N.J. winemakers in limbo after lawmakers' impasse

July 08, 2011|By Paul Nussbaum, Inquirer Staff Writer

New Jersey winemakers, unable to get legislative help before lawmakers left town for the holiday weekend, are waiting nervously for a federal judge to decide the fate of the state's growing wine industry.

State licenses for wineries to sell their product expired July 1 and the division of Alcoholic Beverage Control won't renew them because of a 2010 federal court ruling. Current license-holders will be permitted to continue to sell wine at existing tasting rooms or other outlets, but no new outlets or wineries can be opened.

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That's bad, winemakers say. But their big fear is that their businesses will be trampled in a broader court battle over the issue of direct shipment of wine.

"We have a court ready to drop a decision that has the potential to shut down our tasting rooms, and that would be catastrophic for our industry," said Scott Donnini, a Salem County lawyer-turned-vintner, who chairs the legal committee of the Garden State Wine Growers Association.

Wineries in New Jersey sell most of their wine at on-premises tasting rooms and at their stand-alone stores or kiosks within restaurants.

In December, the U.S. Court of Appeals for the Third Circuit said New Jersey had unconstitutionally discriminated against out-of-state wineries by permitting only in-state wineries to sell directly to consumers and by banning shipments of wine to consumers.

The appeals court sent the case back to a lower court with two options: Give out-of-state wineries the same right to sell to consumers, or prohibit all wineries from selling directly to consumers.

The lawsuit was brought in 2003 by New Jersey wine enthusiasts and a California winery, which argued New Jersey should not be allowed to ban shipment of wine to New Jersey consumers. Additionally, they objected to a provision in state law that permitted only in-state wineries to sell directly to consumers.

Unlike 38 states, New Jersey does not allow wine sellers, in or out of state, to ship directly to consumers.

The two houses in the state legislature could not agree on a solution that would satisfy New Jersey's liquor industry, which opposes direct shipping, and a coalition of consumer groups that supports the practice.

That left New Jersey wineries in limbo.

"We're in the weird position of being a political football that no one really wants to play with," said Donnini.

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