The Supreme Court and retail direct shipping

The U.S. Supreme Court this week declined to hear an appeal of a Texas case, Wine Country Gift Baskets.com v. Steen. In doing so, it decided that the direct shipping law as it stands, which makes it all but impossible for a retailer to sell wine to someone in another state, is perfectly fine.

Tom Johnson at Louisville Juice sums up the development nicely:

The Fifth Circuit Court of Appeals had previously ruled that the 21st Amendment gave states the power to require retailers to operate from within a state; the Gift Basket folk argued that retailers should be treated similarly under a state ?s laws regardless of where they are located.

The Supremes declined to intervene, so the case law on this tiny gray area is now clear. The world will continue to operate as it has been operating since the repeal of Prohibition.

Unless something truly untoward happens, this non-decision will almost certainly end any hopes that someone will do for wine what Amazon.com did for books and music. In fact, the legal tangle is so dense and so complicated that Amazon gave up trying to become a national, direct-to-consumer wine retailer about 18 months ago.

That’s because, under the existing law, each state can regulate out-of-state retailers anyway it wants; a retailer would have to adhere to one set of laws in Utah, another set of laws in New York, another in Pennsylvania, and so on. Which, as Amazon discovered, is impossible.

That’s why, since the advent of the Internet, no one has really succeeded in selling wine on-line. Virtual Vineyard failed. WineShopper.com (which Amazon invested in) failed. The first version of Wine.com failed. Even the current version of Wine.com has limited reach, with wine sales to just three dozen or so states.

Yes, consumers can still buy wine directly from the winery in some states, thanks to the Supreme Court’s 2005 decision in Granholm v. Heald. But Granholm, which many of us thought would pave the way for a company like Amazon to sell wine directly to consumers (what pricing! what selection!), was, apparently, an aberration. The Wine Curmudgeon was one of those people, and I have since been disabused of my optimism.

We are, as Tom noted, stuck in 1933, so we’d better learn to live with it.

3 thoughts on “The Supreme Court and retail direct shipping

  • By Tina - Reply

    I am not surprised, I am sad to say… BTW, Amazon does sell wine in Europe, for example in Germany, via http://www.amazon.de/wein . Unfortunately I live in a state now where I cannot even receive my Case Club member shipments at my door step… As a matter of fact, I’ll have to take a trip to the winery for self pick-up this weekend…

  • By Craig Myers - Reply

    Why is it that Woot! (for example) can be in the online retail business and sell/ship to 24 states but Amazon can’t? Is the matter complicated by the fact that Amazon has “distribution centers” in various states?
    There’s obviously money to be made in online retail wine sales (I buy more wine online now than not — even with shipping costs, it’s cheaper), it’s too bad the various states’ legislators can’t figure out a workable solution.

  • By Tom Wark - Reply

    One very important correction:
    The Supreme Court’s denial of Cert is in no way a ruling on the merits of the case or a comment of any kind on the status of the law in question. Further, the denial of Cert has no precedential value. The Court has noted repeated and many times over the years that a denial of cert is NOT a ruling on the case or even a commentary on the merits.
    So, no, the Court did not “decided” that “direct shipping law as it stands…is perfectly fine.

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