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Untangling regulations from vine to wine

Understanding how wine gets from the vine into the glass is fairly complicated. Federal regulations stemming from the prohibition created a complex process that differs from state to state. At the federal level there is the Tobacco Tax and Trade Bureau (TTB) of the Department of Treasury enforcing laws in alcohol production, labeling, advertising and tax collection, and the ATF (Bureau of Alcohol, Tobacco, Firearms and Explosives of the Department of Justice) makes sure that laws are enforced preventing illegal production and smuggling of alcohol.

In addition, every state and most counties, cities, towns, or other local jurisdictions have alcohol beverage control departments that oversee and enforce further state and local laws relating to wine, with each state having their own jurisdiction and different set of laws governing the distribution of alcoholic beverages, which are most often divided in two groups: wine or beer and spirits or liquor.

Federally the wine industry is structured as a three-tier system: Producers and suppliers, which basically means the wineries and importers; distributors or wholesalers, which buy from the first tier and sell to the third tier, the retailers and restaurants that sell for individual consumption. Sounds complicated? Well, it kind of is.

This system is supposedly designed to protect the general public, which is assumed to know little about alcohol and its effects, from an industry, which would be only concerned with maximizing profits and thus promoting overindulgence of alcohol. Creating three levels of distribution with each level needing to make its own profit is supposed to keep prices from becoming too low. This gives the government different means of oversight and tax revenues.

It gets even more complicated on the state level as several states go beyond regulating and licensing sales and actually take over the distribution or retail tier. There are 18 so-called 'control states' (and two counties in Maryland) that take direct control over alcohol sales:

Pennsylvania and Utah run all distribution and off-premise retail of wine directly through the state. New Hampshire and the two Maryland counties (Montgomery and Worcester) control the distribution of wine and operate government-owned retail stores, but also allow some licensed private owners. Mississippi and Wyoming control wine distribution but leave retailing to privately owned stores. Alabama, Idaho, Iowa, Maine, Michigan, Montana, North Carolina, Ohio, Oregon, Vermont, Virginia, Washington, and West Virginia only control distribution and retail sales for spirits (which includes wines over a certain alcohol percentage: 15% in Alabama, 16% in Vermont and Montana, 17% in Iowa), but leave wine distribution and retail in private hands in accordance to the federal three-tier system.

So far so easy, it gets trickier when crossing state borders, which is technically illegal other than for private consumption on a small level. A Supreme Court ruling a few years ago ruled that states cannot set a different standard for products of other states than they do for their own, which is aimed at direct sales and shipments from wineries to private consumers in another state. This divides states into two groups, those that allow all US wineries to ship wines directly to its residents and those that make any shipment of wine illegal.

Unfortunately these complicated rules often make it hard for the individual wine lover to find wines from small wineries that find it too expensive to sell in every state.

Tagged: regulations, Wine