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Wednesday, December 16, 2009

Fort Wayne retailer challenges wine shipping law

Gift BasketA Fort Wayne liquor store has filed suit against the State of Indiana, charging that existing wine shipping laws violate the Commerce Clause of the U.S. Constitution and discriminate against liquor stores in favor of wineries.

Lebamoff’s Cap n' Cork had been shipping wine to area customers who joined wine clubs using a third-party delivery company for more than 20 years until last May, when Indiana State Excise Police showed up and cited the company for violating its alcohol permit. State law prohibits delivery of alcohol by liquor stores unless they use their own employees. However, another state law allows wineries to ship directly to customers using a third-party common carrier, so Cap n' Cork owner Andy Lebamoff and his attorney, Robert Epstein, maintain that Indiana law discriminates against retailers.

According to a story published in the Fort Wayne Journal-Gazette, Lebamoff says he received permission from the then-Alcoholic Beverage Commission in the 1980s. He said the wine comes from an out-of-state retailer to an in-state wholesaler. Then it is sent to Cap n' Cork for delivery by UPS. “It's a good business. We collect sales tax for Indiana,” he told the paper, and said that he collects $110,000 a year in taxes from the wine clubs. “We're just looking for fairness.”

But there is no record at the Alcohol and Tobacco Commission of Cap n' Cork receiving permission to ship their product via common carrier, an ATC spokesman said, and in any case the scope of a package store permit would prohibit the practice. The excise police have cited one other liquor store in the state for similar shipping violations.

To thicken the plot, the excise police cited Cap n' Cork because of a complaint filed by Jim Purucker, who is the executive director of Wine and Spirits Distributors of Indiana, a lobbying organization funded primarily by Olinger Distributing and National Wine and Spirits, companies that distribute alcoholic beverages in Indiana. The organization opposes direct shipment of wine to consumers.

According to the Journal-Gazette, Purucker received a mail solicitation to join the National Rifle Association’s wine club, so he joined to see what would happen. What happened was that UPS delivered a box of wine to him, sent by Cap n' Cork. Purucker then joined the Wall Street Journal’s wine club, and shortly received another box of wine from Cap n' Cork.

Under Indiana law, the shipments were illegal for at least two reasons. First, retailers can’t ship alcoholic beverages. Second, while wineries do have limited direct-shipping rights, the customer must first have a face-to-face transaction with the winery.

The owners of Cap n' Cork feel that they’ve been caught up in a turf war, and that the restrictions unfairly limit their ability to operate. Lebamoff said Cap n' Cork has an aggressive Internet advertising initiative and can't use its own employees to deliver to customers hundreds of miles away. And his attorney has an idea why Indiana’s wine-shipping laws are so restrictive and, he maintains, discriminatory.

“This is an archaic state,” Epstein told the Journal-Gazette. “Thirty-five states allow direct shipment of wine without hassle. But not here.”
J. Silverheels Gray, 9:36 AM

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