Bill would lift ban on out-of-state wine delivery

Illinois’ strict regulations on wine shipments deprive residents of choice and the state of critical tax revenue. The anti-competitive law may be unconstitutional.

With many Illinois residents holed up for the foreseeable future and unable to visit their local bar or restaurant, it would be nice to browse some fine wines online and enjoy them at home. It would be nice, but is not currently legal in Illinois.

That anti-consumer, likely unconstitutional regulation dating from the end of Prohibition might change.

Senate Bill 3830 was proposed Feb. 14 by state Sen. Sara Feignholtz, D-Chicago, before the spike in coronavirus cases. The bill would allow Illinois adults to purchase wine through out-of-state retailers and wine clubs. Currently, Illinois shoppers can order shipments from wineries, but not from wine stores and clubs outside the state.

The bill would give Illinois consumers greater choice and convenience. It would also allow the state to move policies into the 21st century and generate greater sales tax revenue.

If passed, out-of-state retailers will be required to register with the state and file annual reports with the state about what products are being sold to Illinois residents. Additionally, an adult will need to sign off on the delivery of the wine.

The National Association of Wine Retailers applauded the bill’s introduction as a move to help Illinois’ economy and give consumers choice.

A ban on wine imports like Illinois’ has been ruled unconstitutional by the U.S. Supreme Court twice in the past 15 years: in Granholm v. Heald in 2005 and in Tennessee Wine v. Thomas in 2019.

Illinois is currently in a lawsuit that challenges the wine shipping law. The state’s fight in Lebamoff v. O’Connell is costing Illinois taxpayers hundreds of thousands of dollars to defend the law. It will likely yield an outcome similar to the other two U.S. Supreme Court rulings, the wine retailers said.

Illinois’ Liquor Control Act of 1934 established a three-tier system of alcohol distribution in the state. Under that act, the Illinois liquor industry was set up into three distinct tiers: producers of alcohol – such as wineries, distilleries and breweries – distributors and retail outlets. Licensed distributors buy alcoholic beverages from breweries, distilleries and wineries and then sell them to retailers such as restaurants, bars and stores. With certain exceptions for smaller wineries, craft distilleries and breweries, it is illegal to operate under more than one tier.

This tier system has been filled with cronyism that harms businesses and residents.

Late Blackhawks owner Bill Wirtz ran beverage company Judge & Dolph and other companies that prior to 1999 donated more than $300,000 to state officials, including House Speaker Michael Madigan. That year the “Wirtz law” was passed to prevent distillers and wineries from changing distributors without a “good cause.” The policy discouraged competition and new distributors from entering the market, and caused liquor prices to shoot up before it was ruled unconstitutional by a federal judge in 2002.

In 2013, a law was passed that prohibited brewers from owning any part of the distribution process, further separating the tiers and making it more difficult for businesses to effectively operate.

The last thing Illinois needs is to make it harder for businesses to operate in the state. SB 3830 would be a welcome expansion of consumer choice and increase in state revenue. Lawmakers should allow Illinois residents to explore the tastes of Napa Valley and Bordeaux, without leaving home.