TABC Press Release

FOR IMMEDIATE RELEASE   December 2, 2011

TABC issues permit to Wine.com, authorizing on-line wine sales to Texans.

The Texas Alcoholic Beverage Commission (TABC) has issued a Winery Permit to a new Wine.com location in Houston, Texas. This permit authorizes Wine.com to begin selling and shipping wine directly to consumers in Texas. Although Wine.com is not currently producing wine, the company meets all the requirements to hold a Winery Permit in Texas, including a federal Winemaker's and Blender's Basic Permit issued by the Tax and Trade Bureau (TTB).

TABC Administrator Alan Steen said, "Local access, convenience and competition in Texas are ever-growing, and I believe Wine.com's physical presence in Texas will help to ensure that consumer needs can be met through legal channels available in our state." He added, "This also means that the wine coming to Texans will travel through the state's regulatory system, guaranteeing that the wine sold by Wine.com will be purchased from a TABC-permitted entity and will have undergone label approval by the TTB as well as TABC."

"We're thrilled to be back in Texas, serving our 30,000 Texas customers from our new facility in Houston," said Rich Bergsund, Wine.com CEO. "The TABC has been extremely cooperative and business-friendly, granting us the necessary permits to operate."

Wine.com is one of over 200 Winery Permit holders in Texas that are authorized to sell and ship wine directly to consumers in the state. Adults in wet or dry areas can have wine legally shipped to their front door from the holder of a Winery Permit in Texas or an Out of State Winery Direct Shipper's Permit. Texas Package Stores and Wine Only Package Stores can ship or deliver beer, wine or spirits to consumers only within the same city or county. Steen explained, "The unique aspects of state law associated with a Winery Permit allow Wine.com to offer on-line wine sales directly to Texas residents statewide."

Up until a few months ago, Wine.com had been shipping wine to Texans outside of the Texas regulatory system. They recently agreed to comply with state law and cease shipments. Since that time, they have made the business decision to open a location in Texas where they will operate within the regulatory system and pay the appropriate taxes to the state. Steen commented, "Wine.com brings jobs, competition and tax revenue to Texas - all good things for the state's economy."

Additional Information

In addition to manufacturing wine, the holder of a Texas Winery Permit is authorized to:

• buy wine from holders of Non-Resident Seller's Permits, Wholesaler's Permits or Winery Permits;
• sell wine in Texas to wineries, wholesalers and retailers;
• sell wine to ultimate consumers for consumption on the winery premises; or
• sell wine to ultimate consumers in unbroken packages for off-premises consumption in an amount not to exceed 35,000 gallons annually;
• sell the wine outside Texas to qualified persons;
• blend wines;
• conduct wine tastings on the winery premises;
• participate in wine festivals; and
• ship wine to the ultimate consumer using a licensed carrier, up to nine gallons within a 30-day period and no more than 36 gallons of wine within any 12-month period.

Historical Overview of Wine Shipping in Texas:

• 2001 – The Texas Legislature authorized Texas wineries to ship wine to Texans through a Texas Package Store via the Wine Marketing Assistance Program.
• 2003 – Out of state wineries sued the State of Texas for the right to ship wine to Texans. Pending the outcome of the lawsuit, TABC was prohibited from enforcing wine shipping laws. Any business entity could sell and ship wine directly to Texans.
• May 2005 – The Texas Legislature authorized Texas wineries and out of state wineries to ship wine directly to Texans anywhere in the state. The same month, the U.S. Supreme Court ruled in Granholm v. Heald, that laws in New York and Michigan that permitted in-state wineries to ship wine directly to consumers, but prohibited out-of-state wineries from doing the same, were unconstitutional. TABC began issuing permits to out of state wineries and began enforcing laws prohibiting anyone else from shipping wine to Texans. Cease and desist letters were sent to out of state retailers and unlicensed wineries shipping wine to Texans.
• 2006 – Out of state retailers sued the State of Texas for the right to ship wine to Texans (Wine Country Gift Baskets v. Steen). Pending the outcome of the lawsuit, TABC was prohibited from enforcing wine shipping laws related to out of state retailers.
• 2007 – The Texas Legislature limited Texas Package Stores and Wine Only Package Stores to shipping and delivering alcoholic beverages within the city or county (or within two miles of city limits) instead of statewide.
• 2008 – In Wine Country Gift Baskets.com v. Steen, the District court ruled that Texas must offer a permit to out of state retailers authorizing them to ship directly to consumers, and the out of state retailers must comply with the same regulations as Texas retailers. The Plaintiffs and the State of Texas appealed the ruling. No out of state retailers applied for the Out of State Wine Only Package Store Permit. TABC began enforcing the laws prohibiting unlicensed out of state retailers from shipping. Cease and desist letters were sent to unlicensed out of state retailers shipping wine to Texans.
• 2009 – TABC continued to enforce the laws prohibiting out of state retailers from shipping. Cease and desist letters were again sent to unlicensed out of state retailers shipping wine to Texas.
• 2010 – The Appeals court final ruling stated that Texas is not obligated to offer a permit to out of state retailers. The court stated that the Commerce Clause protects products and producers (wineries), but not retailers. TABC continued to enforce the laws prohibiting out of state retailers from shipping. Cease and desist letters were sent to out of state unlicensed wineries and out of state retailers shipping wine to Texans.
• June 2011 – TABC began working with FedEx and UPS to stop illegal shipments from out of state retailers.
• October 2011 - Wine.com ceased shipments to Texas.
• December 1, 2011 – Wine.com received a Texas Winery permit for a new location in Houston.

Contact: Carolyn Beck, TABC Director of Communications and Governmental Relations, 512-206-3347