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Additional Comments on Illinois Wine Law Issues

In our blog on this topic yesterday, we failed to mention one other major beneficiary of the new Illinois law which prevents consumers from buying wine directly from out of state retailers. That beneficiary is the state itself, the government and potentially its economy.

 

The new law is protectionist. It shields Illinois-based retailers and distributors from out-of-state competition. To the extent that this competition might otherwise reduce the revenue of those sellers within Illinois which would in turn reduce Illinois state revenues that are based on the taxation of those companies. While the law limits consumer choice, it also ensures at least one more stop within the state for those consumers’ dollars before the ultimately wind up in the hands of out of state wineries or importers.

This is currently an even bigger issue as there are still legal battles going on over the extent to which online resellers need be responsible for collection of sales tax for states to which they ship but in which they are not based. For example, if a WA online-reseller sells and ships wine to an IL consumer, is the reseller responsible for collecting sales tax and remitting it to Illinois? With these both the business tax and sales tax points at issue, the potential impact on the revenue of a populous state such as Illinois could be considerable.

On the other hand, there would be nothing to stop Illinois companies from having their own online sales to out of state consumers. We are not aware of any similar efforts in Illinois to prevent its citizens from buying books, music, or other items directly from out-of-state resellers.

This law is selective, as it only affects alcoholic beverages. The weak federal laws regarding commerce in alcohol allow for this kind of local legislation. It will be interesting/concerning to see if similar laws are pursued in other states. There is also the possibility that states could try to create similar laws for different classes of products such as automobiles or books, though doing so would probably create an even greater outcry and might be more difficult to defend in the courts.

This really is a big issue. Whether you are for protectionist policies as a rule or against, an Illinois resident or not, a consumer of alcohol or an abstainer, this law can and probably will have some impact on you, even if indirectly. We encourage you to research the situation for yourself and take whatever action you think appropriate.

This article is original to NorCalWine.com. Copyright 2009 NorCal Wine. All rights reserved.