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THIRD READING
Bill No: AJR 11
Author: Chesbro (D), et al.
Amended: As introduced
Vote: 21
AJR 11
ASSEMBLY FLOOR: 78-0, 6/28/11 (Consent) - See last page for vote
SUBJECT: California wines: sales
SOURCE: California Association of Winegrape Growers
Family Winemakers of California
Wine Institute
DIGEST: This resolution urges the United States Congress to defeat
House Resolution 1161 in order to protect and preserve the ability of
California wineries, and all wineries in the U.S., to ship wine directly to consumers without discrimination or unnecessary limitation between in-state and out-of-state wine producers.
ANALYSIS:
Existing law:
1. Establishes the Department of Alcoholic Beverage Control and grants it exclusive authority to administer the provisions of the Alcoholic
Beverage Control Act in accordance with laws enacted by the
Legislature.
2. Provides that a licensed winegrower, who obtains a wine direct shipper permit, as described, may sell and ship wine directly to a California resident, for personal use, under specific conditions. Knowing violation
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AJR 11
Page 2 of these provisions is a misdemeanor.
3. Existing law, known as the “tied-house” law, separates the alcoholic beverage industry into three component parts of manufacturer, wholesaler, and retailer. The original policy rationale for this body of law was to prohibit the vertical integration of the alcohol industry and to protect the public from predatory marketing practices. Generally, other than exemptions granted by the Legislature, the holder of one type of license is not permitted to do business as another type of licensee within the “three-tier” system.
4. Existing federal law allows direct interstate shipment of wine to adult consumers in conformance with any state requirements. Granholm v.
Heald (2005) 544 U.S. 460 reaffirmed that states cannot discriminate in setting alcohol policy that affects interstate commerce.
This resolution urges the U.S. Congress to defeat House Resolution (HR)
1161 in order to protect and preserve the ability of California wineries, and all wineries in the U.S., to ship wine directly to consumers without discrimination or unnecessary limitation between in-state and out-of-state wine producers. Specifically, this resolution:
1. Urges Congress to defeat HR 1161.
2. Provides findings highlighting the importance of the wine industry to
California.
3. Provides findings about current law already ensuring appropriate permitting and regulation of wine distribution.
4. Provides that HR 1161 would reverse decades of long-established jurisprudence that has balanced interstate commerce concerns with state regulatory authority and fostered a dramatic growth in wine production, sales, and tax revenue.
5. States that HR 1161 would severely limit consumer choice in California wine throughout the nation; and would imperil market access for
California wineries that cannot secure effective wholesale distribution; and would stunt competition among the nation’s wine producers as markets would be artificially constrained and access limited.
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6. Makes other related findings and declarations urging the defeat of HR
1161.
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Comments
Currently, 37 states and the District of Columbia allow direct shipping of wine from winegrowers to consumers. To reach consumers in other states, many California wineries use direct marketing and shipping of their wines throughout the country. In California and across the nation these sales are appropriately regulated by laws that comply with Granholm v. Heald. This
2005 landmark U.S. Supreme Court case reaffirmed states’ rights under the
21st Amendment to the U.S. Constitution to regulate wine as long as they do not discriminate between in-state producers and out-of-state producers, and ruled that these rights do not supersede other provisions of the Constitution.
HR 1161, the Community Alcohol Regulatory Effectiveness Act of 2011, was introduced into the House of Representatives on March 17, 2011. HR
1161 restricts legal challenges to state laws governing the interstate shipment of wine, severely limit consumer choice of California wine throughout the nation and imperil market access for California wineries that cannot secure wholesale distribution.
Existing federal law allows direct interstate shipment of wine to adult consumers in conformance with any state requirements. Granholm v. Heald reaffirmed that states cannot discriminate in setting alcohol policy that affects interstate commerce.
According to the author’s office, HR 1161 would likely impede the direct shipment of wine to out-of-state consumers.
Prior/Related Legislation
SJR 34 (Padilla), Resolution Chapter 71, Statutes of 2010, urges the U.S.
Congress to defeat HR 5034 in order to protect and preserve the ability of
California wineries, and all wineries in the U.S., to ship wine directly to consumers without discrimination between in-state and out-of-state wine producers.
SJR 30 (Chesbro), Resolution Chapter 79, Statutes of 2006, encourages the
Governors and Legislatures of each state in the U.S. to enact legislation that provides for uniform direct-to-consumer wine sales between the states that
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minimizing the expense and complexity of shipping wine from wineries directly to consumers.
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SB 118 (Chesbro), Chapter 157, Statutes of 2005, modifies California law to comply with the recent Supreme Court decision which struck down
Michigan and New York state laws that restricted direct sales across state lines by wineries to consumers.
AB 611 (Cortese), Chapter 394, Statutes of 1994, encourages the adoption of reciprocal wine shipping privileges in other states and to improve fairness and equity for small, family vintners and winegrowers of California by authorizing this formula for the direct shipment of wine to an individual in this state.
FISCAL EFFECT : Fiscal Com.: No
SUPPORT: (Verified 7/5/11)
California Association of Winegrape Growers (co-source)
Family Winemakers of California (co-source)
Wine Institute (co-source)
ARGUMENTS IN SUPPORT: According to the Family Winemakers of
California (FWC):
“AJR 11 is an important response to H.R. 1161, which has been introduced in the wake of litigation to overturn facially neutral, but discriminatory wine shipping laws enacted by states after the Granholm v. Heald decision in 2005. Promoted by the National Beer Wholesalers
Association with support from the Wine and Spirits Wholesalers of
America, H.R. 1161 sets the stage for another round of state legislative wars that could foster economic protectionism by setting different rules for out-of-state producers. It strengthens the wholesale tier to the detriment of producers and, more importantly, consumers in California and across the country.
“If enacted H.R. 1161 also slams the door shut on legal challenges to discriminatory statutes by creating new justifications for states to utilize and shifts the burden of proof to the plaintiff. The bill drastically alters the legal landscape of dormant Commerce Clause and 21st Amendment jurisprudence. FWC recently prevailed in its challenge to a
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Massachusetts statute that arbitrarily set a production cap to control access to the state’s wine market. H.R. 1161 would have made our challenge unwinnable.
“California is the largest wine market in the country and has promoted more consumer choice in wine. The state saw the wisdom of opening its borders to any winery in the United States with passage and enactment of
SB 118 (Chesbro) in 2005. AJR 11 urges Congress to preserve the increased consumer choice and wine commerce that has developed since
Granholm. Most wine producers in America are small, work on tight margins, and do not want to see new markets closed or made uncompetitive due to discriminatory legislation.”
ASSEMBLY FLOOR : 78-0, 6/28/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill,
Block, Blumenfield, Bonilla, Bradford, Buchanan, Butler, Charles
Calderon, Campos, Carter, Cedillo, Chesbro, Conway, Cook, Davis,
Dickinson, Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, Hagman, Halderman,
Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman,
Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Norby,
Olsen, Pan, Perea, V. Manuel Pérez, Portantino, Silva, Skinner, Smyth,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. Pérez
NO VOTE RECORDED: Brownley, Gorell
PQ:kc 7/5/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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