Ruling lifts spirits
at isle wineries

KAILUA-KONA » Hawaii's two largest wineries expect sales to start flowing as a result of last week's U.S. Supreme Court ruling that allows them to sell directly to out-of-state buyers.

"It won't have an impact yet, but this is a huge, huge moment for us," said Suzy Stout, marketing manager for Volcano Winery on the Big Island.

The Supreme Court has struck down laws in Michigan and New York that restrict interstate wine sales, calling them discriminatory and anticompetitive. This means Hawaii's wineries can look forward to shipping their products nationwide more affordably and efficiently.

Since Prohibition ended in 1933, each state had the power to regulate alcohol sales. In all, 24 states passed laws requiring out-of-state wineries to sell through licensed wholesalers and attached permit fees or taxes.

Despite protests that the law protected local businesses and guarded against underage drinking, the Supreme Court held in a 5-4 decision that the Constitution prohibits laws that discriminate against out-of-state businesses.

STAR-BULLETIN / 2004 Isle wineries expect profits to flow in after the U.S. Supreme Court ruled to allow wineries to sell directly to out-of-state buyers. Shown here is a selection of sparkling wines from Maui's Tedeschi Vineyards.

"Most states are seeing this as a plus," Stout said. "States could do one of several things. They could ban all shipping or they could require a permit fee."

States currently have a variety of laws. For example, South Carolina requires a $400 permit fee every two years for shipping wine to its residents. Other states will allow shipping only if the recipient has visited the out-of-state winery. Some states, such as Texas, have alcohol-free, or dry, counties.

Hawaii has had a reciprocity agreement in place since 2001.

Stout said some states may change their regulations within one year, meaning more visitors who want to keep aloha spirits flowing in their homes will be able order Hawaii's offerings online.

"The demand really is there," she said. "We've had an explosion of e-mails since Monday (when the ruling was announced). People are really keeping their eyes on it and are quite excited."

Volcano Winery, a family-run business adjacent to the Hawaii Volcanoes National Park, and Tedeschi Vineyards, on ranch land in Maui's southwestern town of Ulupalakua, have not felt the need to compete with bigger wineries on the mainland.

Volcano Winery produces about 6,000 cases of wine each year; Tedeschi about 30,000. That's just a drop in the bucket considering the industry nationally tops $21 billion annually.