Friday, June 17, 2005

From Our Friends at K&L Wine Merchants

Special Interests Attempting to Limit Your Selection and Pocket Your Money

SB 118 (Chesbro) is a bill in reaction to the US Supreme Court direct wine shipping decision that prohibited discriminatory legislation. The bill originally would have created a permit that could be applied for by anyone licensed to sell wine to consumers (wineries and wine retailers) in any state. The permit would require registration with the California ABC, payment of California taxes, the same protections against delivery to minors that currently exist for CA wineries and retailers, limitations on shipment volume and would give the ABC the authority to regulate the shipments.

However, the mega-wholesale distributor interests in CA (Southern Wine and Spirits and Young's Market Company) have called in their political muscle in order to remove out-of-state retailers from the permit system. Under the version of the bill approved on June 14th, only a select few retailers outside of the state of California may even apply for a permit.

This is WRONG. The proposed permit system MUST provide for the ability of all retail licensees (wherever located) to participate freely. If retailers outside of CA are excluded from the CA market system, other states would retaliate by excluding California retailers from their markets. The goal of the bill was to encourage the creation of a national system of permits and licenses that provides the opportunity for every licensed merchant to participate, no matter where that merchant is located. This would be in the interest of all consumers, whether in CA or elsewhere.

Retailers in all states invest significant sums of money in inventory from multiple winery and importer sources. Retailers hold that inventory (often for years) and make it available in a convenient way to consumers who know and trust the merchant. Those customers could be across the street or across the country. That is the reality of the current market, especially for the expensive, limited production and usually allocated, collectible wines from California and the rest of the world. Requiring these wines to go back up through the three-tier system after they have already traversed it once (if they even could, currently they would just be unavailable outside of California, or unavailable to California if they are located in another state) would give the wholesalers a double profit margin; certainly good for the wholesalers, but not very good for the retailer or for the consumer. Who pays? You bet that the consumer pays.

The Supreme Court in the Granholm case condemned state laws that discriminated against out-of-state interests in favor of identically situated in-state interests. This statute would perpetuate discrimination WITHIN the California market by attempting to keep retailers from outside of California OUT of the market. While we think that any such effort would be unconstitutional as to retailers outside of California under Granholm, we do not want to fight the statute after it is written. Our goal is to make sure that the statute doesn't get passed with that flaw in the first place!

The interests of the wholesale tier, by proposing to take retail licensees out of the statute, is NOT to benefit California retailers by keeping them safe from competition from outside of the state. It is aimed at PREVENTING California retailers from servicing customers outside of California unless the transaction is run through the wholesale tier at a significant cost. Their goal is to have this bill emulated throughout the US. If California creates a discriminatory licensing or permit scheme, the wholesalers will use that example as a bludgeon in every other legislature in the US to keep those markets closed to California retailers.

Here's a link to the proposed bill.

There is a link on that page for you to take action and contact legislators about the bill, or you can go directly to this page.

Most importantly – spread the word about this proposed bill. For a wine lover or wine retailer this is special interest politics at its worst!

No comments: