Lawmakers vote to allow Oklahoma wineries to distribute their brands

By The Associated Press

Published: March 3, 2008

OKLAHOMA CITY - Legislation that authorizes small Oklahoma wineries to distribute their products to liquor stores and restaurants without relying on liquor wholesalers was approved by a state House committee Monday.

But a wholesaler who spoke to members of the House Rules Committee warned that the move could open the door for wineries in other states to also self-distribute and flood Oklahoma with out-of-state wines.

The measure, passed by the Senate last year, would order a statewide referendum on a constitutional amendment to permit Oklahoma wineries as well as wineries in other states to sell their products directly to package liquor stores and restaurants.

Oklahoma wineries were given that right in 2000 when voters approved a statewide referendum that allowed small wineries to sell directly to retail establishments. The measure passed in all 77 counties with 78 percent of the vote.

But the law was challenged by liquor wholesalers who said it discriminated against out-of-state wineries who were not allowed to sell directly to liquor stores or restaurants in Oklahoma. A federal judge struck it down in 2006.

The measure's author, House Democratic Leader Danny Morgan of Prague, said the bill would restore the self-distribution rights that small Oklahoma wineries once had.

"This is an attempt to give back to those wineries the right to self-distribute," Morgan said. Since self-distribution ended, Morgan said there has been a measurable decline in excise tax collections because Oklahoma wines are no longer available.

But wholesaler Brad Naifeh of Central Liquor Co. of Oklahoma City said opening up self-distribution to all states might attract large producers like Gallo in California. Naifeh said Gallo produces small amounts of special label wines that it might be interested in distributing on its own.

Morgan said his legislation includes safeguards to deter out-of-state wine makers, including the requirement that they maintain a warehouse and staff in the state.

"They should have to make an investment in the state of Oklahoma," Morgan said.

Small wineries in Oklahoma have said large wholesalers will not distribute their product because there is little demand for them. Consequently, they are not available in liquor stores and restaurants — even in the same community where the winery is located.

But wholesalers have expressed concern that self-distribution by wine makers will erode the three-tiered system of producer, wholesaler and retailer that has defined alcohol distribution in Oklahoma for almost 50 years.

The measure originally placed a 10,000-gallon ceiling on how much wine a vineyard could distribute on its own before it had to use a wholesaler. Committee members approved amendments that removed that provision from the proposed constitutional amendment and placed the ceiling in companion legislation that will allow lawmakers to set it.

Morgan said 10,000 gallons is roughly equivalent to 50,000 bottles of wine, or about 4,000 cases.

Andrew Snyder of Sand Hill Vineyards in Calumet said only five of Oklahoma's 55 wineries produce enough wine to meet the 10,000-gallon limit, meaning most wineries would self-distribute if the measure became law.

The measures are Senate Joint Resolution 29 and Senate Bill 995.

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