Extending The Granholm Interpretation: The Nexus of Illinois Wine Shipment And HB 0429

On July 1, 2007, a bill called HB 0429 became law in the state of Illinois and amended the Liquor Control Act of 1934. (See Illinois Liquor Control Act of 1934.) Prior to the enforcement of HB 0429, Illinois constituents could have wine shipped to them from wineries or retailers that were located out-of-state as long as those states reciprocated shipment and allowed Illinois wineries to directly ship to the consumers in those states. This allowed for Illinois to receive wine from a total of about 20 different states within the United States. However, the passing of HB 0429 removed the wine shipping privilege Illinois residents had maintained for 15 years and invalidated the direct shipment of wine to consumers from out-of-state retailers. HB 0429 does not quash direct shipment of wine to consumers from either in-state or out-of-state wineries; the new law simply invalidated the shipment of wine directly to consumers from out-of-state wine retailers while still allowing direct shipment to consumers from in-state wine retailers.

As a result of passing this bill into law, Illinois residents became severely limited as per the amount and variety of wine to which they had access. Although residents can still order wines directly from out-of-state wineries in reciprocal states (those states that allow Illinois wineries to directly ship wines to the consumers of those states), residents cannot have wine shipped to them from out-of-state retailers or distributors. Presently, residents of the state can order wine from Illinois retailers and distributors, but the selection is severely slim in comparison to the extent of which constituents once had access. Additionally, consumers in Illinois can no longer search and purchase from the online database of out-of-state distributors as a result of this enactment.

Emerging Waves: The Materialization of HB 2462

A bill titled HB 2462 was recently introduced to the legislature of Illinois by Representative Julie Hamos (Evanston). The bill essentially aims to allow consumers to have wine directly shipped to them from out-of-state retailers and distributors, effectively reinstating the environment pre-passage of HB 0429. Additionally, HB 2462 seeks to achieve the following:

1. Create a permit that out-of-state retailers may obtain allowing them to ship you the wines you order over the telephone, over the Internet or after visiting their stores.
2. Provide enhanced tax revenue to the state of Illinois when out-of-state retailers remit taxes on the wines they ship into the state.
3. Assure that all out-of-state wine stores that obtain a permit fall under the legal and regulatory jurisdiction of the State of Illinois.
4. Protect against minors obtaining alcohol via direct shipment by assuring that signatures are obtained by an adult prior to delivery.
5. Give back to Illinois consumers the legal access to all wines available in the United States that was taken from them in 2007.

(Source:Illinois Wine Consumer Coalition.)

Post Granholm: The Effects on Distributors and Retailers in the Wine Industry

Whereas many opponents of HB 0429 argue the Illinois law is unconstitutional under Granholm v. Heald, it is important to note that the Supreme Court’s ruling in Granholm did not explicitly discuss the ruling’s impact on or coverage with respect retailers and distributors of the wine industry. Granholm did hold that it is unconstitutional for a state to discriminate against the shipment of wine to consumers with respect to in-state and out-of-state wine producers; in other words, if a state allows direct shipment of wine to consumers by in-state wineries, the same must be done for out-of-state wineries. The Court’s holding and dicta within can be inferred to apply to distributors and retailers within the wine industry, and several federal courts have affirmed such, however, the Supreme Court has never unequivocally contested that the same treatment does in fact apply to distributors and retailers within the wine industry. Therefore, it is possible — although not necessarily probable — that a future Supreme Court decision may rule that states can discriminate with respect to out-of-state distributors and/or retailers in wine shipments. However, given the context of Granholm and the extent of the interstate commerce clause, it is unlikely the Supreme Court would affirm such discrimination as constitutional. For more information, please see previous On Reserve entry titled The Alcoholic Beverage Legal Environment Post-Granholm.

The full text of HB 0429 can be accessed at Public Act 095-0634 and more information with respect to the House Bill can be found at Illinois General Assembly — Bill Status for HB0429. The full text of HB 2462 can be accessed at HB 2462 and more information with respect to this House Bill can be found at Illinois General Assembly — Bill Status for HB 2462. Additional information on the Illinois Wine Consumer Coalition and information on how to become involved with the state’s initiative can be accessed at Illinois Wine Consumer Coalition.

(Image Credit:Von Jakob Vineyard.)

For more information on wine or alcohol law, direct shipping, or three-tier distribution, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.