A fed-up consumer calls it "socialism." A fed-up retailer calls it "state-sponsored gouging." They're referring to an Ohio law that requires vintners, distributors, and retailers to jack up the price of a bottle of wine a total of 135 percent before it hits the shelf. As a result, wine costs up to 50 percent more in Ohio than in other states, translating into $100 million a year that Buckeye State residents could spend on something else.
"I don't know how this could possibly benefit the public," Tom Jackson, president and chief executive officer of the Ohio Grocers Association, told the Cleveland Plain Dealer, which documented the stupidity of the state's wine control regime in early March. The paper claimed Ohio is the worst among 17 states that regulate the price at which wine is sold.
It may be the worst, but all 50 states have a strictly enforced three-tier regime to regulate the sale of alcohol. Vintners must sell to wholesalers, wholesalers to retailers, and retailers to the public. Twenty states allow vintners to sell directly to consumers, through either mail order or the Internet. Not one state allows small vintners to bypass the first middlemen and sell directly to retailers.
The protectionist regimes are generally safe in state legislatures, but they are coming under increasing attack through the courts and the Internet. The Institute for Justice, a Washington, D.C.-based nonprofit legal group, is challenging a New York law that prevents direct wine sales from other states. Wine lovers can also take matters into their own hands. In Ohio, for example, wine enthusiasts buy direct from out-of-state stores. The law requires them to register these purchases and pay the markup. But as The Plain Dealer notes, "many bypass that step."