consequential for the wine consumer, would be legislation to "level the playing field" by allowing wineries anywhere in the U.S. to ship directly to individuals here.
At present, Washington already has "reciprocal" agreements with 31 of the 50 states permitting this practice, so the immediate impact of the Supreme Court's ruling is limited here. Still, it signals a significant erosion of the states' privilege to regulate alcoholic beverage at will. In future, the court implied, regulation will be balanced with rationality, equity, and impact on commerce.
A much bigger bomb is ticking away, however, one that could shatter Washington's cozy system protecting both wine distributors and retailers from the high wind of capitalist competition; one that could effectively shatter the system which has controlled distribution of alcoholic beverages in Washington since Prohibition. In the July 6 edition: the Costco case.
rdowney@seattleweekly.com
