Indiana elected a new governor this November, one can hope with the change in administration comes a new way of looking at some of the most outdated liquor laws in the country.

These specific laws serve no apparent purpose other than protectionism for business interests at the expense of the Indiana consumer and need reform.

Direct shipping laws

Under Indiana law, an out-of-state notable winery has a choice ship DTC (direct-to-consumer) and not partake in the three-tier system, or partake in the three-tier system and forego DTC shipping.

Indiana law does not afford a winery that is licensed as a primary source a Direct Wine Seller permit, which permits DTC shipping.[1]  By statute Indiana defines a producer and vintner of alcoholic beverages as a “primary source.” IC 7.1-1-3-32.5(2),(3). The primary source as a manufacturer can sell its products to an Indiana wholesaler.

Once it sells its wine to a wholesaler, the winery essentially forfeits its DTC shipping privileges.

If an Indiana consumer visits a winery such as Caymus or Mondavi and desires to have product shipped back, it can’t deal with the winery directly but must order thru the three-tier system.

There is no good explanation why a consumer in neighboring Illinois or Michigan can order the same wine DTC and have it shipped right to their house. As far as I know, there is no good health and safety reason for Indiana’s policy of making a notable winery chose between entering the three-tier system or shipping directly.

The burden is on the consumer who must incur cost and the logistical hassle. The only one who benefits is the wholesaler that gets a piece of the transaction while providing no societal benefit.

One quick note an out-of-state winery wishing to sell to an Indiana wholesaler and DTC can apply for the Farm Winery permit and a Winery Seller permit. However, if the winery presently has a primary source license, which most out-of-state wineries of note have, they can’t hold a direct wine seller permit or a farm winery permit.

Where to get cold beer

Everyone likes cold beer, well maybe except for some of my Irish and English relatives. But for Americans, it is really a matter of how cold do you want it!

In Indiana the choice to buy cold beer is limited and could only be purchased at the liquor store. So, plan a party and try to do one stop shopping in Indiana. Suppose people are coming over for a football game and you need to pick up several items including food and drinks. You go to the grocery store and get your food and to the beer aisle you go to discover a cold six pack of Angry Orchid (it’s a cider which is considered a wine) but the same six pack of Heineken is warm and not put into the refrigerated section. Your choices, supply Angry Orchard because you are pressed for time, take the warm beer and convince people this is a great beer, or make an unnecessary trip to the liquor store to buy the same exact product but in a colder form.

Trying to obtain a retail liquor license

For a state that is business friendly and fiscally conservative, Indiana’s liquor licensing system defies these principles. Indiana issues retail licenses based on a quota system, where the amount of retail liquor licenses available is based on population within a jurisdiction. If you want to invest in a restaurant or bar and there is no permit available, you either need to win a license at auction or purchase a permit from an existing license holder. If there is none available you are out-of-luck, or if there is one available, the price for sale is so high often times that you can’t afford the license.

I’ve had clients that wanted to move into Indiana, but sunk in cost to obtain a liquor license was so much that they passed on the opportunity. Indiana could face a situation where only major chains can afford to do business and small mom and pop restaurants can’t based on retail quota system. The consumer takes the brunt of the burden as choice in restaurants becomes limited.

Reform

With a new administration there is hope for reform and change. Indiana must adopt a more consumer friendly liquor system, which at the present burdens the consumer to the benefit of special interest.

Keeping the status quo will only maintain and deepen the problems that exist. Overarching reform will increase consumer choice and lower cost for the consumer.

 

[1] https://wineinstitute.compliancerules.org/state_alerts/in-dtc-application-form-available/