FOR IMMEDIATE RELEASE – April 11, 2013
CONTACT: Pamela Frantz, Executive Director
The National Conference of State Liquor Administrators, Incorporated (NCSLA) will assemble June 24-28th on the island of Oahu at the Sheraton Waikiki Resort in Honolulu, Hawaii for its 2013 annual meeting and conference. Serving as conference host is the Honolulu Liquor Commission.
The annual conference theme is “Evolve, Adapt, Endure.” Our business agenda will cover a number of diverse issues that demonstrate the need, application and importance of this philosophy.
What does the future hold for the ubiquitous Certificate of Label Approval—the “COLA”—that single piece of paper upon which every alcohol beverage sold in America depends for its legitimacy and that state liquor authorities also use for their regulation of alcohol sales and distribution? A panel of distinguished regulatory and industry professionals will explore the answers to that very question on Wednesday morning, June 26th, at the NCSLA 2013 conference.
This important panel was created in response to the TTB’s current, ongoing and substantial overhaul of the label pre-approval process. Because suppliers, wholesalers, marketers, vendors, state agencies, and others depend on the COLA for different purposes, any changes being made by TTB to this critical tool will have a substantial impact on how the alcohol beverage industry brings products to markets and regulates those products.
Attendees of “COLA Changes on the Horizon” will be brought up-to-date on the pace of change to the COLA process, hear informed discussions of the implications of potential changes in the COLA process and have the opportunity to join the discussion and ask questions of the panelists.
Serving as moderator is Jeff Carroll, Vice President, ShipCompliant. His panelists include: Susan Evans, Executive Liaison for Industry Matters, Alcohol and Tobacco Tax and Trade Bureau; Deborah Ringo, Senior Regulatory Manager, Diageo North America; and Debbi Beavers, Licensing Supervisor, Kansas Alcoholic Beverage Control Division.
The panelists, in collaboration with NCSLA, will be conducting research and collecting feedback on this important topic in advance of the conference. Feedback is welcome and can be sent to COLApanel@shipcompliant.com.
Start making your plans NOW to come to Honolulu, Hawaii from June 24-28, 2013 for this year’s annual meeting of the NCSLA! Registration is open now so visit www.ncsla.org for details and register early to take advantage of the lowest rates! Watch for more exciting updates on the NCSLA 2013 Annual Conference to be broadcast in the coming weeks.
About National Conference of State Liquor Administrators, Incorporated:
A national organization of state alcohol beverage regulators, founded June 19, 1934, in Chicago, Illinois, whose purposes are to promote the enactment of the most effective and equitable types of state alcoholic beverage control laws; devise and promote the use of methods which provide the best enforcement of the particular alcoholic beverage control laws in each state; work for the adoption of uniform laws insofar they may be practicable; promote harmony with the federal government in its administration of the Federal Alcohol Administration Act; and strive for harmony in the administration of the alcoholic beverage control laws among the several states. Visit www.ncsla.org for more information.
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.
As the snow melts here in Boulder, it’s time for a status update on the direct shipping bills we expected to see in 2013, as well as other notable legislation.
1. How are Direct Shipping Bills Stacking Up?
Massachusetts has seen six direct shipping bills introduced this session, and though there hasn’t been much movement yet, HB 294 has the most promise – especially since former New England Patriots quarterback Drew Bledsoe has recently announced his support for this direct shipping bill.
Pennsylvania currently has three direct shipping bills under consideration: HB 121, SB 36, and SB 101. Only HB 121 has moved out of committee, but all three bills are being considered as part of the privatization push in the state. These bills will move forward if and when an agreement is reached on which portions of the modernization efforts are going to be moved independently from one another. Currently, all three of these bills include the very high “Johnstown Flood Tax” rates – 18% to 24%. The Wine Institute is working to negotiate a lower tax rate before passage of any of these three bills occurs.
Montana, which is effectively closed to direct shipping because of the problematic “connoisseur’s license” system, should see a change when HB 402 is made law. The legislation would replace the wine connoisseur’s license with a direct shipping “supplement”, available to Montana wineries and to out-of-state wineries holding an Importer License. Breweries, however, would still be subject to connoisseur license regulations. HB 402 has passed both the House and Senate, and is on its way to the governor’s desk for his expected signature.
Arkansas’ House and Senate passed HB 1749, a very restrictive direct shipping bill sponsored by the Speaker of the House. The bill was signed by Governor Mike Beebe on March 21, 2013, turning it into law. Act 483 will open up “direct shipping” to Arkansas consumers by wineries that obtain a $25 annual permit. All orders must be placed in person, at the winery; internet orders will not be allowed. Additionally, permit holders may only ship one case per calendar quarter to an individual’s residence only, state sales taxes and excise taxes must be paid, and a special label provided by the ABC at the cost of no more than $10 per label must be on all shipments.
In Delaware, HB 60 was introduced on March 21, 2013; this bill would allow wineries to ship 12 cases annually under a new $100 permit program. Excise taxes would be paid quarterly, and carriers would be required to obtain a permit as well.
A direct shipping bill was introduced in South Dakota earlier this legislative session, but SB 100 has been tabled for the year.
2. COLA Processing at TTB Shifts to Electronic
In keeping with their word to streamline the label submission and approval process, the TTB has revamped their website and included several helpful resources on their labeling page, including a table with up-to-date information on label processing times. Additionally, on February 1, 2013, the TTB began processing paper COLA submissions in the same way they process electronic submissions; paper submissions are scanned into the system and the TTB will notify applicants of approval or rejection via email, if an email address is listed on the application. Industry Circular Number 2012-03 contains more detailed information on this change. We expect more changes to the COLA process as the year progresses. Jeff Carroll of ShipCompliant will be moderating a panel called “COLA Changes on the Horizon” at the NCSLA annual conference in June.
3. Pennsylvania’s Privatization and Modernization
The latest news on modernization centers on HB 790 – a bill that calls for and addresses privatization of the sale of alcohol in the state of Pennsylvania. Though there are several accompanying bills that supplement Pennsylvania’s privatization plan, this bill is leading the charge for ending Pennsylvania’s status as a control state. HB 790 addresses how the state should make the changeover to private distribution & retail sale of alcohol, what should occur in the interim, and what should be the end result of a privatized system. Currently, this bill has passed the House and is awaiting action in the Senate.
4. Third Party Marketing
Two bills were introduced to limit third party marketing in Maryland: HB 1420 and SB 990. These bills contained the following language: “An order may not be transmitted to the holder of the direct wine shipper’s permit by a retailer, a wholesaler, or any other third party, including a marketplace site on the internet in which sellers offer products to customers.” Following a hearing on SB 990, the author has withdrawn the bill, and the author of the House bill no longer intends to move HB 1420 forward either. Defeating both of these bills took a great deal of work by lobbyists working in Maryland on behalf of the wineries and the third party companies.
5. Existing Direct Shipping Laws, Reworked
Nebraska currently allows wineries and retailers to apply for a direct shipping license. LB 230, a bill that would add restrictions to the current process, originally contained language to eliminate access of direct shipments from retailers including online retailers. However, after two amendments, the bill creates a direct shipping license for both wineries and retailers. If passed, wineries (but not retailers) would be required to “identify” the brands they will ship to Nebraska consumers, and submit “notification to wholesalers of intent to direct ship” any brands that are also sold to Nebraska wholesalers. Both wineries and retailers would be subject to a status of nexus (likely requiring payment of corporate income taxes) and monthly excise tax reports (currently an annual filing). As of March 15, this bill is in Committee. Wine Institute is opposing LB 230.
SB 15 in Indiana was intended to help wineries that direct ship into the state, but fails to address all of the existing direct to consumer limitations. The bill would remove the “previous visit” requirement by consumers before direct shippers can send wine shipments. However, a new requirement to obtain a faxed or scanned copy of the consumers identification would be required. Also, wineries with a wholesale relationship are still not eligible for the direct shipping license in this bill. For these reasons, Wine Institute is opposing the bill at this time. Currently in Senate Committee.
6. Product Registration Updates
In Arkansas, HB 1480 would become active on July 1, 2013 if implemented, and would require all wineries to register their brand labels and label extensions at a fee of $15 per label per container size. Additionally, wineries producing over 250,000 gallons annually would have to register as a supplier and submit an annual permit fee of $50. This bill is currently out of committee and in the House with a recommendation of “do pass”.
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In July of 2009, the Virginia Department of Alcohol Beverage Control (Virginia ABC) sent out Circular Letter 09-05 to Direct-to-Consumer Wine Shipper and Beer Shipper licensees, prohibiting Direct Shippers from contracting with third parties for receiving or shipping orders on behalf of the licensee. Since then, Virginia has been working with industry members to outline laws and regulations concerning the use of these third parties. The culmination of these efforts is a new Virginia regulation, which will go into effect this Sunday, November 4.
Initially these regulations were submitted in May of 2011 in support of a “fix-it” bill passed in April of 2010. The “fix it” bill – now current law – allows Direct Shippers to ship through approved Fulfillment Warehouses and Marketing Portals. These new regulations define how out-of-state Fulfillment Warehouses and Marketing Portals can become approved by Virginia ABC to do business with Virginia Direct Shipper licensees.
What’s Changing for Direct Shippers Using Fulfillment Warehouses
From 2010 until now, the Virginia ABC has allowed Direct Shippers to apply for more than one direct shipping license and submit separate monthly shipment reports for each shipping location as a temporary workaround. This workaround will remain in place after November 4, but only until the existing extra licenses expire (one year from the date of issue) giving Direct Shippers and Fulfillment Warehouses time to become approved as defined in the new regulations. All wineries must continue to maintain their primary Virginia Direct Shipper license, but no new licenses for additional fulfillment locations are expected to be approved. In order to gain Virginia ABC approval, Fulfillment Warehouses will need to:
- Submit a copy of the Fulfillment Warehouse’s home-state fulfillment services license to the Virginia ABC
- Submit a written contract or addendum to an existing contract, between the Fulfillment Warehouse and the licensed Direct Shipper, listing all shipping locations and indicating that the Fulfillment Warehouse is the agent of the Direct Shipper for purposes of complying with the Virginia direct wine shipper’s law under Va. Code §§4.1-209 and §§4.l-209.1, and Va. Administrative Regulation 3VAC5-70-240
- Maintain for two years and make available to Virginia ABC upon request, records of each shipment, including: quantity and volume, brands shipped, and names and addresses of recipients
Fulfillment Warehouses must submit these documents for EACH Direct Shipper they represent. A sample addendum to be endorsed by the Virginia ABC is currently being drafted and will allow any existing contract between the two parties to merely be referenced, saving time and protecting proprietary information in existing agreements.
What’s Changing for Direct Shippers Using Marketing Portals
Virginia is one of the first states to restrict use of Third Party Marketers by out-of-state Direct Shippers. Beginning November 4, Third Party Marketers must follow these guidelines to become approved in the state:
- The Marketing Portal must be properly organized as an “agricultural cooperative” in its home-state and provide a copy of its license to the Virginia ABC
- Establish and submit to the state a written contract between the Marketing Portal and the Direct Shipper
The most commonly thought of Third Party Marketers (aka Third Party Providers, TPPs, flash sites, email marketers) may find it impossible to satisfy the new requirements as most are not licensed as “agricultural cooperatives”. Beginning November 4, Direct Shippers will no longer be able to accept Virginia orders made through a Third Party Marketer that is not an “agricultural cooperative”.
Three years after the release of Virginia Circular Letter 09-05, final regulation of third party services will be enacted on November 4. Industry members that are affected by these changes should continue to stay informed and be prepared to adapt how they do business with Virginia. Please comment with questions or contact Terri Cofer Beirne, Eastern Counsel, Wine Institute at firstname.lastname@example.org.
Alcohol Tax Filers who pay Georgia Excise Tax or related Georgia license fees will be required to file and renew online beginning September 2012 through the Georgia Tax Center (GTC). The Georgia Department of Revenue (GDOR) has sent out a notice stating that businesses can begin managing their alcohol tax account with the GTC and access the new e-file templates starting September 4, 2012, in time to file August 2012 monthly tax returns.
Affected alcohol returns include, but are not limited to:
- Georgia ATT-7SP Excise Tax Return
- Georgia ATT-11 Monthly Report of Distilled Spirits Shipments to Wholesalers
- Georgia ATT-112 Report of Wine Shipments
The state sent out a second notice this week containing instructions on how to create a GTC login or add a license account to an existing login. Also noteworthy, those intending to renew their alcohol-related licenses will be expected to do so through their new GTC online account for the renewal period beginning September 4, 2012 and ending November 1, 2012.
Georgia’s announcement to go paperless joins the ranks of other online state filing systems such as Wisconsin and Ohio.
Washington now allows an optional annual filing of wine tax for wineries whose total sales into Washington are less than 6,000 gallons annually (roughly 2,500 cases). Wineries that exceed the 6,000 gallon limit, however, must continue to file monthly returns. This new allowance comes after the passage of SB 5259, a bill that passed in March and officially came into effect in June of this year. Bright yellow postcards were recently sent out by the Liquor Control Board (LCB) to qualifying wineries, along with instructions on how to change to the new frequency.
Senate and House Bill Reports on SB 5259 state that the passage of the bill is expected to benefit an estimated 300-400 wineries, simplify the reporting process and save time and effort. The state will benefit as well, as processing returns and payments for small dollar amounts can prove costly for the state.
How to Notify the State
Wineries who file the LIQ-774 (in-state wineries) and holders of the Certificate of Approval (COA) who file the LIQ-778 or the LIQ-870 (direct wine shippers) expecting to sell less than 6,000 gallons in Washington this year can sign up to file annually for the remainder of 2012 by emailing email@example.com. July 20 is the deadline for notifying the Liquor Board of intention to file annually for the remainder of the 2012 calendar year, so wineries should submit their requests to the LCB as soon as possible. In this email, specific account information should be included:
- Name and phone number of the individual who files the returns
- Trade name of the winery
- COA number (or winery license number for in-state wineries)
- Whether or not June 2012 sales have already been filed
The annual report for the remainder of 2012 may include sales from June through December. However, wineries that have already filed for the month of June will file the annual report beginning with July’s sales. If wineries would prefer to file annually beginning in January, this same process can be followed to change the filing frequency before the beginning of each new year.
Questions? Please contact the Washington State Liquor Control Board directly, or comment below.