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NJ Legislators Eye Changes for State Wine Industry

by Emily Washington on January 5, 2012

in Legislative Process, Public Choice

Although New Jersey is not typically on the short list of states that produce quality American wine, several of its vineyards have won critical acclaim in a variety of categories. However, the state’s wine industry is facing legal setbacks and policy uncertainty that could prevent it from expanding.

Last year, lawmakers threatened to shut down New Jersey wine production after a federal law made it illegal for the state to prevent out-of-state wineries from operating tasting rooms. Instead, lawmakers opted to stop issuing licenses for new wineries to begin operation and banned some existing ones from distributing their product. Now, the Wall Street Journal reports that proposed legislation could allow wineries to begin selling again and benefit wine consumers:

Powerful state Senate President Stephen Sweeney has introduced legislation that would, for the first time, allow both New Jersey and out-of-state producers to operate tasting rooms that sell directly to customers. It would also, for the first time, let New Jersey vineyards ship directly to consumers and let Garden State wine lovers buy from vineyards in the 38 states that allow it, including New York and Connecticut.

Vineyards would pay up to $1,000 for the shipping license and could produce up to 250,000 gallons of wine a year.

The bill would also help at least 16 new producers who have been issued temporary licenses allowing the harvesting of grapes and bottling of wine. But those producers can’t sell their products.

In addition to permitting tasting rooms, the bill would allow New Jersey winemakers to begin selling their product through direct shipping, increasing their potential customer base. It would also allow limited direct shipping from out-of-state producers. Direct ordering wine is crucial for the success of small vintners. Wineries that produce a limited number of cases per year might not be attractive to distributors, but direct shipping allows them to profit and provides greater variety for consumers.

Unsurprisingly, though, the state’s liquor stores oppose the bill, as the change would subject them to increased competition. While vintners favor the proposed legislation, the liquor store lobby suggests that it would hurt local wine makers by allowing the sale of California wines in tasting rooms. In this case, the liquor retailers’ lobby is playing both the bootlegger and the baptist, protecting their own interests while pretending to be looking out for the interest of New Jersey winemakers at the same time.

State Senator Sweeney’s bill has passed the senate already, but it must pass in the assembly by January 10th to be adopted. The  bill would be a gain for consumers and small businesses in New Jersey, but stands a chance of falling victim to special interests.

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