Court rules against Massachusetts law used to limit sales of California wines

The U.S. Court of Appeals for the First Circuit ruled today that a Massachusetts law that prevents many out-of-state wineries from selling directly to local consumers is unconstitutional.

The ruling, which upholds a lower-court decision on a lawsuit by California winemakers, is on a 2006 state law that forces "large" wineries to chose between selling their wine to Massachusetts wholesalers for sale in stores or directly to consumers. Massachusetts wineries were exempt because none produce the volume of wine covered under the law - 30,000 gallons of wine a year.

The court said Massachusetts lawmakers went out of their way to protect Bay State wineries by choosing an artificially low "gallonage" and by exempting fruit wines - because one Massachusetts winery might have been forced to comply with the law otherwise - and that violates the constitutional ban on interference with interstate commerce:

[T]he effect of its particular gallonage cap is to change the competitive balance between in-state and out-of-state wineries in a way that benefits Massachusetts's wineries and significantly burdens out-of-state competitors. Massachusetts has used its 30,000 gallon grape wine cap to expand the distribution options available to "small" wineries, including all Massachusetts wineries, but not to similarly situated "large" wineries, all of which are outside Massachusetts.

The court also rejected a state argument that the 21st Amendment, which repealed Prohibition and gave states broad latitude to regulate liquor sales, took precedence over the commerce clause.

Complete ruling.