Oklahoma liquor wholesalers, winemakers compromise

On Nov. 4, more than one million Oklahomans " nearly 79 percent of voters " voted in favor of State Question 743, a ballot initiative that proponents hope will bolster Oklahoma's growing wine industry. The verbiage in the question was a result of compromises between Oklahoma liquor wholesalers on one side and Oklahoma winemakers and grape growers on the other.


The primary compromises are found in two clauses, one governing common carriers for transport and the other in a 10,000-gallon restriction for winery production. Oklahoma wineries, as well as out of state wineries, that produce less than 10,000 gallons of wine per year may now deliver their products to licensed businesses " liquor stores and restaurants " as long as they use their own delivery vehicles.

Oliver Delaney, former head of the Oklahoma Malt Beverage Association, said the state question was placed on the ballot to redress a problem with language in the original legislation passed in 2000 that granted Oklahoma wineries the same privileges.

"A federal court judge ruled the original law unconstitutional," Delaney said, "because it discriminated against out of state wineries. The Granholm case, as it was called, was named after the Michigan governor, and the decision came down to an issue of the interstate commerce clause, with the judge ruling that states had to treat out of state wineries the same as in state ones."

Granholm v. Heald was decided by the U.S. Supreme Court in 2005, and the decision forced Oklahoma legislators to rewrite the 2000 law to reflect the court's decision. Proposed rewrites never made it out of committee up to 2007 and may never have come to a vote had not Rep. Danny Morgan, D-Prague, taken a personal interest in the legislation.

Sen. Tom Ivester, D-Sayre, who co-authored the legislation, credits Morgan with the question's appearance on the ballot. "Danny was basically raising Lazarus from the dead," he said. Ivester said he got involved with the legislation because his district is an agricultural district.

"There are a couple wineries in my district, as well as a couple of grape growers," he said. "Rural, western Oklahoma is an agricultural area, and this seems to be the best kind of value-added agriculture, something we're looking for these days."

Both Ivester and Morgan defend the language in the state question as the best bill possible considering the conflicting interests.

"The thing was bottled up in conference committee," Morgan said. "Political pressure from the wholesale industry kept it there, so we revised it to get agreement between both sides."

Andrew Snyder, the president of the Oklahoma Grape Growers and Wine Makers Association, agreed. "It is definitively a good thing for the wine industry in Oklahoma," he said. "We negotiated the particulars, and we had to make some concessions."

Snyder listed the common carrier and 10,000-gallon clauses as the main concessions. "Not all Oklahoma winemakers are happy with those two concessions," Snyder said, "but the wholesalers had deeper pockets than we did."

Wholesalers, represented by Central Liquor, Jarboe Sales and Action Wholesale Liquor, the state's three biggest liquor wholesalers, hired lobbyists from the Milner Group, among others, to represent their interests. Snyder said that Oklahoma winemakers hired lobbyist James McSpadden to represent them.

The common carrier clause would require Oklahoma winemakers to deliver their product to licensed businesses within a reasonable time and without discrimination. Winemakers in Central Oklahoma have an advantage in the sense that they are equidistant from all possible locations in Oklahoma, whereas a winemaker in western Oklahoma will have to drive a company-owned vehicle to deliver product as far away as northeastern Oklahoma. This presents a difficulty for small wineries, and it is this restriction especially that chafes Oklahoma winemakers. The 10,000-gallon restriction only eliminates two Oklahoma wineries: Tidal School Vineyards and Grape Ranch, Snyder said.

Both Morgan and Ivester said they hoped there would be changes to the common carrier restrictions in the future. Chad Alexander, a spokesperson and lobbyist for the wholesalers, said his clients insisted on the common carrier language to prevent Oklahoma wineries from functioning as wholesalers and to prevent out of state cooperatives from utilizing common carriers to distribute their products.

James Milner, of the Milner Group, who also represented the wholesalers, said his clients were also concerned with preventing minors from having access to alcohol.

"The overarching dynamic is that they are selling a regulated product," Milner said. "The state has an interest in questions of tax revenue and access to alcohol by minors. The state has to be able to keep track of the distribution."

Snyder believes that the wholesalers' real interest was preventing out-of-state wineries from cutting into their business, and that the common carrier clause was directed at them.

"There are some wineries in the state that could have benefited from a common carrier, but we've already benefited from the question's passage " I delivered wine on Monday " so we're going to step up and play by wholesaler rules. We could not have gotten a better bill under the circumstances."

Snyder estimated that Oklahoma wineries could see as much as a 25 percent increase in their sales thanks to the new passage of the state question. In addition to his work with the Oklahoma Grape Growers, Snyder owns Sand Hill Vineyards and is the winemaker for Tidal School. He sees the new legislation as a chance to get his wines to a larger group.

"If you look at Canadian River Winery, you can see that this is a good thing," Snyder said. "They had their product in 165 liquor stores before the old law was declared unconstitutional. They went from 165 to zero just like that. Now they're back in business." "Greg Horton

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