Direct Shipping Law Signed in New Jersey

The Twenty-first Amendment gives states broad powers to regulate the importation and use of alcoholic beverages within their borders. While there are federal laws dealing with alcoholic beverages, each state is able to create its own laws regarding the importation of such beverages. This has resulted in a patchwork of state laws that vary widely.

These variations have major implications for the wine industry. One’s ability to participate in wine of the month clubs, make online purchases, and ship wine home from a trip to the Napa Valley is dependant on where one lives. While some states have no restrictions on direct to consumer shipping, others prohibit the practice entirely, while still many more limit the amount allowed to some degree.

Last month, New Jersey became the most recent state to allow direct to consumer shipping of wine. Governor Chris Christie signed the legislation approving this measure, meaning that New Jersey will join 38 other states that allow at least some form of direct to consumer shipping of wine into the state. The law will go into effect on April 1, 2012.

Not only will this law allow residents of New Jersey to import wines from around the country and abroad, but it will also allow New Jersey wineries to ship their wine directly to customers outside of the state. Under the new law, customers can have up to twelve cases of wine per year shipped to them for personal consumption from a winery that produces 250,000 gallons of wine or less annually.

While not a place one usually associates with wine making, New Jersey has more than forty wineries that produce over 225 different varieties of wines, and is the seventh largest producer in the nation. Local New Jersey vineyard owners said that the new law allowing small wineries to bypass distributors and ship directly to customers will benefit their industry, though it may take a few years for them to recognize significant profits. Some have even noted that Robert Mondavi had to start somewhere, and hope that the new law will provide them with opportunities to make New Jersey wines as well known as those from already well-established winemaking regions. This is an important step for local winemakers as they seek broader recognition of the quality of their products.

However, not everyone is pleased with the new legislation. Wine retailers are concerned that they will see their sales of cases of wine decline, particularly around the holiday season. Direct shipping allows wineries to undersell local stores, providing a benefit to the consumer, but a potential detriment to the stores. Owners of “mom and pop” shops are concerned that they will see sales decline. Some are also concerned with the potential effect this law will have on the New Jersey economy, from the extra 18-year-old workers they hire during the holiday season to the state and local jurisdictions that will not receive tax revenue, to the fact that direct shipment from California wineries will result in revenues spent in other states, rather than New Jersey.

Though the legislation was signed into law, it still faces the approval of a federal court judge who must rule whether New Jersey the legislation is constitutional, and ensure wineries have stopped disallowing out-of-state wineries to operate retail outlets and tasting rooms within the state. Previously, in Freeman v. Corzine, 629 F.3d 146 (2010), the court held that New Jersey policies prohibiting out-of-state wineries from operating retail outlets was unconstitutional. Furthermore, it may still take time before the law can be implemented effectively by the State Alcoholic Beverage Control Commission.

Each state in the United States has its own laws regarding direct shipment of wine. New Jersey’s twelve case rule puts it on par other states such as Illinois, Louisiana, Maine, New Hampshire, Vermont and Wisconsin. Other states vary wildly, from Wyoming and Minnesota that allow only two cases per year, to Idaho at 24, New York at 36, and California, Colorado, Florida, Iowa, and Washington that have no limit. Still other states, such as Alabama, Arkansas, Delaware, Kentucky, Massachusetts, Oklahoma, South Dakota, and Utah, prohibit the practice entirely.