STAR-BULLETIN / APRIL 2005 Lianne Fu, business manager and president of the Wine Stop, shows a reasonably priced wine. She is among local retailers who feel a rule that would allow out-of-state wine sales could put them out of business.

Wine import proposal is opposed

Local retailers object to easing direct sale by out-of-state wineries

Small local retailers fear a proposed Honolulu Liquor Commission rule allowing increased sales from out-of-state wineries to residents will create unfair competition and hurt sales.

"They could put us out of business," said Liane Fu, president of the Wine Stop at 1809 S. King St.

The Honolulu Liquor Commission is proposing a direct wine shipper permit -- also proposed in Hawaii's three other counties -- to monitor and tax out-of-state wineries shipping directly to residents. But it is proposing only a $48 annual fee, about $850 below what local retailers pay.

Previously, wineries in 12 states could sell directly to Hawaii residents. Others were required to obtain a permit. Besides taxes, Honolulu does not charge wineries in the 12 states a fee.

Based on a 2005 U.S. Supreme Court decision that wineries are free to do business in every state, the Hawaii Legislature passed a law allowing equal direct shipment of wine starting Jan. 1, leading to the commission's proposal.

With the proposed $48 permit, out-of-state wineries could sell wine directly to Honolulu residents, limited to six 9-liter cases per household annually, up from three cases.

Local wine retailers submitted written testimony to the Liquor Commission opposing the permit.

The Wine Stop General Manager Kim Karalovich, who voiced her opposition to the commission yesterday, said the fee is not enough money to pay for inspectors to enforce the rule requirements.

"Good Lord, let's level the playing field a little bit," Karalovich said.

The commission postponed a vote on the rule for a week after several commission members questioned the low fee.

The final decision will be forwarded to the mayor, then the City Council for approval. Kauai's Liquor Commission has already accepted the $48 fee and forwarded the proposal to Kauai's mayor for approval.