Court Rules Against Virginia Ban on Interstate Direct Alcohol Shipment

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A federal judge ruled unconstitutional a Virginia law banning the shipment of wine and beer from out-of-state vineyards and breweries to Virginia residents and from Virginia wineries to residents of other states.


The state's law violates the Constitution's commerce clause by discriminating against wineries and breweries in other states that want to sell to Virginia residents, ruled U.S. District Judge Richard L. Williams of the Eastern District of Virginia.


The existing system, Williams said, "has both the purpose and effect of prohibiting an out-of-state entity from participating in direct marketing and shipment of wine and beer to Virginia residents."


Virginians can buy directly from a Virginia winery and have the bottles shipped to their homes. But out-of-state wines can be sold only through wholesalers and retailers. Also, Virginia wineries cannot ship their products to consumers in other states that allow interstate wine purchases.


The ruling stems from a 1999 lawsuit that challenged the state's ban on direct shipment of wine from other states. Wineries in California, Texas and Washington as well as Virginia residents Robin Heatwole and Clint Bolick sued the state's Alcoholic Beverage Control Board after the residents were prohibited from buying out-of-state wine by mail order or the Internet.


The Virginia Wine Wholesalers Association opposed the lawsuit, arguing that direct sales would increase the purchase of alcohol by minors and cost the state sales tax revenue.


Matthew S. Hale, one of the attorneys representing Heatwole and Bolick, said he expected the state and the wholesalers association to seek a stay of Williams' ruling to preserve the current system.


Bolick, co-founder of the conservative Institute for Justice, reportedly is involved in a similar lawsuit in New York, challenging a law that prevents wine merchants from selling their products online.


Other states have similar restrictions. In Maryland, it has been a felony since 1999 to deliver alcoholic beverages to anyone other than a licensed wholesaler or retailer. That law was enacted in part to stem an increase in Internet wine orders that, it was argued, avoided state alcoholic beverage taxes and could put alcohol in the hands of minors.


Maryland lawmakers, however, reportedly have given initial approval this session to a measure that lets people buy wine by mail or over the Internet from out-of-state producers.


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