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New wine law allows direct shipments

Arkansas wine producers soon can resume shipping their bottles directly to individual customers who have visited their winery.

Act 483 of 2013, which goes into effect Friday, also allows Arkansans who visit wineries in other states to have wine shipped directly to them. Both types of sales were prohibited as part of the Small Farm Winery Law of 2007.

“It’s a step in the right direction for the Arkansas wine industry. It’s not perfect, but it’s good for us and consumers,” said Michael Post, CEO of Mount Bethel Winery in Altus and president of the Arkansas Wine Producers Association. “It’s not a huge marketing avenue for us, but every little bit is critical, especially for smaller wineries. We get a lot of requests to ship our specialty wines that you can’t get in stores.”

Mount Bethel’s elderberry wine and blueberry wine, for example, can only be bought from the winery. The wine is produced in such small quantity that distributors do not pick it up.

Under the new law, Arkansas wine consumers can only have one case of wine per calendar quarter shipped to them. An added restriction is that the purchaser must have “physically visited the winery and made a purchase,” so online sales are not possible.

Michael Lueken, an attorney with the state’s Alcoholic Beverage Control Division, further interpreted the law to include someone ordering by phone after they got home from their visit to the winery.

“I suppose if they wanted, they could buy four cases at the winery and have the winery mail them one each quarter,” Lueken said.

The new wine law is something of an amendment to previous ones, like the Small Farm Winery Law, which allowed wineries to apply for a permit to sell their products in grocery and convenience stores. However, the law also went back to banning direct shipments from in-state and out-of-state wineries to accommodate a 2005 U.S. Supreme Court ruling.

In 2001, Arkansas wineries were allowed to sell their products in grocery and convenience stores. A 2005 law allowed Arkansans to receive direct shipments from Arkansas winemakers, but not from wineries in other states. It created conflict, and the issue, also faced by Michigan and New York, went to the U.S. Supreme Court.

On May 16, 2005, the U.S. Supreme Court ruled that Michigan and New York could not ban interstate direct shipments of wine while allowing in-state wineries to ship to residents. The justices determined that while states have the right to regulate alcohol sales, it is unconstitutional to discriminate against out-of-state wineries in favor of local businesses. The state had apparently gotten away with interstate commerce violation since 2001, when the law prohibited out-of-state wines from being sold anywhere except licensed liquor stores.

“It’s changed a lot, but there’s more we can do,” Al Wiederkehr, CEO of Wiederkehr Wine Cellars in Altus, said of the new wine law. “I don’t want to rock the boat too much just yet, but we’ll work on it.”

Wiederkehr, who has been at the forefront of Arkansas liquor laws since the early 1960s, recalled an old case out of Clarksville that stretched the interpretation of a law. Only one case per person of legal age was allowed, but it did not limit the number of people in a vehicle who could transport a case.

A judge ruled against the act of carpooling to pick up cases of beer in a wet county. Some took it further. Bootleggers picked up migrant workers in the area for harvest season in trucks to legally transport a case of beer each back with them to a dry county

“You have to write the laws so that it ‘puts the blinders on the judge,’ as the old saying goes,” Wiederkehr said. “If you don’t spell it out, the judge will.”

Although Act 483 only states “Arkansas consumer” and “a residence in Arkansas” as the legal receivers, ABC Director Michael W. Langley said it does not mean that Arkansas wineries cannot ship to consumers in other states.

“They can ship out of state, but it depends on where they are shipping it to. Some states still do not allow shipments,” Langley said.

The ABC director also said that if “any consumer,” instead of just “Arkansas consumer,” was used in the wording of the law it would violate interstate commerce laws because the law is concerned with Arkansas tax collection only. Businesses in other states who make shipments to Arkansas will collect their own taxes.

The winery must collect state and local sales taxes on the shipments, the law says, and the ABC must issue a permit for the winery to make the individual shipments.

State Rep. Mary Broadaway, D-Paragould, sponsored Act 483 as House Bill 1749 in March.

According the Encyclopedia of Arkansas History & Culture, more than 150 bonded wineries have existed in Arkansas in the state’s history. At least 11 Arkansas wineries are currently in operation.

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