Illinois: Bill targets bootlegging and illegal wine shipping

Source: Chicago Tribune

Greg Trotter

August 1, 2016

Beware, ye bootleggers and illicit e-commerce shippers of booze into Illinois – the state law is about to get tougher.

Senate Bill 2989, sponsored by state Sen. James Clayborne, D-East Saint Louis, seeks to toughen oversight and enforcement of transportation of alcohol into Illinois. The bill is awaiting Gov. Bruce Rauner’s signature after passing through the state House and Senate. Backed by the powerful and long-established alcohol wholesalers lobby, the legislation represents the alcohol industry’s attempt to protect the so-called three-tier system against unlicensed wine shippers sending booze to Illinois customers and merchants illegally bringing alcohol across state borders without paying taxes.

“Licensed wineries that have the ability to ship into the market – they’re following the law. Why is another winery able to not license themselves and ship in? It’s really about making sure we’re able to cover the laws that are in place and making sure everyone’s following the rules properly,” said Danny Wirtz, vice chair of Breakthru Beverage Group, the alcohol distributor company formed in January when Wirtz Beverage Group merged with New York-based Charmer Sunbelt.

When you buy a six-pack or a bottle of wine or tequila at a store in Illinois, you’re participating in the three-tier system in its most traditional format. A wholesaler sold that alcohol to the store after buying it from the manufacturer.

But of course, consumers have more options these days. You could use an app to order your vino from one of Chicago’s several alcohol delivery services, like Drizly or Instacart, which partner with retailers. Or you could buy your booze online, from out of state, via websites likes eBay Wine and Amazon. Or, if really determined, you could drive to Wisconsin and bring back a twelver of New Glarus Spotted Cow, a popular beer not sold in Illinois.

This bill doesn’t limit any of those options, but it does impose tougher penalties on the “bad actors” of e-commerce and those who illegally transport large quantities of alcohol across state lines with plans of reselling, said Jeremy Kruidenier, vice executive director of the Wine and Spirits Distributors of Illinois, a trade group funded by the state’s two largest wholesalers, Breakthru and Southern Wine & Spirits.

It’s really about making sure we’re able to cover the laws that are in place and making sure everyone’s following the rules properly. – Danny Wirtz, vice chair of Breakthru Beverage Group

Any person transporting into Illinois 108 liters or more of wine, 45 liters or more of spirits, or 118 liters or more of beer would face a felony charge – instead of a fine and business offense – if the bill is signed into law. Likewise, any nonlicensed wine shipper that’s already received a cease-and-desist letter from regulators would also face felony charges.

Last year, Wine and Spirits Distributors of Illinois conducted its own investigation that showed hundreds of cases of wine and liquor entering Illinois illegally. At the time, the trade group calculated that the state had lost $20 million to $30 million in tax dollars over a single year.

The legislation also increases the licensing fees across the board for manufacturers, wholesalers and retailers, and establishes more of an audit process “to track how product is moving into Illinois,” Kruidenier said.

“Frankly, I don’t think there’s been enough enforcement,” Kruidenier said.

Kruidenier emphasized the association wasn’t opposed to e-commerce and declined to name businesses that haven’t been adhering to existing state law. Revenue from the increase in licensing fees is intended to help boost enforcement and will be split between the Illinois Liquor Control Commission and the state’s general fund, he said.