Archive for June, 2007
Oregon Legislation Ends Reciprocity
June 26th, 2007
HB 2171 passed the Oregon Legislature just days prior to the end of the regular session. The new legislation removes reciprocal language from Oregon’s current wine shipping laws. In its place, HB 2171 creates a direct shipping permit system. In essence, the direct shipping permit will be available to all wineries and retailers who wish to ship wines directly to Oregon consumers.
HB 2171 allows a direct shipping permit holder to ship up to two nine-liter cases/month to Oregon consumers above the age of 21. Packages must be marked with age restrictions and signed for by a person 21 years of age or older at the time of delivery. Permit holders are responsible for all privilege taxes due under Oregon Revised Statutes Chapter 473.030. The fee for the direct shipping permit is $50.00/year. In addition to the permit fee, applicants must maintain a $1,000.00 bond.
If signed by Governor Ted Kulongoski, HB 2171 will take effect on January 1, 2008.
Upcoming Compliance Events Summary
June 20th, 2007
Wednesday and Thursday, June 27th and 28th: Wine Institute Member Workshops
The workshops will include in-depth presentations on recent direct shipping and TTB and ABC rules and a discussion on maximizing tasting room and wine club opportunities.
June 27, 2007 – Santa Cruz Mountains/SF Bay Area
June 28, 2007 – Monterey County/Central Coast
Friday, July 13th – ShipCompliant Direct Shipping Seminar and Users Conference
ShipCompliant customers and other interested wineries will hear the latest legislative updates from Steve Gross and gain best practices and workflow tips from a panel of industry experts.
9:00 am – 4:00 pm
Marriott Hotel, Napa, CA
Tuesday, July 17th – Wine Industry Technology Symposium
A global look at best practices and innovative use of information technology.
8:30 am – 6:30 pm
The Meritage Resort, Napa, CA
Buckeye Budget Bill Could Affect Direct Shipping
June 19th, 2007
The Ohio Senate unanimously passed HB 119, which would move Ohio towards becoming compliant with Granholm. HB 119 creates a permit system for wineries seeking to ship directly to consumers in Ohio.
As reported by the Dayton Daily News, the direct shipping provision was inserted by the Senate as an amendment to the proposed 2008-09 budget bill. Some controversy regarding the bill exists as is evidenced by comments from vintners who feel that Ohio wineries have been purposely left out of the legislative process altogether. Others in Ohio, however, believe HB 119 is a good bill for both in-state and out-of-state wineries. HB 119 will next be considered in a Conference Committee of both chambers of the legislature.
If passed as is by the Conference Committee and signed by Governor Tom Strickland, the bill will require wineries who ship into the state of Ohio to obtain an “S Permit” at the cost of $25.00. Wineries that qualify for the “S Permit” must produce less than 150,000 gallons/year, send copies of invoices of all shipments to the Department of Commerce Division of Liquor Control, and report all shipments of wine into Ohio and its destination annually. HB 119 also creates the “B-2a Permit” allowing wineries that produce less the 150,000 gallons/year to distribute directly to retailers.
An interesting aspect of HB 119 is the customer volume limit of 24 cases of wine per year. The language in this provision is similar to that contained in the Massachusetts General Laws that we mentioned in an earlier post. This provision may burden wineries to track the shipment of wines by all “S Permit” holders. Furthermore, this limitation is applied to “Family Households,” a term which remains undefined by the Ohio Legislature at the time of this post.
Another important provision in the Ohio bill is the 150,000 gallon production limit. This limitation, while significantly larger than those applied in Massachusetts, seem to be of the same effects as those under current attack in the Family Winemakers of California v. Jenkins case. A ruling by the Massachusetts District Court in favor of Family Winemakers of California may give wineries some ground to challenge these limitations should they become law in Ohio.
Finally, HB 119 establishes a tax scheme for wines shipped into Ohio. In essence, wines containing 4-14% alcohol by volume are subject to a tax of 30 cents/gallon; wines containing 14-21% alcohol are taxed at the rate of 98 cents/gallon; and sparkling wine will be taxed at the rate of $1.48/gallon.
The ShipCompliant research team will track the progress and effects of HB 119. Stay tuned…
West Virginia permit process details
June 15th, 2007
West Virginia passed legislation to change from a reciprocal state to a permit state. All wineries will have to obtain a direct shipping permit and pay taxes. Corporations will also have to register with the West Virginia Secretary of State.
The West Virginia Direct Shipper Application, instructions and tax forms are now available on the Wine Institute website. Effective July 1, 2007 wineries are required to have a Direct Shipper’s License to ship wine to a resident of West Virginia. Wineries must complete the Direct Wine Shipper Application and pay a license fee of $150 to ship wines with an alcohol content of 14% or less. The license fee is $250 to ship wines with an alcohol content of more than 14%. The Direct Shipper’s Application requires applicants to request a Letter of Good Standing from their state of domicile and provide a list of brands that are to be shipped to WV. A licensed winery may ship no more than 2 cases of wine per month to a consumer. Shipments to dry areas are prohibited.
All wineries must register with the Department of Tax and Revenue and obtain a Tax ID number by completing form WV/ BUS-APP. Wineries, since they are involved in the business of agriculture, are exempt from the $30 registration fee. Applicants should allow 4-5 weeks for their applications to be processed; applications may be faxed to 304-558-8754 to expedite the process. Wineries are required to submit monthly reports and pay sales, municipal and excise tax. The sales tax rate is 6% and the municipal tax rate is 5%.
Corporations are required to register with the Secretary of State and obtain a Certificate of Authority. The Secretary of State requires corporations to pay the following annual fees:
1) License tax for full year beginning in July of $250
2) Registration fee of $100 and
3) Attorney in-fact fee $25. The licensee fee and attorney in-fact fee are prorated for parts of years on a calendar basis.
West Virginia will allow wineries who have applied for a Direct Shipper’s License to continue to ship to consumers while their application is being processed if the winery attaches copies of their Business Registration form and application for a Certificate of Authority (if required) to their Direct Shipper’s Application.
Illinois Direct to Consumer Wine Shipping Bill One Step Closer
June 6th, 2007
The Illinois House of Representatives passed Illinois HB 429, which allows direct to consumer shipping by out-of-state wineries, by a vote of 92-6 yesterday. If passed by the Senate and signed by Governor Rod Blagojevich, the bill will afford individual Illinois residents the opportunity to receive up to 12 cases of wine per year from permitted wineries.
As mentioned in our previous post, HB 429 also gives small wineries – those producing less than 25,000 gallons per year – the privilege of shipping directly to Illinois retailers. This provision will increase access to Illinois for those wineries who fall within the production limit requirement.
As other articles have mentioned, similar legislation (SB 2180) was passed unanimously by the Senate last year. Thus, the horizon looks bright for HB 429. Stay tuned…
Why Can’t I Have a Boston Wine Party?
June 1st, 2007
The current lawsuit Family Winemakers of California v. Jenkins challenges an important aspect of the Massachusetts law regarding direct to consumer shipment of wine by out of state wineries. Recent articles have mentioned that the production limits adopted by Massachusetts act as a method of protecting in state wineries from interstate commerce and restrict the choices of Massachusetts residents. Family Winemakers of California’s complaint asserts that
“in purpose and effect, the limits imposed by these capacity caps fall solely upon out-of-state wineries, whereas Massachusetts wineries continue to enjoy unfettered access to the Massachusetts market.”
Another aspect of the Massachusetts law which is thwarting the delivery of out-of-state wines is the customer aggregate volume limit, which restricts the delivery of wine to 240 liters (about 26 cases) per consumer per year for all wineries. In effects, the law burdens wineries to keep track of how much wine each Massachusetts consumer has purchased not only from their winery, but from all wineries across the country. Wineries that do ship directly to Massachusetts consumers risk violating this provision exposing themselves to fines and loss of shipping privileges.
As important as the removal of production caps and customer volume limits are, the biggest hurdle facing wineries is that neither FedEx nor United Parcel Service offers delivery of wine into the state of Massachusetts. Under the current laws, common carriers are required to obtain and carry in each delivery vehicle a special permit to deliver wine. As a result of this and other anomalous provisions, carriers refrain from delivering wine into Massachusetts. Absent a vehicle for shipping, wineries are unable to send their wines into the Commonwealth, forgoing potential profits from one of the largest wine consuming states and a venue to showcase their artistry. Moreover, Massachusetts residents are affected as the law unreasonably restricts their access to the national marketplace and their freedom of choice in wines.
In the wake of Granholm, it makes sense for wineries to challenge the type of legislative provisions like those currently under attack in Massachusetts. However, once production limits are banned, the next step toward true Direct to Consumer shipping is the abrogation of customer volume limits and anomalous common carrier provisions like those found in the Massachusetts General Laws.
