Special Interests Attempting to Limit Your Selection and Pocket Your Money

I recieved this letter from K&L WIne Merchants, one of my favourite places to buy wine, on Friday. If you are interested please read it and it take the appropriate action.

SB 118 (Chesbro) is a bill in reaction to the US Supreme Court direct wine shipping
decision that prohibited discriminatory legislation. The bill originally would have
created a permit that could be applied for by anyone licensed to sell wine to
consumers (wineries and wine retailers) in any state. The permit would require
registration with the California ABC, payment of California taxes, the same
protections against delivery to minors that currently exist for CA wineries and
retailers, limitations on shipment volume and would give the ABC the authority to
regulate the shipments.

However, the mega-wholesale distributor interests in CA (Southern Wine and Spirits
and Young's Market Company) have called in their political muscle in order to remove
out-of-state retailers from the permit system. Under the version of the bill
approved on June 14th, only a select few retailers outside of the state of
California may even apply for a permit.

This is WRONG. The proposed permit system MUST provide for the ability of all retail
licensees (wherever located) to participate freely. If retailers outside of CA are
excluded from the CA market system, other states would retaliate by excluding
California retailers from their markets. The goal of the bill was to encourage the
creation of a national system of permits and licenses that provides the opportunity
for every licensed merchant to participate, no matter where that merchant is
located. This would be in the interest of all consumers, whether in CA or elsewhere.

Retailers in all states invest significant sums of money in inventory from multiple
winery and importer sources. Retailers hold that inventory (often for years) and
make it available in a convenient way to consumers who know and trust the merchant.
Those customers could be across the street or across the country. That is the
reality of the current market, especially for the expensive, limited production and
usually allocated, collectible wines from California and the rest of the world.
Requiring these wines to go back up through the three-tier system after they have
already traversed it once (if they even could, currently they would just be
unavailable outside of California, or unavailable to California if they are located
in another state) would give the wholesalers a double profit margin; certainly good
for the wholesalers, but not very good for the retailer or for the consumer. Who
pays? You bet that the consumer pays.

The Supreme Court in the Granholm case condemned state laws that discriminated
against out-of-state interests in favor of identically situated in-state interests.
This statute would perpetuate discrimination WITHIN the California market by
attempting to keep retailers from outside of California OUT of the market. While we
think that any such effort would be unconstitutional as to retailers outside of
California under Granholm, we do not want to fight the statute after it is written.
Our goal is to make sure that the statute doesn't get passed with that flaw in the
first place!

The interests of the wholesale tier, by proposing to take retail licensees out of
the statute, is NOT to benefit California retailers by keeping them safe from
competition from outside of the state. It is aimed at PREVENTING California
retailers from servicing customers outside of California unless the transaction is
run through the wholesale tier at a significant cost. Their goal is to have this
bill emulated throughout the US. If California creates a discriminatory licensing or
permit scheme, the wholesalers will use that example as a bludgeon in every other
legislature in the US to keep those markets closed to California retailers.

The proposed bill can be found online here

There is a link on that page for you to take action and contact legislators about
the bill, or you can go directly here

Most importantly - spread the word about this proposed bill. For a wine lover or
wine retailer this is special interest politics at its worst.

K&L Wine Merchants