ANNAPOLIS – When Mark Emon makes deliveries to his customers in the bayside resort town of St. Michaels, he drags behind him a red Radio Flyer wagon full of wine.
Emon, one of the founders of St. Michaels Winery in Talbot County, drops off cases of his wine to shops and restaurants within walking distance of his nine-month-old winery.
But, his deliveries may come to an end if a Feb.1 ruling by Comptroller William Donald Schaefer requiring all Maryland winemakers to distribute their products through wholesalers goes into effect without legislative intervention.
Three bills have been introduced since Schaefer’s decision was announced – two that would exempt all small wineries from the wholesaler requirement and another that would codify the comptroller’s ruling into law.
Currently, Maryland wineries can distribute their wines directly to retailers, consumers and restaurants while out-of-state winemakers have to go through distributors. Schaefer’s decision, which goes into effect June 1, will put an end to this practice by aligning Maryland with a Supreme Court ruling striking down similar laws favoring in-state wineries in New York and Michigan.
Legislation sponsored by Sen. Thomas M. Middleton, D-Charles, would allow any wineries – in state or out of state – that produce less than 40,000 gallons of wine per year to bypass the comptroller’s mandate.
Twenty of the 22 licensed wineries in the state currently produce less than the proposed threshold, including St. Michaels, which Emon estimated sells 3,700 gallons each year.
“All of our business is self-distribution and it’s all within walking distance,” he said. “Being forced to pay somebody to move my wine just half a block . . . it’s just lunacy.”
Sen. Joan C. Conway, D-Baltimore, the sponsor of the bill supporting Schaefer’s mandate, said that she would rather find a peaceable solution outside the legislature.
“Hopefully, we can come up with some sort of compromise to help the little wineries,” she said.
Many winery owners and their advocates turned out to testify at a Senate Education, Health and Environment Affairs Committee hearing Tuesday, arguing that any requirement forcing them to deal with wholesale distributors would effectively put them out of business.
“It will eat away at their slim profit margins,” said Secretary of Business and Economic Development Aris Melissaratos.
In 2005, sales of Maryland wine totaled 161,782 gallons, or roughly $8.2 million. Of that, almost 21,000 gallons was sold by wineries directly to retailers.
Middleton said that entering the grape and wine business has been one of the better options for farmers that once counted on tobacco crops.
The wine industry “is right at its infancy,” he said. “Some of us in agriculture think its one of our best hopes for alternative agriculture.”
Opponents of Middleton’s bill said the proposed 40,000-gallon cutoff is “arbitrary discrimination” that would open the state up to a legal battle.
“That 40,000 gallon cap is going to adversely affect an out-of-state winery and they’re going to challenge it,” said Bruce Bereano, a lobbyist for the Licensed Beverage Distributors of Maryland.
Legislators and winemakers were not impressed. Sen. Paul G. Pinsky, D-Prince George’s, and Sen. Allan H. Kittleman, R-Howard, sparred with Bereano over the legal question.
“The legislature shouldn’t be held up because somebody is threatening to go to court,” Kittleman said. “We should do what we think is right.”
Opponents of Middleton’s bill also claimed that allowing all small vineyards, in-state and out, to circumvent wholesalers would open up the state’s wineries to a flood of competition.
“We’ve got a concerted effort here by large, out-of-state wineries who won’t stop until they have unfettered access,” said Greg Baird of Reliable Churchill, an alcoholic beverage distributor. “Our battle is not with Maryland wineries, we’re all for seeing them grow.”
But, winery owners at the hearing were undaunted by the threat Pennsylvania and Virginia wines pouring over Maryland’s borders. “I already sell against the whole world,” said Albert M. Copp, president of Woodhall Wine Cellars in Parkton. “What’s another winery or two?”