If the Policy Doesn't Put More Money In Wine Wholesalers' Pockets, It's Bad Policy

Push back against corruption in two states

The purpose of every dollar in campaign contributions spent by American wine wholesalers is to push more wine through wholesalers. The purpose of those campaign contributions is not to protect the health and safety of the people. It is not to prevent monopolization. It is not to prevent excessive drinking or binge drinking. It is not to prevent overregulation. Pure and simple, the millions poured into the coffers of politicians by wine wholesalers is meant to push more sales through the middleman.

Illinois allows wineries located anywhere in the country to obtain a permit to bypass the state’s wholesalers and sell directly to retailers and restaurants. However, to qualify for the permit the winery in Illinois, California, New York or Missouri or elsewhere may produce no more than 25,000 gallons of wine annually. This amounts to just over 10,000 cases annually.

But wait, there’s more. If you make below 25,000 cases of wine annually and qualify for the “self-distribution” permit that allows you to sell directly to restaurants and retailers without having to sell your wine to a wholesaler, you may only self-distribute 5,000 gallons of wine annually to restaurants and retailers. This amounts to just over 2,000 cases of wine.

There is no public policy interest served by this kind of production limit on winery self-distribution. It is in place purely to serve wholesalers’ revenues, who annually deliver more than $1,000,000 in campaign contributions to Illinois lawmakers.

A bill was introduced in Illinois this year that would significantly increase those production limits to qualify for self-distribution rights in the state. Under the provisions of House Bill 2864, wineries making 250,000 gallons of wine or less annually would be permitted to sell up to 50,000 gallons of wine directly to restaurants or retailers. This would apply to both Illinois and out-of-state retailers.

There is a fundamental flaw with this bill: It would not allow any winery of any size to bypass the wholesale tier and sell directly to restaurants and retailers in the state. The only reason to put a size limit on the wineries that may bypass using wholesalers to distribute their wines to Illinois restaurants and wholesalers is to protect the financial interests of Illinois wholesalers.