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Thursday, August 30, 2007

Indiana wine shipping law unconstitutional, judge rules

Parts of the Indiana law that regulates shipping from out-of-state wineries are unconstitutional, Federal Judge John D. Tinder has ruled.

Tinder ruled Wednesday in the U.S. District Court in Indianapolis that the law erects an unfair trade barrier and violates the Commerce Clause of the United States Constitution. His ruling reads as follows:

The court finds the wholesale prohibition, Ind. Code § 7.1-3-26-7(a)(6), to be unconstitutional insofar as it bars wineries that possess wholesale privileges in states other than Indiana from seeking a Direct Wine Seller’s permit. The court also finds the requirement of an initial face-to-face transaction between a winery and customer prior to direct shipment, as described in Ind. Code §§ 7.1-3-26-6(4), 7.1-3-26-9(1)(A), to be unconstitutional. These two conditions constitute a form of economic protectionism and violate the Commerce Clause of the Constitution.

The court does not find Indiana’s general prohibition of direct shipping, Ind. Code § 7.1-5-11-1.5, to be unconstitutional except with respect to the two specific conditions in the statutory provisions cited above. Nor does the court find the statute allowing an Indiana farm winery to sell its product onsite and at certain other locations, Ind. Code § 7.1-3-12-5, to be unconstitutional.

Here's the crux of the biscuit: Tinder's order stops the state from enforcing the rules he declared to be unconstitutional. Call your favorite out-of-state winery to tell them the good news (don't forget to get your charge card out first) — and buy that man a drink!

Addendum: If you'd like to read the entire 77-page decision, here's the PDF. I'm no Legal Beagle, but it's worth noting that only wineries that have registered with the State of Indiana, paid their $100 fee and agreed to pay sales tax to the Department of Revenue will be allowed to ship directly to consumers. So in the short term, you won't be able to legally order wine from the fabulous little mom-and-pop winery you stumbled upon in Temecula, but you will have a shot at getting some of the low-production wines from brands already distributed here. It's not quite unfettered free enterprise, but it's a start....
M. Zane Grey, 8:52 AM