"As you know, we were excited to work with you to build the AmazonWine business, Rao said in an email that went to winery partners. "For that reason, this was a very tough choice for us. "Many of you took the time and leap of faith to really support us."

Amazon had been working on a wine launch and had at one point inked a deal to use New Vine Logistics of American Canyon, California to fulfill orders. The plan was to create a consignment system, where wineries earned 47 percent of the retail price for wine when sold.

In its landmark decision, the Supreme Court ruled that states must allow out-of-state wineries to ship directly to residents if they gave their own wineries direct shipping rights. Now 36 states and the District of Columbia allow wineries to ship directly to residents, although those rights are sometimes limited to just a few cases of wine annually or are accorded only to small wineries, said the Wine Institute, the major trade group for the California wine industry.

But the decision only addressed wineries. Retailers can ship to just 14 states, and that will drop to 13 this summer when an Illinois law takes effect prohibiting the practice, said Tom Wark, executive director of the Sacramento-based Specialty Wine Retailers Assn. "We have been able to ship wine to Illinois since we started our e-commerce site back in 2000, but because of new state legislation, we are going to lose that privilege," said David Richards, executive vice president of the Concord, Calif.-based Beverages & More chain.

Such restrictions are generally supported by wine wholesalers and distributors, who see any relaxing of the rules as an assault on a distribution system that has served them profitably since the end of Prohibition in 1933. They argue that the laws make good social policy by reducing access by minors, ensuring state tax collection and providing consumers with a wide selection of products. Retailers disagree, saying that allowing people to order wine in other states improves consumer choice and often saves money.

"This is a pretty clear-cut argument about economics," said Greg Taylor of Taylor & Norton Wine Merchants in Sonoma. "The wholesalers want to have an iron grip on sales." What wholesalers charge for wine varies greatly by state, depending on competition and regulatory issues. BevMo, for example, sells the highly regarded 1999 Dom Perignon champagne for $114.99 in its California stores and through its website. The same bubbly costs $134.99 at its Arizona stores. "In many states the wholesalers are donating huge sums of political money to ensure that outside players are blocked from the market," said Keith Wollenberg, K&L's spokesman and Burgundy wine buyer.