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
Wine Institute and other industry representatives met with the Virginia ABC this week concerning their July 22, 2009 circular No. 09-05 governing use of third party service providers in direct shipments. The ABC staff was well aware of the concerns nationwide that their recent opinion has generated, but remained firm in their position that such entities cannot participate in direct shipments into the Commonwealth under current Virginia law. They rely primarily on the portions below of Va. Code sections 4.1-209.1 and at 4.1-203.
§ 4.1-209.1. Direct shipment of wine and beer; shipper’s license.
Any winery or farm winery located within or outside the Commonwealth may apply to the Board for issuance of a wine shipper’s license that shall authorize the shipment of brands of wine and farm wine identified in such application…..Any person located within or outside the Commonwealth who is authorized to sell wine or beer at retail in their state of domicile and who is not a winery, farm winery, or brewery may nevertheless apply for a wine or beer shipper’s license, or both, if such person satisfies the requirements of this section.
§ 4.1-203. Separate license for each place of business; transfer or amendment; posting; expiration; carriers.
A. Each license granted by the Board shall designate the place where the business of the licensee will be carried on. ….a separate license shall be required for each separate place of business……
In summary, the position of the Virginia ABC is that ONLY wineries and retailers licensed by their home states are eligible to receive a Virginia direct shippers’ license which permits the conduct of business (aka the shipment of wine into Virginia) ONLY at and from the business address listed on their license.
Because of widespread industry concerns, however, the Virginia ABC staff is willing to consider drafting a clarifying circular. While they are not expected to change their interpretation of current law, as part of this clarifying circular, they are willing to consider delaying the effective date of this ruling until April 1, 2010. By this time, the Virginia Legislature will have had an opportunity to change the law to resolve this problem for wine shippers nationwide. The Virginia ABC has suggested they will support the legislative change necessary to enable certain, but not all, third party providers to participate in the direct shipments of retailers and wineries to Virginia consumers.
Update: We will keep you posted as we continue to work with the Virginia ABC on this matter. Please consider their current circular in effect until another one is issued.
Terri Cofer Beirne, Eastern Counsel, Wine Institute