Nov. 11 (Bloomberg) -- Pennsylvania's seven-decade monopoly on wine sales is ending after a judge overturned the commonwealth's ban on Internet and mail-order shipments.

Wineries from across the U.S. will be able to ship directly to residents for the first time rather than being forced to sell through state-owned stores. Pennsylvania, the only state besides Utah to maintain total control over wine and liquor sales, had argued that rejecting the ban would cost the state tax revenue.

``It's wide open,'' said Mark Squires, a Philadelphia lawyer who reviews wine for Web sites. ``People can bring out- of-state wine in here and the state can't do anything about it.''

The decision is also a victory for wineries such as Chaddsford Winery in Chester County, Pennsylvania's largest vineyard. The Pennsylvania Liquor Control Board planned to eliminate a 37-year exemption for in-state wineries so the agency would comply with a U.S. Supreme Court ruling in May that barred states from discriminating against businesses.

The ban may have cost Chaddsford 25 percent of its business, or almost 7,000 cases, co-owner Lee Miller said on Oct. 24. The Pennsylvania Wine Association fought to delay the ban, saying its members get 70 percent of their sales during the holiday season in November and December.

``There is no question in my mind that there is irreparable harm to these wineries,'' state Senior Judge Keith Quigley in Harrisburg said yesterday as he extended an order quashing the ban. ``The impediments that exist here are real.''

`Money and Power'

Pennsylvania's liquor laws date back to the end of Prohibition in 1933. Former Pennsylvania Governor Tom Ridge, a Republican, proposed privatizing the state's more than 600 liquor stores in 1997. Legislators rejected the plan after state employee unions opposed it.

``It's all about money and power,'' said James Tanford, co-counsel for an Indiana winery that sued in federal court for access to Pennsylvania's market. ``If wine bypasses them they fear loss of revenue, loss of control, loss of tax dollars and loss of power.''

The Liquor Control Board contributed $373 million to the state general fund last year, including $54.9 million in profits on wine and spirits and $294 million in taxes, said Molly McGowan, spokeswoman for the board. The total equals about 1.6 percent of the $22.8 billion collected by the state in the year through June 2004.

Pennsylvania lawmakers will have to create a framework for wine sales, McGowan said. State Senator Jim Ferlo, a Pittsburgh Democrat, introduced a bill last week that allows consumers to buy as many as 24 bottles a month from out-of- state vineyards that purchase a $100 license.

No Accountability

``We need to combine some common sense and fairness for the consumer with an obligation we have to protect our own wineries,'' Ferlo said in an interview. The industry generates $21 million in revenue each year and stimulates $140 million in tourism, the Pennsylvania Wine Association estimated in 2003.

Pennsylvania and other states began reviewing rules on wine sales in May, when the Supreme Court struck down laws in New York and Michigan that discriminated against out-of-state wineries by barring them from shipping to in-state customers.

The decision gave states the option of banning direct sales or joining the District of Columbia and 27 states that allowed all shipments. Pennsylvania authorities chose the former, ordering the state's 111 wineries to sell exclusively through state stores for the first time since 1968.

More Expensive

The Liquor Control Board had no choice, because nothing in state law allowed for the shipments or collection of taxes on them, said Faith Diehl, the board's general counsel.

``If it is open, you would have thousands of unknown entities shipping to homes across the Commonwealth without any accountability and any enforcement,'' Diehl told Quigley.

U.S. Judge John P. Fullam in Philadelphia ordered Pennsylvania authorities to stop enforcing the ban on Nov. 9, the day before Quigley's order.

Pennsylvania ranks fifth in the number of wineries in the U.S. The four states with more -- California, Washington, New York and Oregon -- chose to allow all shipments. Connecticut, Ohio and Texas also lifted interstate bans. New Jersey, which has just 17 wineries, was among states to impose a full ban.

Pennsylvania's wineries rely on direct sales from tasting rooms, mailing lists and over the Web to compete with larger rivals in states like California, which produces 89 percent of the nation's wine, according to trade association WineAmerica.

Selling Directly

Selling directly through state stores would have added an 18 percent liquor tax and $4.50 handling fee for each order, on top of the state's 6 percent sales tax.

``That may make local wines more expensive than national brands,'' Squires said.

Tom Carroll, president of Crossing Vineyards & Winery in Bucks County, says he wouldn't sell enough of his gold-medal Chardonnay, Riesling and Wild Berry wines to stay afloat without the Internet. Carroll estimates his production at 8,000 to 9,000 cases a year.

``We've invested substantial monies based on the current law,'' Carroll said. ``If you're going to say `just kidding' to us, that would be a major blow.''

To contact the reporter on this story: Sophia Pearson in Wilmington, Delaware Spearson3@bloomberg.net

Last Updated: November 11, 2005 00:00 EST