Archive for June, 2009
Details on Submitting the Kansas Special Order Shipping License Application
June 30th, 2009
As of June 25th, wineries may apply for a Special Order Shipping License that allows them to ship off-site sales to Kansas consumers (on-site sales do not require a Shipping License). The initial costs for the Special Order Shipping License include a $50 license fee and a $50 registration fee. The license will be valid for 1 year from the date issued. The cost to renew a license is the $50 license fee plus a $10 registration fee. Wineries with a license will be able to ship up to 12 cases of wine to any one consumer or address each calendar year. Direct Shippers are required to confirm the consumer is at least 21 years old by physically examining a government issued form of identification or by using an age verification service approved by the ABC. Lexis Nexis, Wine Institute’s preferred age verification provider, is an Approved Internet Based Age and Identification Service Provider for Kansas.
The Kansas Special Order Shipping License Application and Instructions (Form ABC-800 rev.6/29/09) are posted on the Wine Institute website. In addition to the License application wineries are required to obtain a bond for $750, submit a Kansas Business Tax Application, and file form ABC-160 entitled “Irrevocable Consent to Jurisdiction” with the Kansas Secretary of State’s office. There is a $35 fee to file form ABC-160 and a $1 fee for each additional file stamped copy of the form. Wineries registered as a supplier in Kansas and doing business through the 3-tier system should have already filed form ABC-160 and will not need to file the form a second time. Wineries who have already filed ABC-160 can obtain a copy of their Irrevocable Consent to Jurisdiction letter on the Kansas Department of Revenue website. A copy of the Irrevocable Consent to Jurisdiction should be attached to the application or faxed to the Department of Revenue upon receipt. Special Order Shipping Licenses will not be issued until Alcohol Beverage Control has a copy of the document. The Kansas Business Tax Application should be completed by hand and mailed in with the Special Order Shipping License Application.
Wineries located outside of Kansas applying for the Special Order Shipping License are not required to complete Section 3- “Business Ownership Information,” Section 5– “Background Qualifications” or Section 9 “Management Services Disclosure” of the application. In Section 6, Part 2 and Section 8, Part 1 it is not necessary for out-of-state applicants to attach additional documentation.
Should you have any questions about the Special Order Shipping License Application process or forms please contact Annie Bones with the State Relations Department of Wine Institute at 415-356-7530.
Application
http://www.ksrevenue.org/pdf/forms/abc800.pdf
Business Tax Registration
http://www.ksrevenue.org/pdf/forms/cr16.pdf
Escrow Bond Form
http://www.ksrevenue.org/pdf/forms/abc803.pdf
Surety Bond Form
http://www.ksrevenue.org/pdf/forms/abc804.pdf
ABC-160
http://www.ksrevenue.org/pdf/forms/abc160.pdf
-Annie Bones, State Relations – Wine Institute
Reminder: Updated New York Excise Tax Forms for May Sales
June 29th, 2009
The New York State Department of Tax and Finance recently sent a notice to direct shippers who filed and paid taxes on May shipments using form MT-40 to inform wine distributors and wineries that the paper form mailed by the state was an old version, reflecting old tax rates applicable only to orders placed before the May 1, 2009 excise tax increase. The notice requests taxpayers to send an amended return with any additional payments. The new form, with corrected tax rates, displays a revised date of “5-09″, and is available online. Forms downloaded from ShipCompliant or from New York’s website after May 1st displayed the correct tax amount.
Kansas permit applications available, Tennessee coming soon…
June 26th, 2009
Late yesterday the Kansas ABC posted their applications for direct shipping on their website. Wine producers across the country can now apply for permission to direct ship wine to Kansas consumers effective July 1, 2009.
Kansas SB 212 was signed into law by Governor Kathleen Sebelius on April 10. Wineries interested in avoiding the hassle of the application process can purchase the license at www.easywinelicensing.com.
Licensed wineries will be able to ship up to 12 cases of wine per year to Kansas residents. To obtain a Kansas direct shipping license, wineries must pay a $50 license fee, a $50 registration fee, and post a $750 bond.
Tennessee will also open for direct shipping on July 1, although the paperwork has not yet been finalized. Tennessee’s license is available for pre-order pending the state’s posting.
Release Thirty-One of “Notes on Wine Distribution”
June 23rd, 2009
R. Corbin Houchins’s latest “Notes on Wine Distribution” are now available. Release 31 includes updates on legislation, litigation and general discussions on available distribution channels for wine. In addition to country-wide topics such as “Direct Shipment by Retailers” and “A Limitation of Litigation”, distribution practices are also outlined on a state-by-state basis. Numerous states have had notable legislative activity this session, with Kansas, Maine, and Tennessee adopting major legislative changes regarding direct shipping. Read about these and other updates that affect the way wine is sold and shipped within the United States.
You can view these notes anytime by visiting the ShipCompliant Blog, located under “Compliance Resources”, or by visiting CorbinCounsel.com and clicking on the home page link, “Notes on Wine Distribution.”
Maine Event, At Last
June 13th, 2009
After years of trying, wine commerce proponents succeeded in adding Maine to the list of license states for direct shipment. Governor Baldacci signed HP 696/LD 1008 on June 12th.
After the Bureau of Liquor Enforcement adopts regulations and licensing procedures, the law will permit out-of-state and Maine farm wineries alike to ship wine (but not wine coolers!) directly to consumers by common carrier, subject to the same taxes as if sold locally. Meanwhile, the on-site provisions summarized in previous releases of Notes on Wine Distribution appear to remain available.
by R. Corbin Houchins, CorbinCounsel.com
ShipCompliant User’s Conference 2009 – Live
June 11th, 2009
If you were unable to attend today’s event, you can still feel like you’re part of the excitement – watch the 4th annual ShipCompliant Direct Shipping Seminar from the comfort of your own office. Hear from industry leaders as they discuss how the current direct wine shipping landscape affects you, and how the industry will continue to progress. Live coverage of the conference will simulcast from 9am – 12pm PST. Rob McMillan, Steve Gross, W. Curtis Coleburn, and Susan Cagann are among the esteemed speakers in this morning’s session. Read more about the conference, here.
CA: ABC Issues Industry Advisory on Outsourcing Marketing, Compliance and Logistics
June 8th, 2009
On Friday, CA ABC issued an advisory to respond generally to the explosion of service providers that enable wineries to outsource one or more components of their D2C and D2T channels.
Activities Requiring Licenses: The Department describes when third party providers require a license. In CA a license is required when a business sells (transfers title), solicits a sale or delivers alcohol pursuant to an order. (B&P Code 23025) If interpreted according to its plain language, the definition of sale would require the following types of businesses to obtain licenses to sell wine: delivery companies, credit card companies that offer wine to certain cardholders, banks with loyalty programs, florists that offer wine through retail partners, airlines, and many more. To avoid opening Pandora’s box, ABC offers some exceptions. ABC allows a delivery company under the express direction of a licensee to operate without a license. The Advisory does not offer the same exception for a website that makes an offer to sell at the direction of a licensee. However, if a website merely publishes an offer made by a winery this would not be a solicitation by the web provider. If ABC were to hold otherwise, every media publication in California accepting winery advertisements would require a license. The Advisory does make clear that when selecting a marketing service provider, the winery or licensee must retain control of business decisions and core operations such as pricing, making offers, transferring title and directing delivery.
Tied House Risks: Beyond the cautions on unlicensed sales, ABC reminds wineries that they cannot pay retailers for advertising. Wineries cannot pay online storefronts licensed to sell as retailers for loading content, posting any material, or any advertising whatsoever. The retailer only can receive money from its markup and sale of the wine products. In some instances, the winery can pay for additional services such as age verification and compliance services.
Nothing is Free: ABC reminds industry that no free goods or premiums may be provided in connection with the marketing and sale of alcoholic beverages. This includes free shipping. Shipping may be included the price but it cannot be offered as free shipping.
Consignment Sales: Federal and state beverage alcohol laws prohibit consignment sales. Attempts to improve inventory management through just in time logistics can be problematic for innovative service companies. A licensee must sell alcoholic beverages to which they have title. Inventory cannot be returned if unsold. Any just in time delivery solutions should be carefully examined to ensure that the transaction is not a disguised consignment sale.
The web of federal and CA law is full of traps for the unwary. ABC’s advisory identifies many of the traps without offering solutions. Businesses must examine the totality of the circumstances and ensure that the essential elements of each transaction and control of these elements rest with licensees.
This analysis was authored by Susan Cagann, Special Counsel at Farella Braun + Martel LLP. Susan will be speaking on the subject of marketing and retail agents at ShipCompliant’s Compliance Seminar and Users Conference June 11th in Napa, CA.
Tennessee keeps the ball rolling on direct shipping
June 5th, 2009
Governor Phil Bredesen signed Senate Bill 166 into law today. With the passage of the bill, Tennessee will legally open its doors to winery direct shipping on July 1, 2009. Tennessee prohibited direct shipments from out-of-state wineries long before the landmark Granholm case. Even onsite shipments of wine were disallowed when the Attorney General issued an opinion on the matter in February 2009. Attempts to pass direct shipping legislation in the past years have failed, unaided by a Tennessee wholesaler campaign against the bills during the 2008 legislative session. However, with the Governor’s signature, in-state and out-of-state wineries alike now have access to Tennessee wine consumers. Direct shippers can expect to pay an annual license fee of $150 (an initial application fee of $300 is required for new applicants) and remit monthly sales and gallonage taxes. Some less positive aspects of the new laws include a 3 case annual shipping limit from a winery to a consumer and restrictions on who can obtain the direct shipper’s license—retailers, unfortunately, are among the excluded.
Although retailers will not be among those celebrating on July 1, the passage of SB 166 is a huge victory for many direct shippers. Governor Bredesen’s signature signals a radical change in the state’s stance on wine sold through the direct shipping channel: Tennessee is the first state to reverse its stance on direct shipments for wine since Vermont in 2006. The effective date of this legislation is less than a month away, however, there is no word, yet, on when all necessary forms will be available, so stay tuned.
Labeling Sotomayor
June 2nd, 2009
Although I don’t believe anyone has found a beverage law opinion by Judge Sonia Sotomayor, there’s a good deal of blog traffic related to the fact she did not dissent from Circuit Judge Wesley’s opinion in Swedenburg v. Kelly, a Second Circuit decision famously reversed by the Supreme Court in Granholm v. Heald. As Justice Souter was in the Granholm majority, some wholesalers have already publicly rejoiced that his putative replacement may help swing the balance toward limiting Granholm’s reach.
To understand the significance of Judge Sotomayor’s participation in Swedenburg, it is helpful to examine the context. First, Swedenburg was decided in February 2004, following the law of the circuit as it then existed. The Second Circuit is the source of Battipaglia and other conservative 21st Amendment rulings; precedent strongly supported Judge Wesley’s conclusions. It should be no surprise to an industry that rightly hails Granholm as an innovative stroke profoundly readjusting the balance between the commerce clause and the 21st Amendment that a lower court decision two years earlier did not reach the same result. Second, the Swedenburg decision was pro-commerce in its consideration of the First Amendment issue raised by the New York statutory scheme, striking down a provision that prohibited importation of information about availability of wine at out-of-state wineries, even for lawful purchase. The other two judges on the three-judge Swedenburg panel might have gone along with the result without necessarily holding “strong 21st Amendment” positions or endorsing every aspect of Judge Wesley’s analysis.
As Tom Wark said in his blog, it will be interesting to see if confirmation hearings put direct shipment in the legal news again. It will be even more interesting to see how Justice Sotomayor comes down on implications of Granholm for the second wave of commerce cases.
It’s Alive! (and Waiting for the Governor’s Signature) – Direct Shipping Bill in Maine
June 2nd, 2009
On May 29th, “An Act To Increase Consumer Choice for Wine” (H 696) won initial approval by the Maine House of Representatives. On June 1st, only one legislative day later, the proposed act was passed by the Senate. The bill is waiting for Governor Baldacci’s signature before becoming law.
If passed, H 696 would provide for a direct shipping permit, which would allow wineries to ship up to 12 cases of wine per year to the doorsteps of Maine consumers over the age of 21. As with any direct shipping bill, the freedom to deliver wine to a consumer’s home comes with a few restrictions, but none are overly burdensome. Some specific requirements include:
- Collection and payment of sales tax
- Quarterly reporting and payment of excise tax
- $200 license fee; $50 renewal fee
- Photo ID verification and signature of recipient upon delivery
- Licensees may not ship wine in a container smaller than 750 mL
- Licensees may not ship to local option areas or areas identified as a prohibited shipping area
The expeditious passage of H 696 through the Maine Senate is a welcome event for wineries across the country. A bill that would allow winery-to-consumer shipping in Tennessee is also waiting for a signature from their governor. If both of these measures are signed into law, Maine and Tennessee will join Kansas in the ranks of previously prohibited states who have adopted favorable direct shipping laws in 2009.
UPDATE: The Senate introduced an amendment that addresses some carrier issues as proposed in Committee Amendment “A”. The bill must again be read (date set for 6/3/2009) by the House before being considered for passage into Law.
UPDATE 6/5/2009: The Maine legislature passed the bill to be enacted on June 5th, 2009 with a carrier amendment. The bill is now ready to be sent to the governor. Once received by Governor Baldacci, he has 10 days (not including Sundays) to take action, otherwise the bill becomes law without his signature.
Delaware Clarifies On-Site Shipping Rules
June 1st, 2009
The Delaware Commissioner of Alcohol has released a letter clarifying the regulations for consumers in Delaware who wish to obtain wine from outside the State. The letter confirms that Delaware consumers are permitted to carry an unspecified amount of wine into the State on their person provided the wine is for the consumer’s personal consumption and arrangements have been made to pay excise tax to the Delaware Department of Revenue. Additionally, Delaware consumers are able to purchase wine on the premises of a winery and arrange for the winery to ship the wine directly to their residence or business per the Federal On-Site provision included in the 2002 Department of Justice Appropriations Authorization Act.
Wine purchased at the winery and shipped to the consumer under the Act is subject to the same conditions as wine carried into the state by a Delaware consumer on their person. The Federal On-Site provision does not allow Delaware consumers to receive future shipments of wine (including wine club shipments) or make additional purchases once they have left the winery. The wine cannot be for resale and excise tax must be paid by the consumer.
Additional information and instructions for consumers to pay excise tax can be found in the attached letter from the Delaware Commissioner of Alcohol, John Cordey, “Re: Purchase of Wine from Wineries”.
-Annie Bones, State Relations – Wine Institute
