Here Comes The Anti-Amazon Wine Law

Posted by Tom Wark on Feb 25, 2013

For a moment there, wine lovers in Maryland and wineries across the country thought that the state of Maryland had begun the process of getting its act together where wine shipping was concerned. Maryland wine lovers and wineries across the country thought Maryland had finally come to its free market senses and started the process of opening its borders to real access to wine.

Now it appears they are backsliding and in a particularly pernicious way.

Senate Bill 990 (authored by Senator Joan Conway-D), and probably best dubbed The Anti-Amazon Wine Law, is beginning to work its way through the Maryland General Assembly. The intent of the bill is to protect local wine sellers from competition. In effect, SB 990 outlaws the use of the new Amazon Wine Site by Marylanders as well as other similar wine sites such as Lot 18 that don’t actually sell wine but rather link willing Maryland buyers to wineries selling their own wines.

The synopsis of the bill reads like this:

“Specifying that a direct wine shipper’s permit entitles the holder to sell specified wine by receiving and filling orders that the consumer transmits directly to the permit holder; and prohibiting an order to be transmitted to the permit holder by a retailer, a wholesaler, or any other third party, including a marketplace site on the Internet in which sellers offer products to customers.”

The actual language of this remarkably short bill reads thusly:

“AN ORDER MAY NOT BE TRANSMITTED TO THE HOLDER OF THE DIRECT WINE SHIPPERS PERMIT (ie: wineries) BY A RETAILER, A WHOLESALER, OR ANY OTHER THIRD PARTY, INCLUDING A MARKETPLACE SITE ON THE INTERNET IN WHICH SELLERS OFFER PRODUCTS TO CUSTOMERS.”

They are talking about Amazon.com.

The original direct wine shipping legislation passed in 2011 was a half effort to begin with. Because only wineries, and not out-of-state retailers, were allowed to get the new wine shipping permit, it is illegal today to ship French, German, Italian, Spanish, Australian, Chilean, New Zealand or any other non-domestic wine into the state because in the United States it’s only retailers that sell these non-domestic wines.

Now it appears that Senator Conway and supporters of SB 990 still want to allow Marylanders to have wine shipped to them from domestic wineries, but they kinda want to make it harder for Marylanders to find the wines they want. In other words: “Let’s give Maryland wine lovers what they want, but let’s make it more difficult for them.”

What Led To This Terrible Bill Being Introduced?
So why on earth would Senator Conway and other Maryland legislators want to ban Amazon.com and others from introducing wine to consumers and then pointing them to the wineries that sell these wines? It’s a good question.

One thing I know for sure is that the good Senator Conway didn’t come up with this idea on her own. No, this distinctly bad idea was brought to her either by a constituent that is either a wholesale or retailer or a member of the Maryland alcohol regulatory bureaucracy. And I’d be willing to bet that the idea for this distinctly bad, anti-consumer, anti-free trade idea was sparked in December when the Baltimore Sun ran this story on Amazon.com beginning to offer their wine service to Marylanders.

Why is This a Terrible Idea?
You have to understand what Amazon.com Wine does and what it is to appreciate the particular absurdity of the Maryland bill. Amazon.comWine does not sell wine. Amazon.com does not own any wine inventory. Amazon.com is not a wine retailer. Rather, Amazon.com Wine merely presents winery products to those viewers on their site. If the viewer finds a wine they like, they click the “buy” link. And when they go to their shopping cart to pay for the product, they discover that Amazon.com isn’t in fact selling the wine. Rather, the product is being purchased direct from a winery. In other words, Amazon is advertising the wine for the winery, and taking a fee for advertising the wine and shepherding the sale over to the winery. In fact, this is what the buyer reads when they attend to their shipping cart:

“Your order contains wine and requires an adult signature at delivery. Please confirm that both you and the intended recipient of the item are at least 21 years of age. Once you submit the order, Amazon will provide the order to the seller who will review the order information. The order may be rejected by the seller.”

More importantly, the winery must have a Maryland wine shipping permit in order to have their wine advertised to Marylanders on the Amazon.com site. Other third-party marketers and advertisers work the same way.

Maryland’s Anti-Amazon Wine Law Is So Badly Written It May Not Be Enforceable
In addition to this being a stupid, anti-competitive, anti-consumer, anti-wine bill, it possesses the additional problem of possibly being unenforceable. You see, even if it were still illegal for any out-of-state winery to ship wine to a Maryland consumer, it would not be illegal for a 21-year old Marylander to purchase wine from an out-of-state winery. Maryland has no authority to tell its citizens from whom they can purchase legal products. They only have the authority to control how wine enters and moves about the state. That means they can control the shipment of the wine into the state, but not the purchase of wine by residents of their state.

For example, it is currently illegal for an out-of-state retailer to ship wine directly to a Maryland resident. However, there is nothing illegal about a Maryland resident purchasing wine from an out-of-state retailer. They just can’t have the wine shipped to them.

But wait, there is more. The language of this bill seemingly prohibits a California winery that is permitted to shipped wine to Maryland from having an order transmitted to them from Amazon for shipment to a California address. This of course is absurd. Maryland can’t tell a California winery how, why or when it can ship wine to a California address. Yet according the bill, if a California winery has a permit to ship wine into Maryland, it must not receive any orders transmitted from “A RETAILER, A WHOLESALER, OR ANY OTHER THIRD PARTY, INCLUDING A MARKETPLACE SITE ON THE INTERNET IN WHICH SELLERS OFFER PRODUCTS TO CUSTOMERS.”

Maybe this absurd language in the bill is just placeholder language and is awaiting amendment when the process moves forward. But frankly, knowing what I know about the legislative disposition toward wine in Maryland and the way Senator Conaway and others have gone about legislating on wine in the past, I’d have to guess this is the bill language that is intended.

SB 990 is scheduled for a hearing on March 8th at 1:00pm in the Senate Health, Education, Environmental Affairs Committee. If by chance you live in Maryalnd and would like to express your opinion the bill’s sponsor, Senator Joan Conway, her email address is: [email protected]

This is the sort of absurd and ridiculous thing that happens when lawmakers remain in the clutches of a privileged, anti-competitive, protected cabal. They write bad law and announce in the process their disdain for citizens and consumers. It will be fascinating to see how this issue plays out, particularly if the bill passes.