Circuit Court Upholds Ban on Out-of-State Wine Sales to New Yorkers

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A federal appeals court has upheld a state law that bans out-of-state wineries from shipping wine directly to New York consumers.

The decision by the 2nd U.S. Circuit Court of Appeals overturned a 2002 ruling by a lower-court judge who said the ban interfered with interstate commerce.

The appeals court ruled that the state's ban on direct shipment is permitted by the Constitution's 21st Amendment, which ended Prohibition and granted authority to the states to regulate the sale of alcoholic beverages. The court noted that out-of-state wineries must establish a physical presence in the state to ship wine to New York consumers.

The case originally was brought by Swedenburg Estate Vineyards in Middleburg, VA, a small winery that produces about 2,500 cases annually. Customers can order from the vineyard online.

The Institute for Justice, a Washington public-interest law firm that opposes the ban and brought the case on behalf of Swedenberg and another small vineyard in California and several New York consumers, said it would fight the decision.

Clint Bolick, an institute lawyer, said the 2nd Circuit ruling conflicts with decisions by three other federal appeals courts that struck down similar bans in North Carolina, Texas and Michigan. A Florida appeals court also overturned a trial court decision that had upheld a ban in Florida.

The institute also said that earlier this year, New York Gov. George Pataki introduced legislation in his proposed budget that would permit direct shipments, citing the prospect of additional tax revenue.

Reportedly, New York is the nation's second-largest producer of wine, after California. It is the only state in the top four that does not allow direct shipment to consumers.

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