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Winemakers Toast High Court Ruling

The U.S. Supreme Court opened the door on May 16 for the direct sale of wine across the nation.
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In a decision that could have major implications for the future of Internet commerce, the U.S. Supreme Court opened the door on May 16 for the direct sale of wine across the nation.

A toast (or three) was raised at Zachy's, the New York-based retail wine merchant (see "Wine Sellers," April 2005). CEO Don Zacharia helped fund the lawsuit.

The ruling, in effect, invalidated the laws governing wine sales in 21 states. Some had allowed in-state wineries to sell directly to consumers while forbidding out-of-state wineries to do so. Others had "reciprocity" laws that permitted direct sales only from wineries in states that permitted out-of-state direct shipments.

The Court ruled that state wine laws of this kind engaged in a form of protectionism forbidden by the Constitution. The justices let stand the more restrictive laws of the 15 states that prohibit direct shipments, whether from in-state or out-of-state wineries. Still, given that direct sale of wine to consumers already is estimated at $300 million annually, the Court's decision is sure to have a major impact on the industry. Liquor wholesalers are widely seen as the big losers in the decision.




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