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Regulating Wine by Mail

In 1986, California passed legislation prohibiting the direct shipment of wine to its residents from another state unless the originating state allows California wineries to ship directly to that state's residents. The legislation's obvious intent was to break down other states' barriers to the direct shipment of California wine; prior to 1986, direct shipment was a misdemeanor crime in 47 states. In the past 18 years, 23 states have adopted some form of direct shipment allowance, ranging from reciprocity regulations to permitting systems to special handling provisions. The change raises an interesting question: Are state alcohol distribution regulations based on public welfare interests or on protectionist economic interests? Our research suggests the latter.