Archive for April, 2009
Wine Freedom in the South? Tennessee Direct Shipping Bill Passes the Senate
April 27th, 2009
Tennessee, one of 13 states that still bans direct-to-consumer shipping, took steps towards ending that association on April 13, 2009 when the Senate-approved Senate Bill 166, which allows direct shipments of wine. Currently, anyone who transports wine into Tennessee by bypassing the three-tier system is committing a felony (see Section 57-3-401.b of the Tennessee Code) an act that bill sponsor Senator Paul Stanley says is already widely committed. Due to this continuous violation of existing law, Senator Stanley calls SB 166 a “common-sense bill.” Senate Bill 166 requires out-of-state wineries to obtain a $300 license non-refundable application fee and $150 annual permit fee and also sets a shipping limit of 3 cases per calendar year per individual consumer.
During the Senate Committee hearings, there was lengthy questioning regarding enforcement mechanisms to ensure out-of-state wineries are in compliance. Senator Tim Burchett also voiced concerns about the lack of jurisdiction that the Tennessee Alcohol Beverage Commission has over out-of-state wineries, to which committee chair Senator Bill Ketron responded with a quote from Section 1.C.2 of the bill, which states that applicants must, “execute a consent to jurisdiction and venue of all actions… in the state of Tennessee.” Senator Ketron also noted other enforcement mechanisms such as a clause that makes direct shipping without a permit a Class (E) Felony. Primary Sponsor Senator Stanley addressed the doubts about enforcement and compliance by pointing to many other states that have successfully instituted and enforced direct shipping laws. In addition to mentioning the success of other direct-shipping states, bill supporters also noted that SB166 could bring in an estimated $10 million in additional annual revenue.
The approved version of the bill was passed in the Senate by a 22-8 margin with two amendments, imposed by the Senate Finance, Ways and Means committee. The first amendment reduced the total annual wine shipments allowed to one resident to 27-Liters from the original 108 Liters per year, with a one case per month limit. The second amendment was apparently inserted with no specific purpose except to appease the three-tier distribution system by stating that nothing in the direct shipping bill is meant to “diminish the three-tiered scheme.” The Senate-approved version of SB 166 also requires wineries to report the appropriate sales and gallonage taxes, and direct shippers must keep records of all shipments in case the Tennessee Alcoholic Beverage Commission requests such information. Now that the bill has moved through the Senate, it awaits discussion and approval by the House Government Operations Committee.
In February, Tennessee’s Attorney General chose to level-down by banning all direct-to-consumer shipments and transports of wine for personal use. Only two months later, however, the passage of SB 166 in the Senate demonstrates willingness to accommodate consumer demand by opening up the state to direct shipping.
Keeping up: Direct Shipping Legislation
April 24th, 2009
With Kansas now due to open for direct shipping on July 1st, and legislation pending in Florida and Tennessee that may change direct shipping laws, the direct shipping environment is shifting faster than usual.
You will not want to miss a state-by-state review of legislative updates from Steve Gross, the Wine Institute’s Director of State Relations during ShipCompliant’s 4th annual Direct Shipping Seminar and Users Conference. The event will take place on Thursday, June 11 at the Napa Valley Marriott.
Hear from Steve Gross and other distinguished speakers as they address important direct shipping updates including a state-by-state review, wine-industry market analysis and strategic direct-to-consumer marketing. Confirmed speakers include:
- W. Curtis Coleburn, COO, Virginia ABC
- Steve Gross, Director of State Relations, Wine Institute
- Q&A session with Jeff Carroll, VP Compliance, ShipCompliant
- Additional speakers to be announced soon…
This conference sells out quickly so register online today to guarantee your spot, or sign up to receive email alerts on other upcoming events.
Excise Taxes Updates, New York Up and North Dakota Down
April 23rd, 2009
The wine excise tax rate in New York will increase on May 1, 2009 from $0.1893 per gallon to $0.30 per gallon. Wine Institute was part of a coalition of industry members that actively opposed the NY Governor’s proposal for a wine excise tax and demonstrated the detrimental effects an excise tax increase would have on the economy. These efforts resulted in the original proposal for a $0.32 increase being reduced to only $0.1107 per gallon.
In other news North Dakota will no longer have a separate tax category for sparkling wine. Beginning July 1, 2009 sparkling wine will be taxed at $0.50 per gallon, the same rate as table wine. This is a significant decrease from the current excise tax of $1.00 per gallon of sparkling wine.
-Annie Bones, State Relations – Wine Institute
Kansas to Open for Winery Direct Shipping July 1st
April 20th, 2009
The Kansas Legislature approved Senate Bill 212 on April 10, 2009. Governor Kathleen Sebelius followed suit today by signing the bill into law, which will go into effect on July 1st, 2009. Although the road to approval contained a few bumps and detours, the original purpose of the bill remained unchanged: to give out-of-state and in-state wineries the right to truly direct ship to Kansas consumers. Once the application forms are available, wineries will be able to apply for a special order shipping license with an initial $50 registration fee and an annual renewal fee of $10. Kansas residents will have direct access to up to 12 cases of wine per address from a winery per year. Another specification of SB 212 is a method of age enforcement, required before shipping to residents; licensees must confirm the age of the consumer by either physically examining an approved government issued ID or using an approved internet age and identification service. Permit holders will be required to remit annual sales and excise taxes as well.
Despite these clear cut guidelines, the House Federal and State Affairs (FSA) committee introduced some potentially burdensome amendments. These amendments include a trigger clause that could shut down direct shipments if any part of the Kansas liquor control act is deemed invalid or unconstitutional by a court, similar to a November 2008 Oklahoma referendum. In addition, the FSA committee inserted bond requirements for special order shipping license holders in the amount of $750, which is waived for Kansas farm winery license holders who must submit a $2000 farm winery bond. On April 2, 2009, a Conference Committee also added other amendments, not related to direct shipping, that address clubs, special events, and temporary permits. Both Chambers approved the amended version of the bill and the bill was reengrossed in the Senate and sent to the Governor.
With the Governor’s signature, the new and revised statutes will overturn the existing “direct” shipping statutes. Until July 1st, wineries are required to ship through the three tier system, a system that is very much indirect. Both of these existing permits require wineries to ship orders to a third party for consumer pick-up. Small wineries must ship orders to a designated licensed retailer for pick-up, while large wineries must first ship to a licensed wholesaler, which in turn must ship the goods to a designated retailer for consumer pick-up. On top of dealing with the round-about delivery process, consumers may also be charged a handling fee of up to $5 per order. Consumers and wineries will have to wait until mid-summer to see the effects of the statute changes, but nevertheless, Governor’s Sebelius signature and the Kansas Legislature’s overwhelming approval (88-37 in the House and 38-0 in the Senate) of SB 212 demonstrate the willingness of elected officials to reform direct shipping statutes to address their constituents’ demands.
As mentioned before, the official effective date for all new and revised statutes is July 1st of this year. We will alert you of any updates and notifications on the required forms for the special order shipping license as soon as they are available.
