US Appeals court says Massachusetts law restricting direct wine shipments unconstitutional

Court: Mass. law on wine shipping unconstitutional

BOSTON — A Massachusetts law that sharply restricts out-of-state winemakers from shipping their products directly to consumers in the state is unconstitutional, a federal appeals court ruled.

Thursday’s decision by the 1st Circuit Court of Appeals to uphold a lower court ruling could open the door for connoisseurs in Massachusetts to purchase more of their favorite wines online or by mail order from domestic producers.

The law, approved by the Legislature in 2006 over the veto of then-Gov. Mitt Romney, created a multi-tiered system in which wineries that produce more than 30,000 gallons a year must decide whether to sell retail in Massachusetts through an in-state wholesaler or apply for a license to ship wines directly to consumers. They cannot, however, do both.

The cap does not affect any of the nearly three dozen wineries based in Massachusetts, all of which are small and produce under the 30,000-gallon limit.

“We hold that (the law) violates the Commerce Clause because the effect of its particular gallonage cap is to change the competitive balance between in-state and out-of-state wineries in a way that benefits Massachusetts’s wineries and significantly burdens out-of-state competitors,” the appellate court wrote in its decision.

Family Winemakers of California, a Sacramento-based group representing about 650 producers, argued the law was “protectionist” and effectively kept 98 percent of domestic wine out of direct reach of Bay State consumers.

The group’s president, Paul Kronenberg, said he was extremely pleased by the ruling.

“We’ll have an opportunity to change that law so that all wineries, not only in California but across the nation that produce more than 30,000 gallons will have an opportunity to sell directly to Massachusetts residents,” said Kronenberg.

“Obviously this helps wineries but it also improves the choice for Massachusetts consumers,” he added.

Attorney General Martha Coakley’s office had appealed the earlier ruling by a federal district court judge on behalf of the Massachusetts Alcoholic Beverages Control Commission. The attorney general’s office said in a brief statement Thursday that it would review the decision with the commission before commenting.

In an earlier brief submitted to the appeals court, a state attorney argued that the production caps “represent a rational and well-reasoned solution to the acknowledged difficulties experienced by small wineries.” Massachusetts also contended that its system was more flexible than other states with caps because it provided wineries with a choice of contracting with a wholesaler or shipping directly to consumers.

In a 5-4 ruling in 2005, the U.S. Supreme Court struck down laws in New York and Michigan that banned out-of-state wine shipments. The decision prompted several states, including Massachusetts, to revise their laws.