INTERPRETING GRANHOLM: RETAILERS OR WINERIES

Yesterday we reported that Illinois bill (HB 429) is currently feeling some heat from the Specialty Wine Retailers Association in context to out-of-state retailers and their shipping rights. The bill (announced Monday) provides that in-state and out-of-state wineries can ship 12 cases a year directly to an individual and restaurant, while small wineries (producing less than 25,000 gallons a year) would be able to deliver up to 5,000 gallons of wine annually to retailers. In-state retailers would also retain the ability to ship directly to consumers, but out-of-state retailers would lose that privilege under the bill. Since then, Representative Julie Hamos has presented an amendment that would allow out-of-state retailers to ship directly to Illinois consumers.

According to the Beverage Retailer’s Alliance of Illinois, out-of-state retailers are putting in-state retailers at a competitive disadvantage by incorrectly using Granholm as a way to fight for direct shipping rights. WSD had the chance to speak with Jerry Rosen, executive director of the Alliance, to see where his organization stands on the issue. Jerry played a key part in drafting the bill and feels strongly that out-of-state retailers do not have a valid argument. Firstly, Jerry claims Granholm is directed specifically towards wineries, not retailers, and that it grants states the right to determine their own alcohol laws. He also maintains that Illinois does not have a legal license for out-of-state retailers to ship directly to consumers. Let’s take a closer look at what he had to say:

Megan Haverkorn: What basis do the out-of-state retailers have for shipping directly to Illinois residents?

Jerry Rosen: “If you read Granholm vs. Heald it said several things, one of which is that everything refers to wineries. There is no mention and no discussion of retailers. They are not covered under Granholm.”

“Granholm also reiterates the 21st amendment that gives states the right to make alcohol laws for their particular state. It only deals with wineries and the fact that you cannot create laws for an individual state and discriminate against wineries from out of the state. It has nothing to do with retailers.”

“They’re [out-of-state retailers] trying to legalize what they’ve been doing for years illegally, which is shipping to consumers in Illinois without a license.”

MH: But in-state retailers are allowed to ship directly to residents, correct?

JR: “Illinois is a local option state. The state of Illinois cannot issue a license without the approval of the local municipality or county.”

“The out-of-state retailers want to buy up a shippers’ license for $50, thinking that they’ll settle up the sales tax once or twice a year and that should make everything okay. Well, it doesn’t make everything okay because the shippers’ license for $50 bucks doesn’t cover 20% of the licensing cost.”

“The whole thing is erroneous. The entire argument has no bearing whatsoever. Illinois retailers can have the right to ship in Illinois. They’ve always had that right. In the first paragraph of the bill we specifically say that Illinois retailers can ship anywhere in Illinois where it’s legal. That’s their license.”

MH: What about the recent amendment that would allow out-of-state retailers to ship directly?

JR: “The amendment was followed up by Tom Wark’s [president of the Specialty Wine Retailers Association] people with a letter to all of the members of the house of representatives, and I might add that last night a counter debunking their entire argument line by line, item by item was also sent out to every member of the house of representatives because not one statement in there holds water.”