Why It's Getting Harder to Ship Wine Across State Borders

Just as you thought it was getting easier to get alcohol, a U.S. federal appeals court has made life more difficult for wine lovers in certain states.

The ruling this week in Sarasota Wine Markets v Schmitt means a Florida wine shop cannot ship their wares to a Missouri resident, though licensed Missouri retailers can. This is part of a recent trend in court cases and state legislatures that discriminates against out-of-state retailers.

It’s a good time to explain the three-tier system: As VinePair noted in 2018, this alcohol distribution system was a post-Prohibition way to keep control of booze and to increase the price of alcohol. It added costs by “ensuring alcohol flowed from producer to consumer through a minimum of three separate businesses.” Basically, growers/wineries/producers sell their wares to wholesalers (tier two) and retailers (wine shops, bars, etc.) purchase said goods at tier three.

State laws vary, and even though the Supreme Court allowed for direct shipping by out-of-state wineries in 2005, states like Tennessee are finding new ways to limit out-of-state shipments to places like fulfillment houses. In the latest Sarasota court decision, Judge James B. Loken called the three-tier system “unquestionably legitimate,” as Wine-Searcher reported.

“There’s a move underway from the distributors to shut down every means of out-of-state shipping,” beverage alcohol attorney Sean O’Leary told Wine-Searcher, also noting wholesaler groups that donate heavily to state-level politicians tend to use the same “unquestionably legitimate” quote as the Eighth Circuit judge (it was also a phrase uttered by the late Supreme Court Justice Antonin Scalia regarding the three-tier system).

Wholesalers, who give a lot of money to state-level campaigns (more than double everyone else in the alcohol business combined), were obviously pleased with the recent court decision.

“We commend the opinion handed down by the 8th Circuit in the Sarasota Wine Market v. Schmitt case that upholds Missouri’s law that allows in-state retailers to ship wine to Missouri consumers but prohibits out-of-state retailers from doing the same,” said Wine & Spirits Wholesalers of America (WSWA) President and CEO Michelle Korsmo in a statement. “The court also noted that those seeking change to a state system must do so through the legislature as this law is valid.”

Essentially, states win and wine consumers lose. As Wine-Searcher accurately noted, this was “the worst week for wine shipping in the 16 years [since the 2005 Supreme Court decision].”