House Bill 6644 – PROPOSED LAW BANNING DIRECT SHIPMENTS BY IN AND OUT-OF-STATE WINE RETAILERS IS BAD LAW AND BAD FOR MICHIGAN

PROPOSED LAW BANNING DIRECT SHIPMENTS BY IN AND OUT-OF-STATE WINE RETAILERS IS BAD LAW AND BAD FOR MICHIGAN
Prior to the holidays, the Michigan Legislature hustled a poorly crafted piece of legislation through the system to allegedly protect the public's best interest by making it almost impossible for in and out-of-state wine retailers to ship directly to customers. The senate modified Bill 6644 previously passed by the House of Representatives by allowing wine deliveries by retailers to consumers but only if the product is delivered by employees of the retailer.

The Bill supporters will cite factors such as loss of state tax revenue from diminished sales by Michigan liquor distributors and without the new law, alcohol sales to minors would sky rocket out of control.

Basically, the Bill's proponents argue that alcohol, unlike other products, needs to be strictly regulated based on the potential harm to the public because of abuse, addictions, and the products intoxicating effects. They argue that the current system with minor modifications has served its purpose well for 75 years so why change it. Maybe the Bill's proponents fail to notice the internet, computer, and fax machine in their home or office which was not there 20 years ago, let alone 75 years ago when a substantial portion of the law that still governs alcohol distribution and sales was created by the legislature.

The rush to pass legislation directly resulted from a recent federal district court case Siesta Village Market, LLC vs. Granholm where the judge ruled that the State of Michigan was prohibited from banning out-of-state wine retailers from selling, delivering and shipping wine through commerce direct to Michigan customers. Michigan's law and certain provisions of the state's liquor code prevented that activity by out-of-state wine retailers and that law was challenged by the Plaintiff in the Siesta Village Market case. Various legislative analysis agencies such as House Fiscal Agency in summary reported the following as an argument in support of the bill:

"Passage and enactment of the bill, on the other hand, would give time for the case (Siesta Village Market, LLC vs. Granholm) to be litigated and for the commission and lawmakers to examine the issue and see if a regulatory structure could be developed and implemented that would be equal treatment to in-state and out-of-state retailers yet still protect the public from unscrupulous business owners, and that would create a mechanism by which to collect appropriate taxes. In the meantime, the bill would protect the three tier system, ensure that laws prohibiting sales to minors are adhered to . . . "

If the legislature is serious that the law is in place to allow further work to be done in order to develop regulations to manage the alleged downside of the fall of the three tier system, then who should be expected to lead the charge? Presumably, the legislature has dealt with many of these issues with respect to the fact that out-of-state wineries have been allowed to ship to customers in the State of Michigan for the past several years and there already exists a regulatory system with respect to taxes on those sales by out-of-state wineries to Michigan residents.

In the meantime, small retailers who are located in tourists destinations with local wineries such as Leelanau County, Michigan will be negatively impacted in that it is economically impossible to dispatch employees all over the state to deliver wine to consumers who previously placed orders for more of various wines of the region they may have first noticed and purchased while visiting the area on vacation.

In conclusion, it is clear that the law passed by the legislature is an act of protectionism for the powerful Michigan Beer and Wine Wholesalers Association and their lobbyists who seek to anchor the wine industry and the sale of related alcohol products in an archaic system which ultimately will be bad for business and bad for Michigan residents.

----------
Dan A. Penning

We welcome your comments. Please post your comments and opinions about House Bill 6644.