Hoo hah! Wine shipping now legal to Kentucky consumers

I love wine, but being a beer guy, I wonder if this applies to beer as well. There are many beers that I can't buy here in the Commonwealth, but would love to have shipped to me. Anyone know if beer is part of this? Or, is it all alcohol?

The law didn't ever apply to beer to the best of my knowledge. Reading the article and the legal brief from the district court it talks about the law only applying to wine. If it is illegal to ship wine in it must be a different law but I've never heard a shipping beer was illegal. It's probably just not done because the shipping cost vs. beer cost ratio would be ridiculous compared to what it is for wine.

It's probably just not done because the shipping cost vs. beer cost ratio would be ridiculous compared to what it is for wine.

You're not drinking the beer that Scott and I drink then!

My reading of 6th Circuit's opinion is as follows:

1. The challenged statutory framework had to do with the process whereby a small farm winery (< 50,000 gallons produced/year) could apply for a Kentucky small farm winery license.

2. This license was and still is required for any out of state small farm winery to be able to ship wine directly to a consumer in Kentucky.

3. The license requirements that were challenged stated that in order for a small farm winery to ship wine directly to a Kentucky consumer, (1) the Kentucky consumer had to purchase the wine in person at the winery; (2) the wine had to be shipped by a common carrier; and (3) the amount allowed for shipment was 2 cases per visit. Failure to abide by these requirements could result in criminal penalties for the winery.

4. The federal district court in Louisville held that portions of the statute were unconstitutional, and therefore invalidated them. I would have to read the district court's opinion to figure out which portions were unconstitutional and invalidated. The COA opinion does not specify, beyond making it apparent that requirement (1) (in-person purchase) is unconstitutional.

5. In summary, by affirming the district court, the COA has effectively invalidated the portion of the statute requiring in-person purchases. Without reading the DC opinion, I opine that this is likely the only portion invalidated, as limiting shipments to 2 cases per order and requiring that it be shipped by licensed common carrier has no negative effect on interstate commerce.

6. Therefore, as a result of this opinion Kentucky consumers can order up to 2 cases of wine at a time from out of state small farm wineries (producing less than 50,000 gallons per year) that have applied for and been granted the Kentucky small farm winery license, to be shipped by common carrier, without a need to purchase in person. This opinion ONLY applies to the framework surrounding the small farm winery license, and therefore has no effect on the current laws surrounding large wineries, spirits producers, or beer brewers (though I am not familar with those laws).

[Robin Garr]

My reading of 6th Circuit's opinion is as follows:

Nice analysis, thanks.

One important question that I don't see answered here: Does the statute also limit Kentucky wineries to ship no more than two cases per year? One need not be a lawyer to clearly discern that Granholm absolutely requires there be no distinction in the regulation of in-state wineries over out-of-state wineries in any way, shape or form.

My reading of 6th Circuit's opinion is as follows:

Nice analysis, thanks.

One important question that I don't see answered here: Does the statute also limit Kentucky wineries to ship no more than two cases per year? One need not be a lawyer to clearly discern that Granholm absolutely requires there be no distinction in the regulation of in-state wineries over out-of-state wineries in any way, shape or form.

Yeah, that's a good question, Robin. I'm honestly not sure from my 15 minute analysis. I do know that that the "in-person" requirement is eliminated for Kentucky wineries, and Granholm leads me to think that the 2-case limit applies to in-state wineries as well. However, I think the two case limit is per order, not per year. The statute read two cases "per visit," and since this part of the statute stays, I think, per visit would probably be contrued as per order.

I would expect to see new legislation in the next session addressing this opinion, to rework the statue to be constitutional but also to have clearer wording to reflect telephone/internet orders.

[Robin Garr]

I would expect to see new legislation in the next session addressing this opinion, to rework the statue to be constitutional but also to have clearer wording to reflect telephone/internet orders.

Yep ... and wine enthusiasts may have to watch in horror as the well-heeled lobbyists from the national wine-and-spirits wholesalers grease the rails to bar all shipping from in-state and out-of-state wineries. Granholm will be satisfied, and so will the wholesalers, and tough noogies for Kentucky wineries and Kentucky wine lovers.

OK, even more importantly....when does this start??? I am ready to place my first order.

[Robin Garr]

OK, even more importantly....when does this start??? I am ready to place my first order.

Difficult to say, Jim. There's no specific date that I know of ... just a question of when the shippers - UPS and FedEx most notably - decide that it's safe for them to ship and let the wineries know that.

It might be worth a check with the national advocacy site
http://www.FreeTheGrapes.org
to see what they're saying ... they're pretty well wired into the national scene.

Also, on a more formal level, the wine-shipping section of California Wine Institute's Website,
http://wineinstitute.shipcompliant.com/ ... StateId=50

Unfortunately, both sites seem to draw the same information and neither appears to have caught up with recent events.

OK, even more importantly....when does this start??? I am ready to place my first order.

It is a bit unclear. Technically, the defendants here could petition the Supreme Court for certiorari. Whether or not the district court and 6th Circuit decisions would be stayed pending the SCOTUS decision to review or now, and if review was granted, whether it would be stayed pending SCOTUS review, is another matter. On the long end, if by some slight chance SCOTUS granted cert and reviewed the 6th Circuit, and there is a stay, it could be a year to a year and a half before a decision is handed down. I'm not sure off the top of my head how long the defendants have to file their cert petition - maybe 30 days - but once that time runs the 6th Circuit opinion should be effective and the statute's in person requirement is gone.

[Robin Garr]

the defendants here

Brad, my memory is fuzzy on this, but do you know if I'm recalling correctly that Kentucky ABC declined to pursue the district court decision, leaving it to the wholesale lobby to step in as defendant? I've been told privately that ABC regarded this as "junk law" from the start, passed for lobby interests rather than public policy, and has never shown much interest in enforcing it. The felony provision requires a second "strike." I'm not aware of any shipper ever being sent a first warning.

the defendants here

Brad, my memory is fuzzy on this, but do you know if I'm recalling correctly that Kentucky ABC declined to pursue the district court decision, leaving it to the wholesale lobby to step in as defendant? I've been told privately that ABC regarded this as "junk law" from the start, passed for lobby interests rather than public policy, and has never shown much interest in enforcing it. The felony provision requires a second "strike." I'm not aware of any shipper ever being sent a first warning.

Fair enough. I should have said "appellants."

the defendants here

Brad, my memory is fuzzy on this, but do you know if I'm recalling correctly that Kentucky ABC declined to pursue the district court decision, leaving it to the wholesale lobby to step in as defendant? I've been told privately that ABC regarded this as "junk law" from the start, passed for lobby interests rather than public policy, and has never shown much interest in enforcing it. The felony provision requires a second "strike." I'm not aware of any shipper ever being sent a first warning.

I think I misread your post. Either way, "defendant below" or "appellant" would be proper, I think. As to what I think you were getting at, I have not looked back at the history of this to know whether the ABC declined to pursue it or not. The 6th Circuit opinion didn't address that, and it did refer to the ABC in the opinion. That being said, you may be entirely correct. I've got some time off this week - maybe I'll dig a little deeper.

I doubt the Supreme Court of the United States would accept certiorari on this because it just decided the Granholm decision on this issue a few years ago.

As for the question regarding whether this only allows out of state wineries producing less than 50,000 gallons of wine to ship to KY customers, I believe the answer is yes, but a quick read of the district court's decision would definitively answer that question. Here is why the answer is probable yes:

The interstate commerce clause prohibits discrimination against out of state businesses solely on the basis that they are from another state absent some VERY compelling state interest. If KY did not allow ANY in-state wineries to ship directly to KY consumer, bypassing the usualy distribution system, then KY would be allowed to bar the same sale from out of state wineries. However, once KY starts allowing in-state wineries to sell directly it must not prohibit out of state wineries to do the same unless it can show a compelling reason why it should. In this case, the argument was that alcohol sales to minors was the compelling state interest. This compelling interest is examined with "strict scrutiny" by the court, which is the highest level. Obviously, the state here was unable to prove that alcohol sales to minors was more likely by allowing out of state wineries to sell directly to consumers. As for the 50,000 gallon limit, it appears that KY has only allowed those "small farm wineries" defined as producing less than 50,000 gallons of wine or less, so it cannot bar sales by the same size wineries from out of state. However, I think it would have a helluva good argument that out of state wineries that produce more than 50,000 gallons are still prohibited, and it would likely be upheld by the courts. The real issue enforcement. How in the world is KY's ABC going to make sure that a winery selling wine directly to a KY consumer has production of less than 50,000 gallons. Large wineries often have multiple locations, any one of which might not make more than 50,000 gallons of wine even though the overall operation does. Similarly, yields vary. A winery might make 75,000 gallons one year and 40,000 the next. Is the KY ABC really going to monitor this? I understand that the onerous registration system is designed to discover this at the outset, but how well is that going to work? Who is going to check the box of wine that is shipped to my door to make sure it is from a registered winery as opposed to one that is not?

Well, Well Well, WELCOME BACk.... we have missed you!

Does anyone know the status of this? We're headed to wine country in October and it sure would be nice to be able to ship some home.