In 2011, over 146,000 alcoholic beverage label applications were submitted to the Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau (TTB), an almost 10% increase from the prior year. Yet, while the amount of label applications goes up, the resources available to the TTB for processing these applications goes down due to budget cuts. The need to get a product to market as fast as possible comes in conflict with the importance of keeping alcohol beverage products in compliance with federal labeling regulations. As more applications are submitted, the risk for a crippling review process increases. Currently, spirits and wine applicants must wait 28 to 30 days respectively on a pending label application, a particularly aggravating ordeal for applicants wishing to make minor changes to an existing label.
For example, did your marketing department want to add an award to that COLA you just got approved last week? Is the logo of your winery just a tad too far to the left? Did your 2012 Chardonnay increase in alcohol content from 13.5% ABV to 15% ABV? Is the idea of waiting a month to get a new COLA for any of these scenarios leaving you feeling queasy, too? Well, never fear, the TTB doesn’t like the idea of waiting for a new COLA in these situations either. On July 5, 2012, the TTB unveiled the latest Application for Certification/Exemption of Label/Bottle Approval, Form 5100.31. With a longer list of allowable revisions, the TTB anticipates a decrease in the amount of submitted label applications. With a decrease in the amount of submitted label applications, labels for new products and products with major changes can be reviewed faster. At least, that’s the idea behind the effort put into revising the application.
A key component to the success of these changes depends largely on industry members utilizing their new found label freedoms. Because the entire application process requires no fees, there is a potential risk that many applicants won’t take the time to educate themselves on these new allowable revisions, and instead continue to flood the pool of submitted COLA applications with unnecessary requests for additional COLA approvals. In order for this process to work efficiently, industry members need to understand these updates. Two resources from the TTB are, “Allowable Changes to Approved Labels”, which displays examples of allowable revisions and, “TTB Public Guidance 2012-2”, which simplifies the language of the “Allowable Revisions to Approved Labels” table. By utilizing this new form to its utmost potential, along with many other proposed changes outlined on the TTB page devoted to COLA streamlining efforts, the industry may see a faster and easier application process in the near future.
Here is a quick comparison of the new and old table of Allowable Revisions, with updates highlighted in red:
What are your thoughts on the new form 5100.31?
Governor Parkinson of Kansas signed SB 452 into law, changing the license term for a Special Order Shipping License from one year to two years. The legislation became effective on July 1, 2010. The fee for a new Special Order Shipping License was adjusted to $150 to reflect the new two-year license term. Current holders of a Special Order Shipping License are now required to renew their license for a period of two years and pay a $110 fee. Wineries applying for a new license have two options. Option 1) Pay the two year license fee in full. Option 2) Pay half of the license fee plus the registration fee with their application and pay the remaining half of the license fee plus a 10% surcharge within one year of the date the license was issued. It should be noted that a failure to pay the remaining license fee and 10% surcharge by the due date will result in the automatic cancellation of the license.
On August 23, 2010 the Kansas Department of Revenue issued Revenue Ruling, No. 19-2010-03 which states that taxpayers are not required to remit alcoholic beverages gallonage tax due and owing for the reporting period, if the amount is less than $5. The change in policy was made due to the administrative costs associated with processing payments of less than $5. The ruling does not exempt a licensed direct shipper from any reporting requirements. The reporting period for Special Order Shipper Licensees is one calendar year. Gallonage reports are due no later than January 15th of the following year.
The Special Order Shipping License is required for all offsite shipments to consumers in Kansas and requires wineries to use an approved age verification service and to pay enforcement tax and gallonage tax when applicable. The shipping license is not required for on-site sales. Any winery may ship to a Kansas consumer that purchases wine when visiting their tasting room. Applications and additional direct shipping information is available on the Wine Institute website.
-Annie Bones, State Relations, Wine Institute
Wine Institute Eastern Counsel Terri Beirne has been working since July 2009 with the Virginia ABC Board, and representatives of Wine America and the Virginia wineries to resolve problems created by Virginia ABC Circular Letter 09-05. That Circular prohibited Virginia direct wine shippers from using any third-party service providers, namely fulfillment or pick and pack warehouses. To resolve this problem, Wine Institute drafted legislation and identified sponsors in the 2010 General Assembly to permit a third party, under the direction and control of a Virginia wine shipper license, to solicit and receive orders for wine, and to pack and ship wine.
Like sausage, the bill that started in Virginia was quite different from what passed. Most importantly, the new law allows wine shipments into Virginia from out-of-state shipper licensee through an “approved fulfillment warehouse.” The ABC is charged with developing regulations governing such approval. They will require the fulfillment warehouse to: 1) show ABC its home state license; 2) to maintain/give records that the ABC will describe; and (3) demonstrate it has a contract with a wine shipper licensee designating that fulfillment warehouse as its agent. Wine Institute will actively participate in the creation of these regulations, but it is unlikely they will be finalized before July of 2011.
The new law also creates a Virginia fulfillment warehouse license, as well as a Virginia “marketing portal” license. These two new licenses are available only to agricultural cooperatives (non-profit associations recognized by the Virginia Agricultural Cooperative Act of 5 or more growers within Virginia) operating under the direction and control of a Virginia wine shipper licensee. On behalf of wine shipper licensees, the fulfillment and marketing portal licensees can pack and ship wine for wineries/retailers, or solicit and receive orders for wine through an Internet site.
Virginia continues to permit wineries licensed as Virginia direct wine shippers to offer their wines to Virginians via their web sites. It also continues to allow retailers licensed as Virginia direct shippers to market their own inventory on a web site. However, the new law prohibits any marketing on web sites of wine not owned/possessed by the web site owner, unless done by a Virginia agricultural cooperative licensed as a marketing portal.
Unfortunately, the new law (resulting from HB 279, HB 630, SB 483 and SB 590) also raises the annual license tax for Virginia wine shipper licensees from $65 to $95. It will take effect on July 1, 2010, at which time Virginia ABC will begin to draft the regulations.
-Terri Cofer Beirne, Eastern Counsel, Wine Institute
On November 19, Terri Beirne, Wine Institute’s Eastern Counsel, met with the Virginia ABC Board, their Director, and representatives of Wine America and the Virginia wineries to continue discussions about the July Circular Letter 09-05 prohibiting direct shippers from using any third party service providers. Despite earlier indications, the Board has no plans to issue additional circulars on this issue. They suggested that a statutory change is essential to reinstate use of pick and pack/fulfillment warehouse and other third party service providers by Virginia licensees. They also offered to work with industry to craft legislation for the 2010 Virginia General Assembly Session which starts on 1/13/10 and concludes on 3/13/10.
However, the VA ABC offered two interim solutions for Wine Institute members until the law can be changed. Nothing in Virginia law currently prevents direct shipper licensees from obtaining two (2) direct shipper licenses with two different addresses, even though a second location is not owned or controlled by the licensee. Therefore, if a winery sends wine from BOTH their tasting room and a fulfillment warehouse, it can keep a current direct shipper license intact and secure a second one with the address of their fulfillment facility, from where wine can also be shipped. The Virginia direct shipper license application fee is $65 and the annual license fee is $65. Separate tax payments and reports associated with each licenses would have to be filed.
Additionally, if the winery sends ALL wine shipments into Virginia from a pick and pack warehouse with NO shipments originating in their tasting room, the winery’s Virginia direct shippers license could be changed to list the address of the warehouse from which ALL wine will be shipped. Wineries may make such an amendment to a current license by sending a letter on winery letterhead explaining the reason for the change and including the old and new addresses to Dallas “Burnie” Gaskill, VA ABC Licensing Technician at P.O. Box 1597, Spotsylvania, VA 22553-1597. Burnie can be reached by phone at (540) 538-7838 or e-mail at email@example.com with questions. Such letter MUST include a copy of the state license issued to the warehouse making shipments on the winery’s behalf. The letter must also contain an e-mail address for the winery, where the amended license will be sent in an electronic format.
Members can contact Annie Bones at firstname.lastname@example.org or at (415) 356-7530 with additional questions. Terri would also be pleased to talk more about this situation and can be reached at (804) 301-5505 or email@example.com.
-Terri Cofer Beirne, Eastern Counsel, Wine Institute
The Montana Dept. of Revenue, Liquor Control Division recently confirmed that consumers in Montana are prohibited from receiving direct wine shipments under the Federal Onsite provision (sec. 11022 of Public Law 107-273). Montana law only allows consumers with a connoisseur’s license to receive direct wine shipments. However, the common carriers, FedEx and UPS, have NOT approved Montana for shipment of direct-to-consumer sales, because Montana law requires a consumer to obtain a license to receive such direct shipments.
The Maine Bureau of Liquor Enforcement has indicated that direct shipping license applications will be available on September 12, 2009, the same day the direct shipping law becomes effective. Wineries should contact Lori Nolette, the contact for liquor licensing and compliance at the Bureau, for a copy of the application once it becomes available. The direct shipping licensees will be able to ship up to 12 cases of wine to each consumer each year. The initial license fee is $200 with an annual renewal of $50. Wineries must have a license in order to ship on-site and off-site transactions to Maine consumers beginning September 12, 2009. Wine Institute will post any updates about the direct shipper license application on the Wine Institute website as soon as it becomes available.
-Annie Bones, State Relations – Wine Institute