In New Jersey, direct shipping from both in-state and out-of-state wineries is illegal. In-state wineries, though, are allowed to sell directly to local wine stores and have off-premise tasting rooms – but out-of-state wineries are prohibited from both activities. In December, a federal court ruled that this discrimination is unconstitutional, and instructed the New Jersey legislature to act.
Lawmakers have introduced two separate measures to address this issue.
Senate bill S-2782 would allow all America’s wineries producing less than 250,000 gallons of wine annually to ship wine to New Jersey consumers.
This bill isn’t ideal, as the volume limit presents a host of issues, but it’s a start. New Jersey’s wineries have thrown their support behind direct shipping and rallied behind this measure, even though it means increased competition.
The other proposal, Assembly bill 3831 would allow out-of-state wineries to open tasting rooms in New Jersey — but would revoke New Jersey wineries’ right to sell wine directly to retailers, bypassing the middleman wholesaler.
As Tom Wark recently explained, “By revoking the right of New Jersey wineries to self distribute their wines directly to wine stores, these wineries become at the mercy of New Jersey wholesalers if they want to see their wines sold in retail stores. Put another way, this bill will kill numerous New Jersey wineries.”
Unsurprisingly, the lawmaker who introduced A3831, Joseph Cryan, is in the pocket of the special-interest groups that oppose wine consumers’ rights. In just the past two election cycles, he has taken more than $35,000 from wholesalers and wine stores, both of which oppose direct shipping. His largest campaign contributor is Allied Beverage Group, which is New Jersey’s largest liquor distributor. Since 2005, Allied has contributed a whopping $50,000 to Cryan.
Last week, Cryan wrote an op-ed about his bill that would make Pinocchio blush.
In the op-ed, Cyran argues that “direct shipment provides a virtual store where teens can buy alcohol they would otherwise be prohibited from buying at liquor stores. It makes the face-to-face purchase transaction practically irrelevant, and makes underage drinking as simple as a mouse click.”
This is absurd. To successfully order wine online, a teen would have to acquire a credit card, make it through the age verification process, be home when the wine is delivered while making sure his or her parents are not, and convince a delivery driver that he or she is over 21.
Plus, there’s zero evidence of an uptick in teen drinking in the 38 states that allow winery-to-consumer shipping.
He also argues that direct shipping will “have an adverse effect on the appropriate collection of revenues,” citing “a fiscal analysis by the Office of Legislative Services.”
Problem is, New Jersey’s Office of Legislative Services never conducted a “fiscal analysis” of this issue. The OLS website simply cites a claim from the Division of Alcoholic Beverage Control that “economic studies show direct shipments tend to have a negative impact on tax revenues.” And on the website for the Division of Alcoholic Beverage Control, well, those “economic studies” have vanished. (I reached out to David Bregenzer, the legal counsel to New Jersey’s ABC, for comment, and didn’t hear back.)
Consequently, I find it very hard to believe such “economic studies” exist – unless those studies were bought and paid for by the wholesalers.
The most recent and comprehensive study on this issue was conducted by the Maryland Comptroller’s Office, and it found that reporting requirements in states with direct shipping give tax agencies the tools they need to successfully collect taxes on wine.
The Maryland Comptroller’s report also looked at teen drinking, and concluded that the safety protocols written into shipping laws are effective in thwarting underage purchasing.
Finally, Assemblyman Cryan claims that direct shipping could cause “60,000 retail jobs,” to “disappear.” This, too, is a bald-faced lie. No state that has legalized direct shipping has seen its local retail wine industry destroyed. This claim defies logic.
New Jersey is one of just 12 states that forbids winery-to-consumer shipping. Garden State consumers deserve a market in which any adult can purchase wine from wherever he or she wants.
I emailed Assemblyman Cyran and his chief of staff for comment, and they didn’t get back to me. Looks like New Jersey’s citizens have a real stand-up representative.
Correction (4:00pm on 8/15): Under S2782, out-of-state wineries would be allowed to open tasting rooms and self-distribute. This was not reflected in the original post.