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Judge: Parts Of Indiana Wine-Shipping Law Unconstitutional

Court: Rules Discriminate Against Out-Of-State Wineries

POSTED: 1:49 am EDT August 30, 2007
UPDATED: 3:24 pm EDT August 30, 2007

A federal judge Wednesday declared parts of Indiana law regulating wine sales unconstitutional, saying the state wrongly prohibits most out-of-state wineries from shipping wine directly to Indiana consumers.

Besides letting more out-of-state wineries ship to Indiana customers, the ruling in U.S. District Court in Indianapolis also will stop requiring wineries -- both in the state and out -- to have an in-person transaction with a customer before shipping to them, 6News reported.

The law in question prohibits wineries that have wholesale privileges in states other than Indiana from seeking a direct wine seller's permit, which Indiana requires to ship wine to customers in the state.

Judge John D. Tinder decided that the law discriminated against out-of-state wineries, noting that many states -- including the three states that account for 90 percent of U.S. noncarbonated wine -- automatically give wholesaling privileges to their wineries.

"This restriction bars the vast majority of out-of-state wineries from obtaining a direct wine seller's permit," the ruling said.

Tinder also ruled the law discriminates against out-of-state wineries by requiring an initial, in-person transaction between a customer and a winery before the winery can ship to the customer.

"This requirement erects a trade barrier to most out-of-state wineries by requiring them to establish a physical presence in Indiana or limit their potential market to those customers willing to (pay) the expense of travel to their states," the ruling said.

The judge said Indiana's law violated the commerce clause of the U.S. Constitution, and his order stops the state from enforcing the rules he declared to be unconstitutional.

A Michigan winery, Chateau Grand Traverse, and a group of consumers challenged Indiana's law.

"You can't allow wineries in one state to have an advantage over wineries in another state," said Ed O'Keefe, CEO and founder of Chateau Grand Traverse. "It's not right."

David Heath, chairman of the Indiana Alcohol and Tobacco commission, said the ruling also will let Indiana wineries ship to Indiana customers without requiring them to make an initial in-person transaction.

"They'll still have to verify that the person is 21 years of age and follow that through the entire process, even up to and including delivery of the wine, but it doesn't require that they meet face-to-face to verify it," Heath said.

Charles Thomas, owner of Chateau Thomas Winery in Plainfield, said he's thrilled for his business and for customers all over the state.

"You have to know that there's a lot of people that didn't buy because they didn't want to have to go through the hassle of coming down here," Thomas said. "To me, it's a great ruling and it's a fair ruling."


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