Native Wineries

• An Iowa native winery is a manufacturer who processes in Iowa, the fruit, vegetables, dandelions, clover, honey or any combination of those ingredients, by fermentation into wine.
   
• The U.S. Supreme Court decision – Granholm v. Heald – held that the states have extraordinary power to regulate alcoholic beverages. The 21st amendment, which repealed Prohibition, gives the states a wide scope of power to regulate alcoholic beverages. That power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers.”
  
  
• If a state chooses to allow direct shipment of wine, it must do so on evenhanded terms.
  
  
• Iowa has multiple provisions in Chapter 123 that arguably do benefit in-state manufacturers over out-of-state entities.
  
  
• Under Iowa’s native wine statute, native wineries are able to obtain a permit for $25. Out-of-state wineries have to pay a much higher fee. In-state wineries can sell wine directly in their place of manufacture (from the winery). They can also sell at retail from that facility.
  
  
• Iowa wineries pay a $1.75 gallonage excise tax, which is ultimately passed on to the consumer, while out-of-state wineries pay no tax. The current taxing scheme gives an advantage to out-of-state producers.
  
  
• Under Iowa’s three-tier system, most alcohol has to come from a manufacturer to a wholesaler who then distributes it to a retailer.
  
  
• When a manufacturer is allowed to sell directly at retail to the public, the middle tier or the wholesale tier is eliminated and erosion of the three-tier system takes place.