Archive for October, 2008
Mark Your Calendar Because Idaho Won’t: Direct Shipper Permit Renewal
October 31st, 2008
This is a reminder that Idaho Direct Shipping Permit holders must submit a renewal form before the expiration date of their current permit (Direct Shipping Permits expire a year after the date of issue). Idaho does not send out renewal notices, thus it is the responsibility of the permit holder to obtain and submit the renewal form. You can find the form on the main page of the Idaho Alcohol Beverage Control under the name “Idaho Direct Shipper Renewal Form.” A $25 renewal fee and, if you are an out-of-state direct shipper, a certified copy of your state winery license must be submitted with the form. Also, a contact person’s e-mail address is required to complete the renewal application.
There is good news regarding Idaho’s bond requirement for some direct shippers. Direct shippers may request to have their bond requirement removed after one year. However, in order to qualify, the direct shipper must have an impeccable record of compliance and submit a letter of request to the Idaho Tax Commission.
Appeals Court Calls for More Facts in Challenge to Tennessee On-site Law
October 27th, 2008
The October 24th decision of the Sixth Circuit Court of Appeals in Jelovsek v. Bredesen has been widely reported as upholding face-to-face on-site purchase requirements for winery sales to consumers. There is, however, an interesting disconnect between what the district court said when it dismissed the complaint and what the appellate court said in partly affirming the dismissal.
In March 2007 the district court judge upheld a statutory scheme he understood as an exception to the otherwise mandatory three-tier system, allowing Tennessee residents to buy wine at a Tennessee winery that used a certain proportion of Tennessee fruit and to transport the purchase in quantities of up to three gallons, while limiting transportation of out-of-state wine purchases to one gallon. The circuit judge, speaking for a three-judge appellate court, clearly upheld laws requiring both in-state and out-of-state wineries to use Tennessee’s three-tier system and clearly reversed the district court’s upholding the exception. The appellate opinion does not, however, say that Tennessee may continue allowing Tennessee wineries to sell at their premises to consumers so long as the transportation quantities are equalized.
What the opinion appears to leave open is the fundamental question in the lawsuit: whether Tennessee can prohibit direct shipment to its residents by out-of-state wineries while allowing in-state wineries to sell out of their tasting rooms. The first line of attack on that proposition is that on-premises sale requirements, though literally neutral, so obviously favor nearby wineries over more distant ones that they should be analyzed as facially discriminatory against interstate commerce, putting the burden on the state to demonstrate that the differential is indispensable for carrying out a legitimate state objective. The second line is that, even if we read on-site requirements as facially neutral, the harm to interstate commerce from the difference in access to the market outweighs any benefit the differential may confer on the state; under that analysis, the plaintiffs, rather than the state, have the burden of factual proof. The main line of defense is that the differential is a mere “accident of geography” without Commerce Clause significance. Lower courts in other cases have disagreed on which view is correct.
The Sixth Circuit held that discrimination in favor of Tennessee wineries would have to end and noted that good arguments in principle exist for leveling up and for leveling down. In the absence of a sufficient record for choosing one or the other, it remanded the case to the district court for further proceedings. The opinion provides no instructions on how much change would be required to achieve a level playing field if the district court decides to extend equivalent benefits to out-of-state wineries, rather than reduce privileges of in-state wineries. Thus, it looks as if the plaintiffs have an opportunity on remand to provide support for their proposition that leveling up requires allowing direct shipment.
Direct Shipping Online Seminar: Last Chance to Register
October 15th, 2008
This is a quick reminder that we will hold an online direct shipping seminar for wineries tomorrow (October 16th) at 10am PT. Over 550 people have registered for this event so far. Click the button below to register for this FREE event.
October 16th Online Direct Shipping Seminar
Hold the Toasts in Michigan
October 13th, 2008
On October 6th, 2008, the judgment in Siesta Village Markets LLC v. Granholm was stayed by agreement of the parties, to give the state time to appeal and, if the appeal is taken, to leave the current law in force for the duration of the appellate process. It seems almost certain the defendants will appeal.
That means the law in Michigan has not yet changed and, depending on the outcome on appeal, may not change as contemplated by the district court opinion. Reports that Wine.com will begin shipping in reliance on the original judgment appear premature.
DHL to Cease Wine Shipments Nov 3rd
October 6th, 2008
Steve Bachmann at The Wine Collector is reporting that DHL has notified its customers that it will cease wine shipments effective November 3rd. DHL has struggled to gain a foothold in the interstate wine shipping market, where FedEx and UPS dominate.
If you have received the notification letter from DHL, we’d love to see a copy of it. You can always reach our blog authors and editors at blog@shipcompliant.com.
UPDATE: We received a copy of the letter that DHL sent out to their customers. See the letter below.
Granholm, the Sequel
October 1st, 2008
On September 30, 2008, a federal district court ordered Michigan to give out-of-state retailers access to Michigan consumers to whom local retailers could sell wine. The reasoning in Siesta Village Market LLC v. Granholm closely parallels that of the landmark Supreme Court decision, Granholm v. Heald, in effect rendering Governor Jennifer Granholm a serial violator of the dormant Commerce Clause.
Judge Hood found laws requiring differential treatment of local and interstate commerce to be discriminatory on their face, thereby assuring their invalidity in the absence of showing by the state that there was no less discriminatory way to pursue its legitimate regulatory objectives. She further found that, as in the original Granholm case, the state had not met its evidentiary burden.
The “Granholm II” order enjoins the governor and other state officials from prohibiting selling, delivering and shipping wine through interstate commerce directly to consumers by out-of-state wine retailers, but allows the state to collect taxes on wine sales and to require licenses and permits for direct interstate sales and deliveries, so long they do not discriminate against out-of-state wine retailers. The state and its wholesaler allies are expected to move for a stay pending appeal, though the forcefulness of the court’s opinion puts the result of a motion in doubt. However, the licensing and tax-collecting provisions of the injunction provide opportunities for delays in compliance without a formal stay.
Wisconsin Becomes a Limited State Today: I’ll Have Some Wine with that Cheese, Please
October 1st, 2008
Beginning today, October 1, 2008, Wisconsin is open to direct wine shipments from wineries throughout the country. Direct shipments to consumers in Wisconsin must be shipped under Wisconsin’s new “Direct Wine Shipper’s Permit”; reciprocal shipments of wines are no longer allowed. New direct shipping regulations include: a $200 Direct Shipping license, payment of sales and excise taxes, and quarterly reporting. Additionally, the consumer is limited to receiving no more than 108 liters (12 cases) of wine per year from any combination of licensees; the consumer is responsible for staying within the limit, however an individual direct shipper may not ship over 108 liters of wine to any individual in Wisconsin.
Also included in the legislative changes is the ability for wineries that produce less than 25,000 gallons of wine per year, to sell wine to retailers through a “co-operative wholesaler”. Co-operative wholesalers must be created before December 31st, 2008. To learn more about the legislative changes and co-operative wholesalers, read “Direct Shipping Bill Receives Governor’s Signature“. Also, “Permit Applications Available” contains more detailed information on these legislative updates, and information on how to become permitted as a Direct Wine Shipper in Wisconsin.
