Wine Talk

Snooth User: Mark Angelillo

Poor Illinois

Posted by Mark Angelillo, May 28, 2008.

Tom Wark at Fermentation reports that Illinois recently passed a bill HB429 which denies Illinoisans the right to have wine shipped to them from internet wine stores.

http://www.ilga.gov/legislation/Bil...

The fiscal note directly on the Illinois state government's notice:

"HB 429 will increase taxes and fees collected by approximately $662,000 to $1,213,000 per year."

I assume that's the percentage of online sales that would have been taxed were the wine sold within the state.

Replies

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Reply by Sung, May 28, 2008.

Sucks for Illinois. I find it surprising since Chicago has a lot of fancy restaurants. I would think importing wine as easily as possible would have been something the state would want to help foster that industry.

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Reply by Chris Carpita, May 28, 2008.

The fancy restaurants are usually hooked pretty well with distributors, so it's more of a concern for the individual. This is clearly not the solution to Illinoisian tax woes. If they focused on taxing large internet retailers (it's being done in New York), they would make up the spread easily, and wouldn't have to deny anybody's rights for a paltry $600K.

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Reply by Philip James, May 28, 2008.

Really? Wow, Illinois was one of the more progressive states.

Sad to see "Free the Grapes" supporting such a bill

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Reply by Stephen, May 28, 2008.

I agree, and I got on Wark a bit for not pointing that out in his earliest posts. Illinois is really take a step backward and doing a great disservice to their residents. What was important, and I don't feel much like finding the link, but clear ties were made between backers of the new changes and significant amounts of political contribution from the wholesalers.

The taxes and fees is ridiculous because it is entirely feasible (VA, LA, PA etc.) to devise a licensing system that requires the collection and remittance of taxes and fees, while allowing for greater participation from outside the state.

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Reply by Chris Carpita, May 28, 2008.

@Philip: Is Free the Grapes supporting the bill or just not saying anything?

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Reply by Stephen, May 29, 2008.

Free the grapes was one of the proponents of the bill...So they went beyond not saying anything. I should clarify, from my research (way back when) it was the Wine Institute, but I believe they are all the same, yes? In any event the Wine Institute was listed as one of the supporters of the bill, ostensibly because it supports wineries, which is their mission. In my opinion, though, they undermine their main argument of "more choice for consumers" by backing such bills and getting in bed with wholesalers.

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Reply by Philip James, May 29, 2008.

Ccarpita - sadly, as Stephen points out, Free the Grapes supported this bill. Its pretty depressing, but basically the bill harms retailers while leaving the wineries untouched.

As Free the Grapes only seems to care about California Wineries, they voted in a way that would unfairly benefit their constituents.


Its a cute logo, but they just lost my faith in their mission...

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Reply by Philip James, May 29, 2008.

I copied this response from Tom's Fermentation blog (http://fermentation.typepad.com/fer... - the comment was left by "theRP")"

BEGIN QUOTE

I'm no spokesman for Free the Grapes but it seems as though they supported the bill because it allowed direct shipment from wineries in all 50 states. They proposed an amendment that would also allow out of state retailers to ship in but it was shot down.

Here's a summary of a Free the Grapes press release:
Illinois Governor Rod Blagojevich yesterday signed House Bill 429 which goes into effect June 1, 2008. The new law dramatically expands consumer choice for winery-to-consumer purchases made by Illinois wine consumers. Under the new law, wineries in all 50 states may purchase a permit to ship. Under the old law, wineries in just five states, including Illinois, were allowed to direct ship to Illinois consumers. The trading network of states with so-called ‘reciprocal’ wine shipping arrangements has decreased from a dozen to just five: New Mexico, Wisconsin, Iowa, Oregon (changes to permit law in January 2008) and Illinois (changes to permit law in June 2008).
“The new law is a boon for winery-to-consumer shipments, and long overdue, but unfortunately it corks out-of-state retailers. An amendment, widely supported by Illinois consumers and Free the Grapes! would have allowed out-of-state retailers the same privileges as wineries. It was defeated by powerful Illinois retailers and wholesalers,” said Jeremy Benson, executive director, Free the Grapes!, a winery-consumer grassroots coalition.

and a link to the full press release...
http://www.businesswire.com/news/go...

END QUOTE

I think this sheds some light on the matter. It seemed Free the Grapes made some efforts to redress the fact that they screwed over out of state stores, but that it was shot down. Luckily there's the Specialty Wine Retailers Association, or the amendment would never have been proposed.

As Tom Wark says, now that Illinois is discriminating against out of state retailers but allowing in-state retailers to ship what remains is unconstitutional, according to the 2005 Supreme Court decision.

[Actually, Stephen, is my last paragraph correct, or is the 2005 decision only applied to wineries?]

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Reply by Stephen, May 29, 2008.

First, while I would like to say that it's nice Free the Grapes attempted to include out-of-state retailers, if memory serves the primary function of the bill was to prevent out-of-state retailers from accessing the market, so I don't put much faith in their efforts. Furthermore, I think they undermined one of their own primary arguments for promoting open winery shipments (more options, better prices).

In regards to the Granholm decision, the full relevance is still being debated in the courts. A few months back Texas Supreme court ruled mostly in favor of extending Granholm to include retailers. So I think that's why Tom is optimistic, but the same decision provided a loophole which currently negates any relevance of the decision (the state can require that wines shipped be bought from a Texas wholesaler)...so figure out how that would work. In the end, though, I think that the 2005 decision has been, and will continue to be applied to retailers, as the dormant commerce clause clearly applies in both cases, it is difficult to argue otherwise.


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