Internet Alcohol Sales Focus of Legal Battles

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The ease and anonymity with which minors can purchase alcohol from sellers on the Internet plays a role in a nationwide legal battle focusing on the alcohol-distribution system, USA Today reported June 9.

At issue is whether states have the authority to prohibit out-of-state companies from shipping wine, beer, and liquor directly to customers. The U.S. Supreme Court agreed to hear legal challenges to the bans, currently in place in 15 states, and settle conflicting rulings in courts in New York and Michigan.

The traditional distribution system requires wineries, breweries, and distilleries to sell their products to state-licensed wholesalers. They, in turn, sell the alcoholic products to liquor stores.

However, the technology offered by the Internet has added another dimension to alcohol sales that is not addressed by current laws. "Internet sales complicate our ability to protect minors and collect taxes," said Michigan Attorney General Mike Cox. "This is really a states' rights issue vs. the federal government's use of the Commerce Clause to upset our regulation. So we're fighting for Michigan minors and for the Constitution."

Many of the lawsuits against online-sales bans have been filed by small, family-owned wineries. The owners argue that current laws requiring them to sell through wholesalers keep them from competing with big-name wines that get better positioning on liquor-store shelves.

The wineries contend that the laws should be expanded to regulate the new marketplace created by the Internet, while enabling states to collect taxes on online sales and prohibit minors from accessing alcohol through enhanced identification screenings.