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North Dakota Makes Direct Shipping Easier for Wineries and Retailers

North Dakota legislature has passed, and its Governor has signed into law on April 1, new legislation that will allow wine orders to be shipped from any fulfillment house that obtains a North Dakota “logistics shipper” license, require licensure of common carriers, and make other related changes to the state’s direct shipping law. These new requirements will take effect on August 1, 2013.

North Dakota notified direct shippers that wine shipments could only be shipped from the licensee’s premises back in April of 2010. Fulfillment houses, from which almost half of all direct shipments originate, were not allowed to ship on behalf of the licensee, despite the fact that California considers fulfillment houses with public warehouse licenses (Type 14) to be an extension of the winery’s premises. With the passage of this bill, licensed wineries and retailers will once again be able to use this much valued function of wine shipping.

North Dakota isn’t the only state to restrict the use of third party and shipping services —

  • Virginia imposed restrictions on shipments from fulfillment houses in 2009, but established regulations to allow it last November. Virginia now requires out-of-state fulfillment houses to become approved, submit signed winery-fulfillment house contracts to the state, and remit periodic shipment reports.
  • New Hampshire enacted a bill in 2011 that not only created a common carrier license, but also created a “black list” of unauthorized shippers from which FedEx and UPS cannot deliver without penalty.

New regulations and laws in New Hampshire, Virginia and North Dakota give these states additional resources and tools to track shipments, enforce direct shipping rules and collect tax on all shipments.

In addition to becoming licensed, fulfillment houses and common carriers wishing to ship wine into North Dakota will be required to report shipments on a monthly basis and will be subject to penalties if they fulfill and/or ship orders from unlicensed warehouses or suppliers. Also, licensed direct shippers will be required to report their use of fulfillment houses in preparing direct shipments. The Alcohol Tax Section of the North Dakota Office of the State Tax Commissioner has already begun drafting license application and reporting forms and plans to make these available ahead of the August 1 effective date in order to give potential licensees time to review the new requirements.

Until the new law takes effect, out-of-state direct wine shippers should continue to ship from their licensed premises. As the August 1 date gets closer, we will keep our clients and readers informed of specifics related to the new regulations.

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