The Law of Wine

When Judge Janet Pechman offed a big chunk of Washington's wine law back in December, everybody expected that the people most affected—the brokers and distributors who long held a monopoly on handling out-of-state wine—would fight tooth and nail to keep their privileges. So far it hasn't turned out that way. Judge Pechman ruled that the state could not legally discriminate against out-of-state wine producers by forcing them to go through distributors, while in-state producers aren't required to if they don't see any need to. She left it up to the state Legislature to decide: Make everybody use a distributor—and pay for the service—or let everybody who wants to skip that step ship their wares directly to retailers. If legislators couldn't agree on one solution or the other before the end of this year's short session, she warned, she would decide the issue for them. On Jan. 23, a bipartisan quintet of Eastsiders—henceforward to be known as the Woodinville Five—introduced House Bill 3166, which if passed in its present form would allow "any winery or manufacturer of wine . . . also to act as a distributor of wine of its own production," so long as it complies with existing laws for wine distributors. This right is one of the main things that led Costco Corp. to bring suit against the Washington law in the first place, so it's not surprising that the bill already is being referred to as "the Costco bill." The bill did not remain long without competition. On Jan. 25, an alternative, House Bill 3213, was submitted, with the notation "By request: Liquor Control Board." But even someone well-disposed to Washington's current distribution system might be forgiven by amending that to "For the preservation of entrenched wine distributorships." HB 3213 allows all wineries to ship directly to retailers, but only up to a maximum of 5,000 cases per year (breweries are restricted to 2,500 barrels). Why? No messing around here. The Liquor Control Board's own summary says its purpose is to "allow us to maintain our current three-tier system." What it doesn't provide is any good reason why the three-tier system should be preserved. What economic or social good is reinforced by forcing winemakers to pay distributors to deliver their products (apart from propping up the distribution business) if the winemaker thinks it can do the job better and cheaper itself? I see a clue to why the Liquor Control Board appears to be carrying the distributors' water for them. Among the items under "What Our Bill Accomplishes," we find that "it maintains a proven, cost-effective system of accounting and taxation for beer and wine." Right. And who manages this proven, cost-effective system? Why, the Washington State Liquor Control Board, of course. If we started letting the marketplace handle the wine and beer distribution system, somebody might start wondering why the WSLCB should be involved at all. Hmmmm. . . .

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