Re-cork that champagne bottle! Deregulation not so simple.

• Author: Caskey, Doug
• Position: Guest column

When the U.S. Supreme Court issued an opinion in May 2005 on a case styled Granholm v. Held, the headlines read something like: "Pop the Champagne: Court Knocks Down Wine Shipping Restrictions." As with so much of our news, though, a very complicated case was distilled down into a sound bite--and a misleading one at that.

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Consumers were calling wineries all over the United States thinking that suddenly wine could be shipped anywhere. In truth, while Granholm did overturn particularly discriminatory restrictions on shipment of wine in New York and Michigan, it actually complicated interstate shipment of wine more than it opened it up. And more significantly, it put a big crack in the three-tier system of alcohol distribution nearly every state has relied on since the end of Prohibition.

The Granholm decision, itself, was rather simple, though not in the way the headlines led consumers to believe. It said that while states do have the power to regulate sales of alcohol within their borders under the 21st Amendment to the U.S. Constitution, which was the repeal of Prohibition, states cannot favor in-state producers of alcohol to the detriment of out-of-state producers.

The court said to discriminate was a clear violation of federal law that provides for interstate commerce. The state laws overturned in Granholm included Michigan's prohibition on wineries outside its borders shipping wine to Michigan residents while allowing Michigan wineries to ship intrastate, and a New York law that required out-of-state wineries to establish a physical business presence within New York in order to ship to New York consumers. If a state is to restrict shipment of wine to its residents, the Granholm decision ruled it must do so "evenhandedly."

Prior to Granholm, about 15 states, including Colorado, had reciprocal shipping agreements whereby California wineries could ship to Colorado residents only if California allowed Colorado wineries to ship to California consumers. The Granholm decision even called those reciprocal statutes into question, however, saying that reciprocity still discriminates against producers in states that do not honor reciprocity. Consequently, State Rep. Bernie Buescher of Grand Junction and State Sen. Ron Tupa of Boulder sponsored House Bill 06-1120, signed into law in April, to bring Colorado's wine shipping laws into compliance with Granholm.

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The new law requires any winery, in- or...