Archive for March 19th, 2006
Washington opens for non-reciprocal states
March 19th, 2006
Governor Chris Gregoire signed into law a bill that will allow all out of state wineries to ship to directly to Washington consumers. Previously, Washington had reciprocity arrangements with 13 states. The new regulations will make it more difficult for those 13 states because they will be required to obtain a direct shipping permit and pay taxes, but will also allow for shipments from non-reciprocal states.
On a similar front, Washington continues to revisit their laws surrounding shipping wine directly to retailers. The Costco case gets back into full swing this month. Costco is challenging the constitutionality of the Washington laws that require out-of-state wineries to go through distributors instead of shipping directly to retailers. This is a very important challenge to the three-tier system of wine shipping that states around the country are watching closely. Costco alleges that the laws create an unfair monopoly for distributors and artificially inflate wine and liquor prices.
Idaho removes reciprocity
March 19th, 2006
Idaho officially removed its reciprocity language in House Bill No. 454, establishing itself as a limited direct state. Idaho joins California and Washington as reciprocal states that moved to a limited direct model to comply with Granholm. Other reciprocal states are likely soon to follow, including Colorado and Hawaii.
With the new legislation, which goes into effect on July 1st, out of state wineries can purchase a $50 annual permit to ship wine directly to Idaho consumers. Limitations include a per individual volume limit of 24 cases per year, sales and excise taxes, and an annual reporting requirement.
The Granholm case effectively established that states must treat in-state and out-of-state wineries evenhandedly. Although the Granholm opinion did not specifically address the legality of reciprocity, Idaho did not want to risk a court challenge. Check out the Statement of Purpose from the admendment to HB 454 (emphasis added):
In a recent United States Supreme Court ruling requiring equal treatment of in-state and out-of-state wineries in the direct shipment of wine to consumers, Idaho’s law needs to be changed to a permit state from a reciprocal state.
This change would be equally beneficial to Idaho wineries as to out-of-state wineries. This proposal will establish a permit system that applies the same rules to all wineries, regardless of location.
This proposal would increase the collection of sales and excise taxes on wine shipped to Idaho consumers and establish greater public safeguards to prevent wine shipments to minors. It also will create a licensing requirement and fee to support oversight of wine shipments. This will also eliminate the potential for a legal challenge to our existing law.
