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Senate passes winery legislation

Proposal would let small vintners continue selling directly to retailers and restaurants

Thursday, March 30, 2006

The Maryland Senate unanimously passed legislation Tuesday that would allow small wineries in the state to continue to sell their wines directly to retailers and restaurants.

Currently, Maryland wineries can distribute their products without going through a wholesaler, but out-of-state wineries cannot. A ruling by Comptroller William Donald Schaefer would have ended that distinction on June 1, requiring all wineries to sell through a distributor.

Winery owners have been in Annapolis in force to lobby for the bill, arguing that Schaefer’s mandate would put them out of business as they would be forced to shoulder the costs of the wholesalers’ markups. Also, many say they are too small for wholesalers to deal with.

Schaefer’s decision came in response to a Supreme Court ruling last year that struck down laws in New York and Michigan that favored in-state wineries, as well as a lawsuit filed by a Pennsylvania vintner alleging that the Maryland law is unconstitutional.

The bill passed Tuesday, sponsored by Sen. Thomas M. Middleton (D-Dist. 28) of Waldorf, would treat small out-of-state wineries with less than 40,000 gallons of annual production the same as small Maryland wineries. Both would be able to sell directly to Maryland’s retailers and restaurants.

The bill now moves to the House Economic Matters Committee.

The House has its own version of the bill — introduced by Del. Virginia P. Clagett (D-Dist. 30) of West River and co-sponsored by a majority of delegates — which has sat in committee since its initial reading on March 6.

Lt. Gov. Michael S. Steele (R) said Gov. Robert L. Ehrlich Jr. (R) will sign the bill if it gets to his desk.

‘‘We believe that the ability [of Maryland’s wineries] to enter the market should be a free access opportunity,” Steele said during a visit to Brunswick Tuesday. ‘‘Anything that cuts out the middleman and helps [the wineries] to direct sell – that’s important. [Ehrlich and] I really appreciate the industry leaders pushing the issue.”

Charles Daneri, owner of the nascent Frederick Cellars, cheered Tuesday’s vote.

‘‘This was certainly good news,” said Daneri, who expects to begin sales in downtown Frederick in the next year.

‘‘The [Senate] affirmed what all of the small wineries have felt all along,” he continued. ‘‘This is an agricultural issue that helps us keep some farmland from being developed.”

Albert M. Copp, president of Woodhall Wine Cellars in Parkton, was on hand for the bill’s passage in the Senate.

‘‘Assuming that the House will go along, it means I can stay in business,” Copp said after the vote. ‘‘I already give up one-third of my price to retailers. I can’t afford to give up any more.”

Daneri said passage is not a done deal in the House.

‘‘We face the same fight on the House side,” he said. ‘‘The subcommittee has not voted on the bill yet, much less the full committee or the House. There is significant opposition within the committee, although the full House seems to look favorably on the issue.”

In 2005, sales of Maryland wine totaled 161,782 gallons, or roughly $8.2 million. Of that, almost 21,000 gallons was sold by wineries directly to retailers.

A competing bill, which would have written Schaefer’s ruling into law, is still in a Senate committee.

Staff Writer Kevin M. Smith contributed to this report.