PHOENIX — A Senate panel voted Wednesday to end the state's small wineries ability to sell their products directly to restaurants and retailers.
On a 4-4 vote the Committee on Commerce and Economic Development refused to revamp existing law to preserve the right of direct shipment. The move came after stiff lobbying by wholesalers who want these wineries to have to sell their products through them, and, by extension, allow them to make a profit from the transaction.
State law generally requires producers to sell their products through state-based wholesalers.
But legislators created an exception in 1982 for Arizona wineries that produce less than 75,000 gallons a year. That was designed to give a jump-start to the state's nascent wine industry.
Last year, however, the U.S. Supreme Court said states cannot give privileges to their own wineries that are not available to others. The lawmakers sought to fix the problem by allowing any small winery in any state to ship directly.
Susie Stevens, lobbyist for Alliance Beverage Distributing, said the proposal opened too wide a door in deregulating the "three-tiered system." She said having wholesalers in the process ensures state taxes are collected.
Rod Keeling, a Tempe resident who owns a winery south of the Chiricahua National Monument in Cochise County, said Wednesday's defeat will hurt small wineries. "We're trying to survive as small farmers," he said.
Wholesalers have offered to work with the wineries to distribute their product. But the vintners have said their profit margins, and what they can command for Arizona wines, makes that financially unattractive.
