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Direct sales by wineries barred
Pa. wines must be shipped to state liquor stores for customer pickup
Wednesday, October 05, 2005

HARRISBURG -- The Pennsylvania Liquor Control Board isn't waiting for the Legislature to bring the state into compliance with a recent U.S. Supreme Court ruling on direct shipment of wine to consumers.

The board issued an interim rule yesterday prohibiting Pennsylvania wineries from shipping directly to consumers, effective Nov. 1.

There are 100 wineries in the state, and starting next month they can ship wine only to the 638 state liquor stores, where customers will pick it up and pay all applicable taxes.

The LCB imposed the same policy on in-state wineries that has been in place for out-of-state wineries, which also are prohibited from shipping their products directly to a Pennsylvania consumer.

LCB Chairman Jonathan Newman said the state attorney general's office had advised him that the current state liquor code had to be changed, in light of a Supreme Court ruling in May regarding restrictive wine laws in New York and Michigan.

Pennsylvania law "is unconstitutional because it treats in-state wineries and out-of-state wineries different," Mr. Newman said. "The board has put an interim policy in place to comply with the Supreme Court's decision."

Ultimately, Mr. Newman added, the Legislature will have to adopt a law on direct shipment of wine, either allowing it for both in-state and out-of-state wineries or banning it for both.

State House and Senate committees that oversee wine and liquor issues held a meeting on the problem two weeks ago but haven't proposed legislation yet.

Douglas P. Moorhead, treasurer for Presque Isle Wine Cellars in Erie County, said he'll contact legislators about once again allowing direct shipments to consumers by in-state wineries.

"The story isn't over," he said. Direct shipments "are part of the life blood of our industry."

He said the new LCB rule "could hurt our business. I think the public will weigh in on this. I come from a small winery and I want to ship directly to consumers."

Mr. Moorhead said he was part of an effort by small Pennsylvania wineries, back in 1968, to get the law passed that allowed in-state wineries to ship directly to customers.

To do so, a winery couldn't sell more than 50,000 gallons a wine per year and had to use 100 percent Pennsylvania fruit to make the wine. The direct-shipping provision allowed small Pennsylvania wineries to compete better against huge wine growers from California and other states who account for most of the sales in the state.

Mr. Moorhead said fruit growers and small wineries are an important part of Pennsylvania agriculture and tourism and thus "resonate with legislators." There are wineries in 41 of the 67 counties, so legislators in many parts of the state will hear from local vintners, he said.

LCB officials said that if an in-state winery wants to ship wine to LCB stores for customer pickup, it must obtain a state "direct shipper license," for which there is no fee.

But a winery must follow some rules when shipping to a state store. They are:

In addition to normal postage, a direct wine shipper must pay the state a $4.50 handling fee, Pennsylvania's 18 percent liquor tax (sometimes called the Johnstown flood tax), plus the state's 6 percent sales tax (with an additional 1 percent in Allegheny and Philadelphia counties).

A winery can use direct shipment only for selling wines that are not available in LCB stores.

Consumers cannot buy more than nine liters of wine per month from a single direct shipper.

Wine bought from direct wine shippers is only for a consumer's personal use and cannot be resold.

First published on October 5, 2005 at 12:00 am
Harrisburg Bureau Chief Tom Barnes can be reached at tbarnes@post-gazette.com or 1-717-787-4254.
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