Published: April 13, 2006 10:15 am      

Fighting to stay alive

Local wineries join others facing legal challenge

Luther winery owner Richard Kennedy planted his vineyard in 1999, becoming the third winery owner in Oklahoma.

Soon afterward, he found himself leading the battle to change the Oklahoma Constitution to allow the direct sale of wine from wineries to liquor stores and restaurants, a battle that resulted in Oklahoma voters casting “more votes for State Question 688 (whether wineries could direct sell) than any person or question on that general election, beating even President George W. Bush,” according to a recent press release put out by the Oklahoma Grape Growers and Wine Makers Association.

Now his establishment, Tres Suenos Vineyard and Winery, is one of over 34 wineries that occupy the state, with others in the process of setting up their business and he is working with state legislators on a number of issues that still trouble his and other state-wide wineries.

The newest challenge to the wine industry is a March 7, 2006 lawsuit by wine and spirits wholesalers Central Liquor Co., Jarboe Sales Co. and Action Wholesale Liquor Co. The three companies filed suit to reverse the 2001 decision by Oklahoma voters allowing state wineries to sell their own wine to restaurants and liquor stores.

The lawsuit comes on the tail of a May 2005 decision by the U.S. Supreme Court declaring that states cannot ban out-of-state wineries from shipping directly to in-state consumers while in-state wineries are allowed to do so. According to members of two winery associations in Oklahoma, the lawsuit, if successful threatens the ability of smaller, newly started wineries from staying in business and could limit and set back the Oklahoma wine industry as a whole.

“Eighteen of 34 wineries that were asked if they could stay in business said they would not be able to do so if they could not sell their wine to the liquor store or restaurants,” a Stable Ridge employee stated.

Judy Walkingstick and Joe Gibson have been working on their own business, though they have not gone beyond growing grapes and setting it up yet.

“The wholesalers are crazy,” Walkingstick said. “They talk about how it will be more available to minors if it was shipped directly, but what kid orders their wine on-line. Who would even think of that. They say a lot of things.”

Walkingstick also noted that the wholesalers would like to make it illegal for the wineries to hold festivals in which winning wines took home prizes.

“They don’t understand about the agro-tourism side of the wine industry here and they don’t care either,” she said.

A vineyard owner and member of the Lincoln County Grape Growers Association had some commments to make about the recent lawsuit.

“In 2000, the voters gave wineries the right to self-distribute their wines. There are only three big wholesellers in the state and they are basically trying to control distribution by overriding the voice of the people,” Scott Caldwell, owner of Caldwell Vineyard in Midwest City said.

Caldwell added that the wine was a $10,000 industry in Oklahoma and growing.

“There are approximately 40 wineries in Oklahoma and around 200 vineyards in 38 counties,” he said. “This legislation, if passed, would effect the vineyards and the viticulturists (grape-growers) along with the wineries.”

As to whether or not he thought the legislation would pass, Caldwell replied, “They’ve got big pockets and are obviously intent on going against the voice of the people, they are wanting to force this change.”

Not only does Kennedy, Walkingstick and others want to retain the right to sell wine to retail businesses, but they are fighting to gain the right to ship directly to the consumer.

With this in mind, they have pushed legislators to learn about the industry and support their needs.

State Senator Harry Coates, R-District 28, represents a district with more wineries than any other in Oklahoma. After working with local wine producers and grape growers, he came up with three bills concerning a problem in which wineries could sell wine on-location and through retailers, but could not ship directly to consumers.

“The state put it to a vote and citizens gave the wine producers the right to direct sell to liquor stores and restaurants,” Coates said. “We did work on the language to try and make it possible to sell direct to the consumer and, in the act of compromising, we’re trying to give the wholesalers something in amending the bill to disallow direct sales to retail establishments in order to allow direct sale to the consumer.”

Kennedy, who holds a lot of respect for Coates in supporting the wine industry, noted that he believed the state senator had made a mistake in rewriting the legislation.

“I do respect him, but I think that he has gotten some wrong information. He should have consulted us.”

Coates did note that the wineries had not “gone for the bill” and that neither of his three bills had been taken up in the House or Senate. He stated that he believed that things would remain the same, with direct sale by wineries to liquor stores and restaurants remaining legal but not to consumers.

“My personal opinon is that the statute amended by voters to our constitution should be upheld, and likely will. It’s going to be business as usual unless we get surprised by the outcome of the lawsuit.”

State Representative Danny Morgan, D-District 32, who represents the same part of the state as Coates, noted, “Oklahoma laws are so confusing that a consumer can actually go to a winery and put a shipping label on wine and have it sent to him, but the wineries cannot.”

Morgan added that the Oklahoma Constitution had a number of holes concerning the distribution of alcohol due to the fact that in order to become a state back in the days of prohibition, it had to come in as a dry one.

“When prohibition ended, Oklahoma did the bare minimum to fix its laws and until their is a concerted effort of the citizens of Oklahoma, there will still be a lot of changes to be made,” he said.

Kennedy also noted a problem more specific to his own winery, noting that despite the approval of a grant to pave the road to his establishment, “squabbles” among county commissioners had resulted in still unpaved roads.

“Kevin Leach, my commissioner, was able to get a grant but the money was spent on gravel. The problem is that the commissioners, who answer to no one, do not work together.”

As for wine legislation, he believed one problem was bipartisan politics.

“I support whoever supports our bills,” Kennedy said. “We have both republicans and democrats working on it, but the Speaker of the House Todd Hiett, he won’t even hear us. I felt hopeful when he and Wes Watkins introduced their rural economic development plan but it turned out to be a total joke.”

Kennedy did applaud Representatives Lance Cargill and Trey Worthern for hearing the wineries out.

As for the wholesaler’s lawsuit, Kennedy believes it will backfire once the word “Oklahoma” is taken our from the original SQ 688 language. That will meet the wholesalers claim that the bill discriminates against out-of-state wineries.

Updates on how the lawsuit is unfolding can be found at www.oklahomawines.org.