Out-of-state shipping restrictions in the U.S.: Texas, a case study

I’m not sure where she got her information but my blogging colleague Lindsay Ronga (scroll down) published a pungent post over at the latest Gary V foray into the world of eno-social media, cork’d. In it she wrote:

“Just this week, wine retailers around the country received cease and desist letters from the Texas Alcoholic Beverage Commission (TABC) saying they can no longer ship wine to Texas consumers. The letter specifically told FedEx not to accept any wine retail packages to Texas. Wineries can still ship direct-to-consumer in the state of Texas.”

Good for Texas wine retailers? You bet. Good for wineries? Yes sir. Good for competition? Not a chance. Definitely not good for the Texas consumer. What government decided has put Texas wine retailers ahead of the online competition who most likely offers wine at lower prices.

Her information seemed a little skewed and so I got on the phone with the Texas Alcoholic Beverage Commission this morning to set the record straight (everyone I talked to there was extremely nice, btw, and responded to me very promptly).

Basically, here’s what I found out.

Back in 2005, the Supreme Court ruled that U.S. wineries could ship directly to consumers. Here’s the reference in the Wiki. The idea was that the Congress has the right to regulate commerce between states, trumping the states’s regulation, and that states must allow other states to ship their products to them (this is one of those over-arching concepts at the heart of our country’s creation, evolution, and spirit: free commerce among states).

Back in 2006, a Florida retailer filed a complaint against the governor of Texas, arguing that if wineries had the right to ship their products to Texas, so did retailers.

In 2008, the judge in the case ruled in favor of the plaintiff but after a series of appeals and a decision issued in February 2010, it was decided that out-of-state retailers could ship to Texas if they applied for and obtained the appropriate permits BUT they had to purchase the wine from Texas-based distributors and have the wine shipped to them before they ship it to their customers. See the last ruling in the documentation provided (click to download a large PDF) to me by the TABC and check out this link as well.

Bottom line: IT IS LEGAL for out-of-state retailers to ship here but the logistic and legal hurdles they face makes it impossible to do so.

Having said that, the TABC public relations spokesperson told me that no one has applied for a permit since the 2008 ruling. She also told me that the TABC is aware that out-of-state retailers regularly ship to Texas regardless of the law.

Above: This morning, I grabbed this screen shot from Wine Searcher. It speaks for itself.

According to the spokesperson, the TABC has never sent cease and desist letters to retailers (as stated by Lindsay) but it has sent repeated letters to UPS and Fedex telling them not to ship wine from retailers. The last letter was sent May 14, she said.

She also told me that as long as a purchase was made outside of Texas, an individual may ship wine to Texas. The purchase may not be made by a phone call placed or an email sent from Texas (because the state of Texas considers that a purchase made in Texas).

She pointed out that it’s not the TABC that makes the law but rather the Texas legislature. It’s clear from the documentation provided to me that the big commercial distributors in Texas have lobbied heavily to stop out-of-state retailers from shipping here and they are named as cross-appellants in the documents.

She also told me that she’d never heard of Gary V.

Sorry, Gary.

(Photo of Gary via Peter Hodges)