Lionstone International ® Our Position on the Recent Supreme Court Ruling May 23, 2005 As they say, “don’t believe everything you read.” Press articles are proliferating daily regarding the recent Supreme Court ruling on Direct Shipping of wine. On one side of the press hype people read that the floodgates are open and “Let the Wine Flow”. On the other side, the WSWA’s headline on the topic read “Supreme Court Upholds the 21 st Amendment” … certainly taking a positive spin on a legal defeat. So what does this ruling say and what is Lionstone’s position in this regard? Prohibition was repealed in 1933 and we have lived with governments regulating the sale and distribution of alcoholic beverages in their states for 72 years! Over that time pressures from consumers, winemakers, and wine merchants have eroded the antiquated 3-tier system of distribution to the point where there is almost no continuity from one state to the other, with 8 states having discriminatory laws addressed in the Court’s ruling. So don’t expect sweeping changes with this decision, which did in fact reassert the legitimacy of the 21 st Amendment, but ruled that states may not create a trade bias, by discriminating against wineries outside of their state. If their own state wineries are allowed to ship directly to consumers, then wineries in other states have that same right. It is a core freedom in the Constitution commonly called the “commerce clause.” At this point, state governments are sitting with their attorneys, the liquor boards, and their elected representatives to chart a course for the future. Each state has the right to ban all in-state shipments, which allows them to also ban the outside wineries from shipping. In fact 16 states currently prohibit direct shipping within their states. One of them, New Jersey, actually allows direct shipping by retailers to consumers, but bans shipping from their (relatively small) wine industry. Other states have laws just as confusing. In the coming days and weeks you can expect a lot of saber rattling by the WSWA contingent on one side and cries of victory by proponents for free trade on the other. It will take a while for a shakeout to the point where we all have a clear path to take. At Lionstone we applaud the Court’s decision to bring wine distribution into the 21 st century and treat consumers over 21 as responsible adults. We have been in the forefront to enable access to wines and spirits through our network of wholesalers and retailers in the restricted states. It is important to note that the Supreme Court underlined the legitimacy of the 21 st Amendment and the 3-Tier distribution of alcoholic beverages absent any discriminatory trade practices by the states. Lionstone is one of the few wholesalers belonging to the National Conference of Liquor Administrators, enabling us to understand each state’s position on alcoholic beverages and to likewise give our feedback from the viewpoint of distribution. As the battle is enjoined we will maintain our services and adapt them according to the outcome, keeping you abreast of all changes as we stay on the cutting edge of future developments.   The Management and Staff of Lionstone International