Utah Legislature considers separate wine club bills, but home delivery is off the table

(Tribune file photo) Wine for sale at the Utah Wine Store in Salt Lake City in 2016.

Any hopes that Utahns had of having wine shipped to their homes have evaporated — at least for another year.

Although two bills that would allow subscriptions to wine clubs are making their way through the Legislature, neither measure provides home delivery — the one perk that consumers like most about the service — and one plan might cost too much to be successful.

So which bill could win the duel: HB157, sponsored by Rep. Michael McKell, R-Spanish Fork, or SB103, sponsored by Sen. Gene Davis, D-Salt Lake City?

Much of the original language in HB157 — which originally had called for home delivery through the Utah Department of Alcoholic Beverage Control — has been substituted since it was first unveiled.

It now calls for a program in which consumers could order wines not sold in Utah and pick them up at a preferred state-run liquor store, said McKell. In addition to the subscription cost and shipping, consumers would pay the state’s 88% markup on wine, one of the highest liquor taxes in the nation.

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The proposal would require a one-time investment of about $450,000 to develop the DABC database, McKell told members of a House committee. By 2022, though, “it should support itself, and I’m optimistic it will generate revenues.”

The panel backed the idea and advanced it in a 14-0 vote.

About an hour before that vote, SB103 was approved by a Senate committee, 5-0.

The Senate version calls for a similar wine subscription program to be created by the DABC with pickup in liquor stores, but consumers would not be subject to the mandated markup.

“For a number of years, I’ve been trying to figure out how to get wine clubs (to deliver) in Utah,” Davis told the committee, “so consumers have access to the type of wines that are not in liquor stores.”

Under his proposal, wine clubs would register with the state and consumers would order through the DABC, he said. “But delivery would be to a liquor store to make sure underage drinking doesn’t go on.”

DABC Executive Director Sal Petilos testified at both House and Senate hearings, saying he preferred a wine subscription program that included the 88% markup.

“The idea of not having the markup,” he told the Senate committee, “erodes a longtime state policy of higher pricing to ensure moderate consumption of alcohol. I’m concerned that particular policy may be weakened without the markup.”

While revenue is the biggest reason to have liquor taxes and markups, there is evidence that higher prices and taxes reduce the deaths and injuries caused by overconsumption of alcohol and underage drinking.

For years, though, Utahns have complained about not being able to subscribe to wine clubs. The only way to get products not sold in the state is to place a special order with the DABC, a process that can be onerous and requires a minimum purchase of one case.

It’s no surprise that many consumers protest the system by crossing state lines to seek a better deal on their liquor purchases and then, in violation of Utah law, bring those products back home.

Utah is one of five states — along with Alabama, Delaware, Kentucky and Mississippi — not allowing direct-to-consumer wine delivery, according to Free the Grapes, a national grassroots organization working to improve consumer choice in wine.

In the 45 states that permit shipping, controls are in place to ensure that consumers pay the appropriate state and local taxes and “that minors don’t have access to the shipments,” said Tyler Rudd, with the Wine Institute, a public policy advocacy association.

Wyoming, for example, allows direct-to-consumer shipping of wines that are not available in its state-controlled system, Rudd told the Senate committee. The products are marked up 12% — compared to the usual 17.5%.

“It’s still profitable because the state doesn’t have to do anything but collect the taxes from the winery,” he said. “It’s free money.”

Rudd added that if Utahns were forced to pay the full 88% markup, the wine subscription program would likely fail. “It is simply untenable for consumers to pay that.”

What caused this sudden legislative interest in wine subscription programs? Thank the growing number of residents new to the Beehive State.

McKell said the leaders of Domo — a software company based in American Fork — contacted him about sponsoring a bill. The company recruits many out-of-state employees who are used to ordering wine by mail and want the perk in their new locale.

“Wine has important familial, cultural and religious importance for them,” Dan Stevenson, Domo’s chief legal officer, told the House committee. A state-run wine subscription program would have the controls Utah wants, but would “allow employees access to wine in a reasonably free way.”

Passage, he added, “allows our colleagues to live their best life.”