MICHIGAN BANS WINE RETAILERS, UPS AND FEDEX FROM SHIPPING WINE TO ITS RESIDENTS

SAN FRANCISCO, CA - 1/22/2009

Wine.com, the nation's #1 online wine retailer, is exiting the state of Michigan due to a bill that was signed into law in early January. The new law, signed by Governor Jennifer Granholm, prohibits retailers from shipping wine directly to consumers, and specifically bans the use of third-party delivery services like UPS and FedEx.

The law reverses a ruling in October 2008 by the U.S. District Court for the Eastern District of Michigan. That ruling declared it unconstitutional to prohibit out-of-state retailers from selling wine to Michigan consumers.

“Michigan is missing an opportunity,” said Rich Bergsund, CEO of Wine.com. “This legislation hurts Michigan residents because they will no longer have access to the world’s best wines at the lowest prices. It hurts their businesses because Michigan wine retailers and shippers who employ people in Michigan, like UPS and FedEx, will see a reduction in their volumes. And it hurts Michigan’s revenue base, because they are walking away from sales taxes that Wine.com and other retailers would be happy to pay.”

States have been mixed on the issue of direct shipping of wine to consumers by retailers. While 30 states currently allow out-of-state wineries to ship to their residents, only 15 states allow the same from out-of-state retailers. Wine.com ships to 80% of the U.S. population by maintaining a network of licensed, in-state stores in order to comply with state laws. But in Michigan, not even an in-state store would help, because the company uses UPS and FedEx to deliver its wine.

Arguments for free trade of wine between states include providing a benefit to consumers, providing a tax base for the state, and by implementing a direct shipper’s license, providing the state the jurisdiction and oversight to manage the process. Today, many wine retailers ship between states illegally, and states have no recourse.

The primary argument against free trade appears to be preventing underage access to alcohol. To address this, Wine.com pays UPS and FedEx an additional fee to perform an ID check to confirm the package recipient is over 21 years of age. The package is not delivered without a signature and ID check. The signature is captured electronically and subject to later audit by Wine.com. If an adult is not available to provide a signature, the package is held by UPS or FedEx and two additional attempts are made. If the third attempt still fails, the package is returned to Wine.com.

All Wine.com packages are clearly labeled that they contain wine and that an adult signature is required for delivery. The Wine.com website also confirms the age of its customers and notifies them that an adult signature is required for delivery. Wine.com has recently implemented evening, Saturday and by-appointment delivery options to ensure that its customers can find a convenient time to be home to sign for their package.

If you’d like to weigh in on the Michigan state law banning the direct shipping of wine by retailers, contact Governor Jennifer M. Granholm (517) 335-7858, P.O. Box 30013 Lansing, Michigan 48909.

If you’d like to be made aware of pending legislation in other states and help Wine.com work toward free trade, send an email to: freetrade@wine.com.