Saturday, August 24, 2019


Minnesota wineries want to sell over the Internet

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A bottle of wine produced by St. Croix Vineyards in Stillwater, Minnesota. Wineries have filed suit over Minnesota's law which prohibits vineyards in the state from advertising or selling their wine over the Internet. (Photo courtesy of St. Croix Vineyards)
Two regional vineyard are challenging a state law that bans them from selling their wines over the Internet to Minnesota consumers. They've filed suit in federal court arguing the law infringes on their right to free speech.

St. Paul, Minn. — Charles Quast owns Fieldstone Vineyards about 115 miles southwest of the Twin Cities. He'd like to sell wine over the Internet, but he can't because Minnesota bans wineries from doing so. Quast says he does sell in liquor stores, but the Internet would supplement those sales.

"An acknowledged part of how we want to grow our business. We also want to make sure that the customers can buy from us direct and then go there as well. We can't even tell them that we might be in a liquor store," says Quast.

The Fieldstone Vineyards Web site even warns Minnesota residents they can't order online -- instead, they have to call the winery and order over the phone.

The lawsuit names the state Commissioner of Public Safety Michael Campion. The department's spokesman Kevin Smith said the department had not seen the lawsuit and would not comment on it at least until Thursday if at all.

When states try to prevent information on the Internet coming into their state ... that would impose those restrictions on other states. In a federal system that's not permissible.
- Cyberlaw expert Dan Burk

The wineries listed in the lawsuit are backed by the Institute for Justice, an organization that labels itself a libertarian, public interest law firm in Washington D.C.

The group won a major victory for wineries last year at the U.S. Supreme Court. As a result, consumers may now buy wine from out-of-state wineries directly, rather than having to buy it from a local liquor store. But the challenge in this case is whether the state can ban wineries from advertising and selling their wine via the Internet to Minnesota consumers.

The vineyards argue that it's unfair for Minnesota to keep them from selling their wine over the Internet when local liquor stores can.

"And liquor stores would argue you're not a liquor store," says Jim Farrell, who represents the Minnesota Licensed Beverage Association.

Farrell says allowing wineries to sell their wine over the Internet would take sales away from wholesalers and liquor stores, who collect taxes and help the state regulate alcohol.

"If the wineries want to be compared to liquor stores, then we should be asking them to carry mandated dram shop insurance to the degree that liquor stores do. We should be conducting compliance checks on them," says Farrell. "There's a lot of things they don't have to do that liquor stores have to do."

But the wineries argue that wholesalers and liquor stores don't want their wines anyway, because they don't produce large amounts. They say the bigger issue is Minnesota is stifling their right to free speech.

Dan Burk, a University of Minnesota law professor and an expert on cyberlaw, says they may have a case. He says one of the problems is that the Internet is not limited to Minnesota, so any ban Minnesota imposes also spills over to other states.

"When states try to prevent advertising, when they try to prevent legal pornographic materials or other kinds of information from coming into their state -- that on the Internet is very restricted -- that would impose those restrictions on other states. And in a federal system that's not permissible," says Burk.

Burk says there is the possibility the court could throw out the wineries' complaint on technical grounds. He says a person usually can't ask the court to strike down a law unless he or she can show there's a real controversy, and is in danger from the state enforcing the law. He says courts don't give hypothetical relief.

It's unclear how many vineyards are located in Minnesota. Calls to the Minnesota Grape Growers' Association were unsuccessful. It lists 18 vineyards as members of its organization.