Federal Court Strikes Down In-State Grape Quota: Decision Could Have Nationwide Implications
In the first Federal ruling of its kind, the U.S. District Court of Minnesota has struck down a 51 percent in-state fruit quota for Minnesota wineries, declaring the requirement an unconstitutional violation of interstate commerce.
“This is a huge win for the future of the wine industry and small wineries in Minnesota,” said Nan Bailly, owner of Alexis Bailly Vineyard. “We are finally free to make the wines we want to make, not the wine dictated by the state legislature.” Bailly is co-plaintiff with Next Chapter Winery in the suit against the state of Minnesota.
“They are so excited,” attorney Jaimie Cavanaugh told Grape Basin News. “Now they have more options. They can experiment with different varieties now. It just gives them more freedom,” she said.
While Minnesota’s winemakers are celebrating, the decision has implications for winemakers across the nation. The specific legal finding is that a restriction on purchases from out-of-state farmers harms both parties – the sellers, as well as the Minnesotans who want to make the purchases.
“States have to be allowed to trade freely with each other,” Cavanaugh said. “States can’t create protectionist laws that harm commerce in other states.”
The decision could spawn legal challenges by winemakers outside Minnesota. It might also color discussions with state lawmakers. Twenty other state have domestic content requirements, including Nevada, where commercial winemakers can produce up to 1,000 cases before its 25 percent Nevada-grown grape quota takes effect.
“It doesn’t follow necessarily that all states will just abandon their laws, but here’s the first court precedent saying that this type of requirement is unconstitutional,” Cavanaugh told GBN. “You have a very strong argument now if you’re going to talk to lawmakers that there’s a good reason to get rid of [mandatory fruit quotas].”
The Minnesota winemakers don’t intend to abandon their heritage.
“It’s something they’re proud of, that they’re on agricultural land in Minnesota, and that they’ve grown grapes all these years in a really difficult climate,” Cavanuagh said.
Nonetheless, grapes grown in the cold northern climate often require blending. The law has limited their product assortments, as well as their creativity.
The decision is also a victory for consumers, Cavanaugh said.
“It might mean that prices go down a little if they can order in bulk, or buy from different states where grapes might be priced better,” she said.
The wineries were represented by the Institute for Justice, a nonprofit law firm with a focus on small businesses. The State of Minnesota has not yet indicated whether it will appeal the ruling.