BILL ANALYSIS
SJR 34
Page 1
Date of Hearing: June 30, 2010
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
SJR 34 (Padilla) - As Introduced: June 1, 2010
SENATE VOTE : 26-0
SUBJECT : California wines: sales.
SUMMARY : Urges the United States Congress to defeat House
Resolution (HR) 5034 in order to protect and preserve the
ability of California wineries, and all wineries in the United
States, to ship wine directly to consumers without
discrimination between in-state and out-of-state wine producers.
Specifically, this bill :
1)Urges Congress to defeat HR 5034.
2)Provides findings highlighting the importance of the wine
industry to California.
3)Provides findings about current law already ensuring
appropriate permitting and regulation of wine distribution.
4)Highlights the important of protections against discrimination
again out-of-state producers.
EXISTING LAW :
1)Establishes the Department of Alcoholic Beverage Control (ABC)
and grants it exclusive authority to administer the provisions
of the Act in accordance with laws enacted by the Legislature.
2)Provides that a licensed winegrower, who obtains a wine direct
shipper permit, as described, may sell and ship wine directly
to a California resident, for personal use, under specific
conditions. Knowing violation of these provisions is a
misdemeanor.
3)Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts of
manufacturer, wholesaler, and retailer. The original policy
rationale for this body of law was to prohibit the vertical
integration of the alcohol industry and to protect the public
SJR 34
Page 2
from predatory marketing practices. Generally, other than
exemptions granted by the Legislature, the holder of one type
of license is not permitted to do business as another type of
licensee within the "three-tier" system.
4)Existing federal law allows direct interstate shipment of wine
to adult consumers in conformance with any state requirements.
Granholm v. Heald reaffirmed that states cannot discriminate
in setting alcohol policy that affects interstate commerce.
FISCAL EFFECT : Unknown.
COMMENTS :
Currently, 37 states and the District of Columbia allow direct
shipping of wine from winegrowers to consumers. To reach
consumers in other states, many California wineries use direct
marketing and shipping of their wines throughout the country.
In California and across the nation these sales are
appropriately regulated by laws that comply with Granholm v.
Heald . This 2005 landmark U.S. Supreme Court case reaffirmed
states' rights under the 21st Amendment to the U.S. Constitution
to regulate wine as long as they do not discriminate between
in-state producers and out-of-state producers, and ruled that
these rights do not supersede other provisions of the
Constitution.
HR 5034, the Comprehensive Alcohol Regulatory Effectiveness Act
of 2010, was introduced in Congress on April 15, 2010. HR 5034
restricts legal challenges to state laws governing the
interstate shipment of wine, severely limit consumer choice of
California wine throughout the nation and imperil market access
for California wineries that cannot secure wholesale
distribution.
Existing federal law allows direct interstate shipment of wine
to adult consumers in conformance with any state requirements.
Granholm v. Heald reaffirmed that states cannot discriminate in
setting alcohol policy that affects interstate commerce.
According to the author's office, HR 5034 would likely impede
the direct shipment of wine to out-of-state consumers.
SJR 34
Page 3
In Support : According to the Family Winemakers of California
(FWC), "SJR 34 is an important response to H.R. 5034, which has
been introduced in the wake of litigation to overturn facially
neutral, but discriminatory wine shipping laws enacted by states
after the Granholm v. Heald decision in 2005. Promoted by the
National Beer Wholesalers Association with support from the Wine
and Spirits Wholesalers of America, H.R. 5034 sets the stage for
another round of state legislative wars that could foster
economic protectionism by setting different rules for
out-of-state producers. It strengthens the wholesale tier to
the detriment of producers and, more importantly, consumers in
California and across the country.
"If enacted H.R. 5034 also slams the door shut on legal
challenges to discriminatory statutes by creating new
justifications for states to utilize and shifts the burden of
proof to the plaintiff. The bill drastically alters the legal
landscape of dormant Commerce Clause and 21st Amendment
jurisprudence. FWC recently prevailed in its challenge to a
Massachusetts statute that arbitrarily set a production cap to
control access to the state's wine market. H.R. 5034 would have
made our challenge unwinnable."
"California is the largest wine market in the country and has
promoted more consumer choice in wine. The state saw the wisdom
of opening its borders to any winery in the United States with
passage and enactment of SB 118 (Chesbro) in 2005. SJR 34 urges
Congress to preserve the increased consumer choice and
wine commerce that has developed since Granholm. Most wine
producers n America are small, work on tight margins, and do not
want to see new markets closed or made uncompetitive due to
discriminatory legislation.
Prior/Related Legislation : SJR 30 (Chesbro), Resolution Chapter
79, Statutes of 2006, encourages the Governors and Legislatures
of each state in the United States to enact legislation that
provides for uniform direct-to-consumer wine sales between the
states that minimizing the expense and complexity of shipping
wine from wineries directly to consumers.
SB 118 (Chesbro), Chapter 157, Statutes of 2005, modifies
California law to comply with the recent Supreme Court decision
which struck down Michigan and New York state laws that
restricted direct sales across state lines by wineries to
consumers.
SJR 34
Page 4
AB 611 (Cortese), Chapter 394, Statutes of 1994, encourages the
adoption of reciprocal wine shipping privileges in other states
and to improve fairness and equity for small, family vintners
and winegrowers of California by authorizing this formula for
the direct shipment of wine to an individual in this state.
REGISTERED SUPPORT / OPPOSITION :
Support
Family Winemakers of California (Sponsor)
Wine Institute (Co-Sponsor)
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531