NEWS

S.D. moves closer to direct wine sales – with catches

David Montgomery
dmontgome@argusleader.com

The middle man between Napa Valley and South Dakota wine drinkers soon might disappear — but supporters of legalizing wine-by-mail shipments in the state shouldn't raise a glass just yet.

South Dakota is one of about 10 states that don't allow alcohol shipments to private residences. Both wineries and consumers have pushed to change the law in recent years but with little success because of opposition from retail stores and especially the wholesalers who deliver alcohol from producers to stores.

Donald Roesler, a Sioux Falls nurse anesthetist and the leader of a group pushing to legalize wine shipments, said he's a member of several wine clubs — but has his alcohol delivered to friends in other states, from whom he picks it up when he visits.

"We pay our fair share of fees and taxes for these wines, but they go to Iowa and Minnesota," Roesler said, offering to "bring revenue into South Dakota."

More importantly, Roesler said, South Dakoans should have "that choice that citizens of other states have" to order wine directly to their home.

Roesler might be close to winning. Representatives of the state's alcohol retailers and a major wholesaler Monday presented a bill to allow what they previously have fought: direct wine shipments to consumers.

"We've all agreed to create a path to have direct shipment. Now we're just down to the details," said Jeremiah M. Murphy, lobbyist for Republic National Distributing Co.

But the details might contain the devil.

The wholesaler-backed bill would allow direct wine shipments, but with several restrictions. Both wineries and delivery companies such as UPS or FedEx would have to get permits from the state before they could deliver wine, including application fees and monthly reports to the state Department of Revenue.

Those reports would have to list the name and address of everyone who received wine shipments in the previous month, as well as what they received, in what Murphy said would be an attempt to ensure sales tax is properly collected.

And in perhaps the biggest limitation, wineries would have to choose for each variety of wine they sold whether they wanted to sell it directly to South Dakota consumers or through normal retail stores.

"I think you're being extremely restrictive," said Diana Miller, lobbyist for Roesler's pro-wine-shipment group. "My concern is you're building in additional roadblocks to not allow the wine to be shipped directly to an individual, so it isn't really choice."

Murphy said the limitations are intended to create the smallest necessary change from the current system, when all alcohol deliveries have to go through wholesalers such as his client, Republic National.

Ideally, Murphy said, wines that already are sold in South Dakota stores would continue to be sold only in South Dakota stores. His wine shipment bill is targeted at more obscure vintages that can't be found in South Dakota.

"There are a lot of wines that are not in distribution in South Dakota," Murphy said. "It is those wines that are covered by this bill."

Prairie Berry Winery co-owner Matt Keck said he expects to primarily ship its "higher-priced wines" to customers. But Keck urged state lawmakers to make the system as simple as possible.

"You want to make compliance as easy as possible, because the easier it is to comply with the law, the more people that will comply with the law," Keck said.

Lawmakers who are studying wine shipments this summer will meet again in September. Until then, Murphy and Miller will negotiate to try to iron out their differences.

There's lots of potential sticking points, including questions of taxes.

Side issues also could complicate things: artisan distilleries and craft breweries could seek the same treatment as wineries, and a representative of the South Dakota Retailers Association said some retailers also might like the right to ship directly to customers.