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Changes In State Wine Laws Could Crush Small Businesses

Posted by Gayle Kesten Monday, Mar 9, 2009, 02:32 PM ET

President Obama is finally talking the small-business talk, but pending legislation at the state level is potent enough to leave local businesses with an incurable hangover.

The states I'm referring to (for the time being) include the one I live in -- New York, plus Tennessee. But what's at issue should strike fear in the hearts of every small-business owner in the United States: losing business to the big guys that can afford to buy in volume and sell for less.

Specifically, the two states have proposed legislation that permits supermarkets to sell wine in their aisles. If passed in New York, that translates to $105 million in licensing and franchise fees from stores to the state during the new fiscal year.

"I understand the state's in dire straits. And we're all trying to work our way out of this. But in the right direction is what I think we need to do," said a sweatshirt-clad Gene Losey, who operates GCP Liquors in upstate New York, in this video. Losey has joined hundreds of other N.Y. small-biz owners in the newly created Last Store on Main Street coalition to lobby against the legislation.

All told, New York is dealing with a $14 billion budget gap. (And to think I lose a few hours' sleep over a few hundred bucks on my credit card.) I'm taking a total guess here, but if each liquor store owner clears $50,000 a year and some predicted 1,000 shops go out of business as a result of New York's passing the law, that's $50 million out of your fellow entrepreneurs' hands, and doesn't even include the salaries of their employees. All told, 4,000 people are expected to be out of work.

"For the big box stores, it's one more item it'd be nice to sell. For liquor stores, it'll be a life-and-death issue," Geneseo, N.Y., liquor store owner Gregory Brown recently told Democrat and Chronicle.

For the record, 35 states already permit wine sales in supermarkets; Iowa was the last to join the list -- 25 years ago. And just to play devil's advocate, many local wineries are small businesses, too. Supermarkets selling their products would certainly help their bottom lines -- "where new jobs could easily overwhelm any losses from liquor stores closings," states an editorial in The Buffalo News, which cites Washington state as one example where wineries saw their sales triple when liquor laws were loosened.

I'd love to hear your thoughts; you certainly don't have to live in the affected states to take a stand. And, don't forget, another 15 states in the country are still ripe for the picking.

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