TABC collaborates with global delivery companies to stop illegal wine shipments into Texas

The Texas Alcoholic Beverage Commission (TABC) is collaborating with FedEx Express and FedEx Ground, subsidiaries of FedEx Corp., (Fed Ex) and United Parcel Services (UPS) to thwart the illegal shipment of wine into Texas. On May 4, 2011, TABC met with representatives from UPS and FedEx to discuss options for preventing unlicensed retailers from selling and shipping wine to consumers in Texas.

Texas law requires that anyone selling alcoholic beverages in the state must hold a TABC license or permit. The law does not authorize TABC to issue a license or permit to a retailer outside of Texas. A retailer is defined as a company that buys alcoholic beverages and then re-sells them to the ultimate consumer. The term does not include wineries.

TABC has notified unlicensed retailers repeatedly (September 2008, November 2009 and May 2010) requesting that they cease these illegal shipments. "I can't say enough regarding FedEx and UPS' willingness to come to the table and work with TABC," said TABC Administrator Alan Steen. "We all see the value of working together on the front end to ensure legal transactions and a satisfied and educated customer. This collaboration is a proactive step toward that end."

Both UPS and FedEx have policies that prohibit customers from using their service to ship wine without authorization from the origin and destination states. TABC provided FedEx and UPS with a list of retailers who have recently shipped wine into Texas illegally. In turn, these companies have notified those retailers that shipping wine without the proper authority is a violation of their agreement and puts their business relationship at risk.

TABC will continue to provide UPS and FedEx with monthly lists of unlicensed retailers shipping wine into Texas until the illegal activity ceases. The agency will also be contacting the retailers directly. Finally, for those companies who continue to violate the law, TABC will notify the alcoholic beverage control agencies of their home states.

"The wine industry is one of the fastest and most competitive aspects of the beverage alcohol industry today," said Steen. "Local access, convenience and competition in Texas are ever-growing, and I strongly believe consumer needs can be met through legal channels available in our state."

Texans who are looking for wine that is not available in their local stores have several options. Adult Texans in wet or dry parts of the state can have wine legally shipped to their front door from the holder of a Texas Winery Permit or an Out of State Winery Direct Shipper's Permit. There are over 200 wineries in Texas, 800 wineries in California and over 200 wineries in 24 other states that are authorized to sell and ship wine directly to consumers in Texas.

Legal Background

A lawsuit was filed in U.S. District Court in 2006, claiming that sections of the Alcoholic Beverage Code discriminate against interstate commerce, and violate the Interstate Commerce Clause of the U.S. Constitution, by authorizing in-state wine retailers to ship wine directly to Texas consumers while denying out-of-state wine retailers the same right.

On January 26, 2010, a three-member panel of the 5th Circuit Court of Appeals ruled on twin cases Siesta Village v. Steen and Wine Country Gift Baskets v. Steen. The appellate ruling said that Texas laws prohibiting out-of-state wine retailers from shipping wine directly to Texas consumers violate neither the Commerce Clause of the U.S. Constitution nor the Supreme Court's 2005 decision in Granholm v. Heald. TABC is not required to offer a permit to out-of-state retailers.

The appeals court said that the Interstate Commerce Clause and the Granholm decision intend to prevent discrimination against out of state producers and products, which means states can't discriminate against out-of-state wineries. However, this does not protect out-of-state retailers.