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Oct 25, 2014

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Law to restrict Internet alcohol sales advances

Small wineries find latest version more acceptable

Mar 3, 2000 - A Senate committee approved legislation Thursday that gives state prosecutors stronger tools to enforce their own state laws involving interstate alcohol sales. Lawmakers first made some changes in the proposed "21st Amendment Enforcement Act" to address concerns of Internet and mail order sellers.

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The act would permit the attorney general of a state to go to federal court to stop shipments into a state that violate individual state laws. Sponsor Orrin Hatch, R-Utah, sought to ease some concerns by amending his bill to make clear that injunctions would be allowed only if a person is or has been engaged in an act that violates state law. He also added language stating that the bill does not conflict with the moratorium on Internet taxation and that Internet providers would not be subject to injunctive action as a result of users selling alcohol illegally.

Sen. Dianne Feinstein, D-Calif., who had previously opposed the bill, got Hatch to incorporate language making clear that no court can enforce a state law that is unconstitutionally protectionist and discriminates against out-of-state sellers. The Wine Institute said the new version was an improvement over a bill the Senate passed last year.

Direct sales by phone or the Internet are crucial for small wineries -- they now account for an estimated $500 million of the $17 billion industry -- but the laws affect all alcohol sales, including beer.

Two groups representing wine producers -- the Wine Institute and the American Vintners Association -- dropped their opposition to the bill. A lobbyist for the AVA said the industry recognizes the measure will clear Congress this year, and would rather focus on court challenges to states' ability to block the sales.

The prohibition-lifting 21st Amendment to the Constitution gives the states the right to regulate the sale and transport of alcohol across state borders and also mandates the so-called three-tiered system. Internet and mail order sales have allowed producers to bypass some or all of this system. Wine and beer wholesale have lobbied extensively to get this more restrictive legislation passed.


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