WineAmerica Letter of Support for A4436: Permits Self-distribution in NJ

December 20, 2011

RE:     A4436 (Burzichelli, Wisniewski, Riley) – Permits direct shipping by wineries and creates Out-of-State Winery license

Dear Member of the Assembly:

WineAmerica, the National Association of American Wineries, on behalf of our member wineries in New Jersey and across the nation, encourages you to vote yes on A4436, a bill that would permit New Jersey and out-of-state wineries to self-distribute their products, operate satellite tasting outlets, and ship wine directly to New Jersey consumers.  WineAmerica is the only national winery trade association.

We support this bill because it secures local winery privileges threatened by the recent Third Circuit decision in Freeman v. Corzine, 629 F.3d 146 (3d Cir. 2010) while expanding opportunity for wineries throughout the United States.  A4436 offers continuing support to the New Jersey wine industry’s progress, growth and prosperity, and removes an unhelpful cloud of uncertainty that has prevented New Jersey wineries from opening their doors.

For more than a year, the looming Freeman decision has been a weight on the dynamic growth of the state’s wineries.  A4436 will finally allow New Jersey winemakers to focus on what they do best—keep small farms viable and, through agri-tourism, build a new model for farm development.  Failure to pass this important bill could put the success of this burgeoning industry in serious jeopardy.

New Jersey’s dynamic wine industry is a critical component of the state’s agricultural potential and heritage, and contributes to the preservation of rural landscapes that could otherwise be turned over to developers.  In crafting its winery laws, New Jersey has rightly tried to keep these agricultural spaces vital and flourishing.  A4436 supports this legitimate local purpose and promotes a traditional agricultural form—winemaking—that reliably makes family farming more economically feasible.

Small, dynamic businesses, like those of our members, that are particularly well-suited to small parcel agriculture; creating jobs in the state’s fastest growing agriculture segment; and paying more in taxes than they use in public resources, should be provided every opportunity to sell their goods in open markets.  Wineries are keeping small farms viable and, through agri-tourism, are building a new model for farm development.  New Jersey wineries are family destinations that educate consumers about local agriculture and feature local musicians and entertainers.  Their impact is dynamic—helping make local restaurants, hotels, and attractions more viable.  In other words, local wineries are keeping the “Garden” in the “Garden State.”

Many New Jersey wineries are unable, or find it difficult, to reach consumers in the state, since smaller brands are not likely to find distribution through traditional three-tier channels.  Satellite tasting outlets and self-distribution enable wineries to capture lost sales that often result from consumers’ inability to find their favorite New Jersey wines on local store shelves.  Similarly, direct-to-consumer shipping has proven a vital channel for customers to find the wines they want, while still allowing for safe and effective regulation.

In a recent comprehensive report examining direct shipping laws in the states where shipping is allowed, the Maryland Comptroller’s Office, the state agency that regulates alcohol in Maryland, concluded that: (1) state regulation of direct-to-consumer shipping is effective; (2) the safety protocols written into state direct shipping laws prevent deliveries to minors; and (3) recordkeeping and reporting requirements give states the tools for effective tax collection on wine shipments.  See Peter Franchot, Compt’r. of Md., Direct Wine Shipment Report (2010), available at http://www.comp.state.md.us/DWS_Complete.pdf.

We support A4436 because it reinforces existing winery privileges and expands opportunity for both in-state and out-of-state businesses in the form of direct-to-consumer shipping.  Wineries add both to the character and the strength of New Jersey’s agricultural industry, tourism and family farm development.  While direct shipping capacity caps remain problematic, see Family Winemakers of Cal. v. Jenkins, 592 F.3d 1 (1st Cir. 2010), but see Black Star Farms LLC v. Oliver, 600 F.3d 1225 (9th Cir. 2010), New Jersey wineries should be afforded the opportunity to operate efficiently and profitably and New Jersey’s citizens should be allowed the benefit of free access to the wines of their choice.  We believe that A4436 promotes these aims, and respectfully request that you vote yes on this important bill.