Posts from the Kansas Category
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.
Kansas to Open for Winery Direct Shipping July 1st
April 20th, 2009
The Kansas Legislature approved Senate Bill 212 on April 10, 2009. Governor Kathleen Sebelius followed suit today by signing the bill into law, which will go into effect on July 1st, 2009. Although the road to approval contained a few bumps and detours, the original purpose of the bill remained unchanged: to give out-of-state and in-state wineries the right to truly direct ship to Kansas consumers. Once the application forms are available, wineries will be able to apply for a special order shipping license with an initial $50 registration fee and an annual renewal fee of $10. Kansas residents will have direct access to up to 12 cases of wine per address from a winery per year. Another specification of SB 212 is a method of age enforcement, required before shipping to residents; licensees must confirm the age of the consumer by either physically examining an approved government issued ID or using an approved internet age and identification service. Permit holders will be required to remit annual sales and excise taxes as well.
Despite these clear cut guidelines, the House Federal and State Affairs (FSA) committee introduced some potentially burdensome amendments. These amendments include a trigger clause that could shut down direct shipments if any part of the Kansas liquor control act is deemed invalid or unconstitutional by a court, similar to a November 2008 Oklahoma referendum. In addition, the FSA committee inserted bond requirements for special order shipping license holders in the amount of $750, which is waived for Kansas farm winery license holders who must submit a $2000 farm winery bond. On April 2, 2009, a Conference Committee also added other amendments, not related to direct shipping, that address clubs, special events, and temporary permits. Both Chambers approved the amended version of the bill and the bill was reengrossed in the Senate and sent to the Governor.
With the Governor’s signature, the new and revised statutes will overturn the existing “direct” shipping statutes. Until July 1st, wineries are required to ship through the three tier system, a system that is very much indirect. Both of these existing permits require wineries to ship orders to a third party for consumer pick-up. Small wineries must ship orders to a designated licensed retailer for pick-up, while large wineries must first ship to a licensed wholesaler, which in turn must ship the goods to a designated retailer for consumer pick-up. On top of dealing with the round-about delivery process, consumers may also be charged a handling fee of up to $5 per order. Consumers and wineries will have to wait until mid-summer to see the effects of the statute changes, but nevertheless, Governor’s Sebelius signature and the Kansas Legislature’s overwhelming approval (88-37 in the House and 38-0 in the Senate) of SB 212 demonstrate the willingness of elected officials to reform direct shipping statutes to address their constituents’ demands.
As mentioned before, the official effective date for all new and revised statutes is July 1st of this year. We will alert you of any updates and notifications on the required forms for the special order shipping license as soon as they are available.
FedEx begins shipping to Kansas
August 8th, 2006
Following up on Annie’s post below, FedEx is now approved to ship to Kansas for onsite shipments and began shipping yesterday. They posted the change on the state pairing chart on their wine website.
Kansas’ Limited Direct-to-Consumer Shipping Law
August 2nd, 2006
Governor Kathleen Sebelius on May 23, 2006 signed a direct to consumer (DTC) shipping bill in Kansas that gives us only half of what we were seeking. This was an extremely hard-fought battle in a state that had previously banned all DTC shipments. Unfortunately, the success Chuck McGrigg and our local lobbyists had in passing our version of the bill from the House were undermined when the Kansas wineries, faced with uncertainty as to self-distribution, made an agreement with the Kansas Wine & Spirits Wholesalers, leading us ultimately to oppose an important component of the final bill. The new law allows both in-state and out-of-state wineries to ship directly to consumers, although “the consumer must purchase the wine while physically present on the premises of the wine manufacturer.”
Consumers will be responsible for paying the necessary taxes on such on-site shipments. The portion of the legislation we opposed dealt with complex procedures that will be required for off-site purchases. Here, the consumer must identify a retail licensee in KS to which the winery will ship the wine, for pickup by that consumer. The retailer will be required to collect and remit all taxes due, and may charge the consumer up to $5 for each delivery received on their behalf.
A further restriction requires that wineries over 100,000 gallons can only send the wine to the designated retailer via their in-state KS wholesaler, who will deliver the package on to the retailer for pickup by the consumer. Wineries are required to complete a direct wine shipping permit application and agreement, file annual reports and pay required taxes for off-site shipments
Costco-Granholm battle lines forming in Ohio
July 9th, 2006
Ohio wineries selling to state residents operate under a mandatory 33.3% markup system, whether distributing directly or through a wholesaler.
Under past law, wineries outside the state could not sell to Ohio consumers at all. To comply with Granholm, the state accepted a consent decree permitting consumers to purchase directly from out-of-state wineries, beginning in July 2005. The decree makes no provision for minimum markups, and shipments are authorized so long as the parties comply with pre-existing § 4307.08 of the statutes and § 4301:1-1-23 of the regulations and use the new form at www.liquorcontrol.ohio.gov/1516pdf.pdf.
Although the Commerce Clause may not prohibit Ohio’s treating interstate commerce more favorably than local commerce (the reverse of local protectionism condemned by Granholm), the current system could be interpreted as favoring in-state wineries by shielding them from local price competition. More immediately significant is the political problem arising from competitive pricing by out-of-state sellers, to the detriment of Ohio wholesalers and retailers.
Governor Taft’s response has been to propose legislation applying the mandatory markup to out-of-state sellers. A rival proposal would limit all direct selling to wineries producing no more than 150,000 gallons annually. State legislative hearings are likely this fall.
Both proposals raise significant legal issues. Minimum markups were invalidated under federal antitrust law in Costco, a result consistent with earlier cases in Kentucky and Kansas. Volume caps are problematic, with court challenges now in early stages. Invalidity under Granholm is possible, if a court finds the threshold, which is typically just above the largest home state winery, a de facto discrimination against interstate commerce relative to local commerce. Otherwise, the law will be evaluated under an “unreasonable burden” test, in which the regulatory interest of the state is weighed against disadvantage to out-of-state sellers, with a less certain outcome than in cases of outright protectionist discrimination.
