Federal Court Rules Discriminatory Wine Distribution Law Unconstitutional
Similar federal lawsuits challenging discriminatory self-distribution laws in NY and CA
There is no imperative—social, cultural, economic, or regulatory—that requires alcohol laws to be discriminatory; to be protectionist. And yet, a huge swath of the state laws that govern alcohol sales and distribution are just this. The most familiar discriminatory laws fall into the category of direct-to-consumer shipping. However, an equally discriminatory set of alcohol laws impacts how retailers procure inventory.
A federal judge recently declared this form of discriminatory alcohol law unconstitutional. The question now is how will the opponents of a level playing field in alcohol regulation react to this dismissal of protectionist legislation.
The lawsuit is Buckel Family Wine v Mosiman. The law in question comes from Iowa where retailers in that state may buy wines directly from Iowa wineries. However, those same retailers are barred from buying wine directly from out-of-state producers. Out-of-state wineries must sell first to an Iowa wholesaler, who then marks up the price of the wine and sells it directly to the state’s retailers.
In issuing her decision in this case, Judge Rebecca Ebinger wrote:
Iowa does not apply its laws “evenhandedly” to both in and out-of-state wineries. Instead, Iowa’s laws grant “in-state wineries access to the State’s [retailers] on preferential terms” by requiring out-of-state wine manufacturers to go through additional tiers in Iowa’s system or create an in-state premises. Either scenario results in a benefit for in-state wine manufacturers at the expense of burdening out-of-state wine manufacturers, which discriminates against interstate commerce.