This Is How You Chip Away At the Irrelevant Three-Tier System

A California lawsuit on winery distribution leads the way

For quite some time now I’ve made the case that the most important change the alcohol industry must pursue is the legal ability of alcohol producers to bypass wholesalers entirely and go straight to the restaurants and retailers. It’s a position that acknowledges the irrelevancy of the three-tier system in the 21st century.

But what’s not often acknowledged is the abandonment of the legal mandate for producers to go through wholesalers has taken place in several states already. Many states allow their own brewers and wineries to sell to retailers and restaurants without using a wholesaler. However, in almost none of those states can out-of-state brewers and wineries legally sell directly to retailers and restaurants without a wholesaler.

Turns out California is one of those states. And they are being sued over this discriminatory treatment of out-of-state wineries.

The state of California wanted this lawsuit challenging its discriminatory treatment of out-of-state wineries to go away. They filed a response to the lawsuit saying it should be dismissed and thrown out of court.

Well, the court said, "Sorry…These wineries have a good chance of succeeding. This lawsuit isn’t going anywhere.”

The lawsuit, Dwinell v McCullough, will go forward. And the state of California will be forced to show that this discriminatory alcohol law is justified. California will be asked to explain why California can allow its own wineries to sell directly to the state’s retailers and can allow out-of-state wineries to sell directly to California consumers, but somehow it’s necessary to ban out-of-state wineries to ship wine into the state directly to retailers.

California won’t be able to make this case.

I’m going to provide below some quotes from Judge Stanley Blumenfeld, Jr. from his Order denying California’s request that the lawsuit be dismissed. But first I want to make the point about who would really benefit from California being forced to allow out-of-state wineries being able to sell directly to retailers and restaurants without using a wholesaler: California retailers and restaurants.