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.