Posts from the Maine Category
Hidden Costs of Direct Shipping Licensing
March 3rd, 2010
Before jumping into a direct shipping program in a new state, wineries should consider their current prospect list, market potential, shipping difficulty and costs. When it comes to calculating start-up costs to enter a new state, there is often more than meets the eye. In addition to license fees, wineries may need to budget for a number of “hidden” fees including bonds, label registration fees and other application fees.
Bonds
Some states require wineries to obtain a bond in order to secure a direct shipping license. A bond is a written guaranty, purchased from a bonding company (usually an insurance firm or a surety company), to guarantee that all taxes due will be paid to the state. If there is a failure to pay, the bonding company will make good up to the amount of the bond.
Bonds for direct shippers range from $500-$1500 depending on the state, but premiums, or out-of-pocket costs, to wineries typically average around 10% of the total bond price, or $50-$180 out-of-pocket on an annual or biannual basis. Different bonding agents may quote different rates, so it pays to shop around.
Connecticut, Idaho, Illinois, Indiana, Kansas, Texas and Wisconsin all require that wineries secure a bond before submitting your license application. For wineries that ship 40,000 gallons or more annually, Oregon issues a bond document after the license application has been received but before the license is issued. Wineries that ship less than 40,000 gallons to Oregon annually can apply for a bond wavier.
Label Registration
Several states require brand or label registrations for direct shipping. Ohio, a state that 26% of direct shippers have in their program, requires wineries to register all the labels that will be shipped into the state for a one-time registration fee of $50 per label.
If that sounds pricey to you, consider Connecticut who charges $200 per label and requires labels to be re-registered every 3 years if they are still actively shipped into the state.
Georgia, Michigan, New York, North Carolina and Virginia do not charge a fee though label or brand registration is required in these states.
Application Fees
Some states may require business, Secretary of State or tax registration, or other one-time application fees. This varies from state to state and depends on how your business is structured. Wineries that start shipping to Arizona, Connecticut, Hawaii, Kansas, Maine, Michigan, North Carolina, Ohio, Tennessee, Virginia or Wisconsin may encounter one or more of these fees.
License, bond, label registration and application fees all factor into the true break-even costs of shipping to a new state. The key to ensuring a profitable direct shipping program is to research thoroughly in order to avoid getting caught off-guard with unexpected costs.
Notes on Wine Distribution v.32
February 4th, 2010
The latest version of “Notes on Wine Distribution”, by R. Corbin Houchins, is now available. Release 32 includes updates on legislation, litigation and general discussions on available distribution channels for wine. This release includes substantial changes, including new sections on age and identity, facial neutrality, and logistical support services, as well as updates to state summaries in Arizona, Delaware, Kansas, Kentucky, Maine, Maryland, Massachusetts, Montana, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia, Washington, and Wisconsin. Read about these and other updates that affect the way wine is sold and shipped within the United States.
If you are at all interested in the shipping and distribution of wine, this is an excellent resource that is well worth reading. You can view the most recent version of the document anytime by visiting the ShipCompliant Blog and clicking the link located under “Compliance Resources”, or by visiting CorbinCounsel.com and clicking on the home page link, “Notes on Wine Distribution.”
Maine Direct Shipping Permit Applications Available
October 12th, 2009
The direct shipping applications for Maine are now available on the Wine Institute website. The direct shipping permit allows wineries to ship up to 12 nine liter cases of wine to a recipient’s address each year. The Department of Public Safety, Liquor Licensing and Inspection Division has confirmed that there are no prohibited shipping areas at this time. The annual permit fee is $200 plus an additional $100 filing fee. Applicants will have to register with Maine Revenue Services to pay sales and use taxes before submitting their permit application. Maine Revenue Services will send applicants a Retailer’s Certificate to confirm that their sales tax account has been established. There is no fee to register with Revenue Services and the tax registration forms can be sent in via U.S. mail or electronically. The processing time for electronically filed applications is significantly shorter. Only sections 1 and 5 of the tax registration form must be completed.
Once wineries have received their Retailer’s Certificate they can submit their completed direct shipper application to the Liquor Licensing and Inspections Unit, along with a copy of their federal basic permit and application fee. The direct shipper application must also be notarized. Once wineries receive their direct shipping permit they will be responsible for paying excise tax to the Department of Public Safety and sales tax to Revenue Services. In addition, a direct shipping report must be filed twice a year. Reporting forms will be posted on the Wine Institute website once they become available. Should you have any questions please contact Annie Bones in Wine Institute’s State Relations Department at abones@wineinstitute.org.
Annie Bones, State Relations – Wine Institute
Maine Direct Shipping Applications Update
August 25th, 2009
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
Maine Event, At Last
June 13th, 2009
After years of trying, wine commerce proponents succeeded in adding Maine to the list of license states for direct shipment. Governor Baldacci signed HP 696/LD 1008 on June 12th.
After the Bureau of Liquor Enforcement adopts regulations and licensing procedures, the law will permit out-of-state and Maine farm wineries alike to ship wine (but not wine coolers!) directly to consumers by common carrier, subject to the same taxes as if sold locally. Meanwhile, the on-site provisions summarized in previous releases of Notes on Wine Distribution appear to remain available.
by R. Corbin Houchins, CorbinCounsel.com
