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Catallaxy.net’s own Aaron Morris was published Monday at the Lexington Herald-Leader on the subject of wine. His op-ed follows:

Let wineries ship wares out of state

By Aaron Morris

Prohibition, one of the darkest chapters of American government, officially came to a close 74 years ago. John D. Rockefeller, once a supporter of a national ban on alcohol, concluded that Prohibition had reduced respect for the law and driven crime “to a level never seen before.”

Sadly, Kentucky’s consumers and wineries are still paying a heavy price for policies that came after Prohibition’s repeal.

When Prohibition ended, it was replaced by a system placing alcohol distributors as legally ordained middlemen between alcohol producers and consumers. The policy was meant to get organized crime out of the alcohol business.

Today, Kentucky distributors can use their legal status to arbitrarily increase the price of spirits, wine and beer at the expense of producers, retailers and consumers.

Kentucky is among a shrinking number of states (16, at last count) that prohibit direct wine shipments to consumers. Wise to the competitive threat posed by UPS delivering cases of Riesling to consumers directly, distributors have sought to keep this government-sanctioned monopoly in place with a variety of tactics.

Arguments favoring a law to protect distributors from the rigor of the marketplace rarely amount to anything more than, “We must protect the children!”

If we leave aside the prevalence of Kentucky drive-thru liquor stores and the cheap availability of beer in every grocery and convenience store in every wet county in the state, it becomes difficult to imagine many teenagers wanting to risk a federal mail fraud charge as they seek home delivery of a case of fine California pinot noir. Never mind the extra cost for shipping and handling, and the wait of up to a week for that first drink. As weak as the case is, that’s essentially the public defense for laws protecting distributors. The reality of how these distributors harm Kentucky is even less defensible.

Following a 2005 Supreme Court decision requiring states to give in-state and out-of-state wineries identical treatment, the Kentucky General Assembly made a half-hearted attempt to adjust its laws accordingly.

It passed a law allowing visitors to any domestic winery to have wine shipments essentially follow them back home. Unfortunately, the only way out-of-state consumers could ship Kentucky wine back home was to first visit a Kentucky winery in person and jump through a few other hoops.

While it certainly helped distributors keep a stranglehold on supply, it’s not the kind of policy meant to spur the development of a strong wine industry. There’s plenty of reason to believe that a change of policy might strengthen Kentucky’s ability to compete with some neighboring wine- producing states.

Just 15 years ago, there were zero wineries in Kentucky. Missouri and Illinois - two states that allow direct shipment of wine - had 10 and seven wineries respectively.

By 2006, Kentucky had 31 wineries, but Missouri and Illinois vintners had larger ambitions. The states had 56 and 63 wineries, respectively. Virginia, which allows direct wine shipments, went from six wineries to more than 100 over the same time period.

The Kentucky Department of Agriculture features a “Kentucky Proud” campaign spotlighting local agricultural products. Agriculture commissioner Richie Farmer wrote in a letter to Kentucky Proud businesses that: “Consumers will be strongly motivated to seek out products bearing the Kentucky Proud promise of home state excellence.”

If “Kentucky Proud” is a moniker worth claiming, why do Kentucky’s politicians insist on keeping Kentucky’s quality wines a secret with these burdensome anti-competitive policies? Wineries in neighboring states are growing their businesses, advertising and selling their homegrown wines across the country. Kentucky wineries are simply being shut out, utterly prevented from competing globally.

Had our lawmakers in the Bluegrass decided to favor the wine-buying public instead of wholesalers and liquor distributors, consumers all over the world could today order the small batch wines made in Kentucky over the phone or the internet. Elk Creek and dozens of other Kentucky wineries could ship directly to Paducah, Louisville, New York or Los Angeles. They could even ship wines right down the street, all without using an expensive and often useless middleman.

Wine is a value-added agricultural product, one that Kentucky is uniquely suited to produce with its rolling hills, quality soil and temperate climate. Distributors don’t care about having a thriving wine business. They just want their government-guaranteed piece of the pie, even if the pie is smaller than a free wine market would dictate.