FedEx announced today that, effective Feb. 1, 2015, FedEx Express and FedEx Ground will open the state of Massachusetts for legal shipments of alcoholic beverages. The announcement provided the following:
- FedEx Ground and FedEx Express will both transport legal alcoholic beverage shipments into, out of and within the state of Massachusetts starting Feb. 1, 2015.
- Please note, unauthorized shipments of alcoholic beverages destined for MA prior to a Feb. 1, 2015 delivery date may not be accepted for delivery and/or returned to shipper.
- Per FedEx policy, all alcoholic beverage shipments may only be tendered by licensed entities that have executed a FedEx Alcohol Shipping Agreement.
- All alcoholic beverage shipments must comply with all FedEx policies and federal, state and local regulations.
- Wine is the only type of alcoholic beverage that is allowed to be shipped to consumers.
FedEx does not provide legal advice to third parties. Questions not related to FedEx policy should be directed to appropriate legal counsel and the Massachusetts Alcoholic Beverages Control Commission.
(The new direct-to-consumer statute goes into effect on Jan. 1, 2015. Under the new law a winery must hold a Direct Wine Shipper license that has been approved by the MA ABCC and be registered to pay excise tax in order to ship to MA consumers.)
As ShipCompliant reported earlier this week, the new Direct Wine Shipper License application and advisory were released over this past weekend. The new permit law replaces the existing unworkable direct shipping law in its entirety. See the previous post
to read more about how the new laws, in effect starting January 1, 2015, apply to wineries.
It is expected to take approximately four weeks for applications to be approved. Wineries may NOT engage in any “sales activities” prior to January 1, 2015. (or their license is approved.) Both the Direct Wine Shipper License application and Direct Wine Shipper License Advisory are available on the Wine Institute, ShipCompliant, and Massachusetts Alcoholic Beverages Control Commission (ABCC) websites. Below please find instructions on how to complete the application process. Questions about the application requirements can be directed to Ralph Sacramone of the ABCC at 617-727-3040 ext. 731 or to Annie Bones at email@example.com.
MASSACHUSETTS NEW DIRECT WINE SHIPPER LICENSE APPLICATION INSTRUCTIONS
Step 1: Register with the Department of Revenue to Pay
Sales and Excise Taxes
- Go to MassTax Connect to Register and Pay Excise Taxes (note the date of registration as you will need to enter this on the DTC application.)
Step 2: Application for a Direct Shipper Wine License (effective 1/1/2015)
Part 1 – Applicant Information and Legal Structure
- Attach vote by the Board of Directors or LLC Managers appointing a manager or principal representative
- Articles of Organization as filed with the Secretary of State’s Office
Part 2 – Licenses to Manufacture and Export Wine
- List and attach a copy of your California 02 Winegrower license
Part 3 – Federal Compliance
- List and attach a copy of your TTB Basic Permit Number
- List and attach a copy of your FDA Registration
Part 4 – Tax Registration
- Enter the date that you registered with the MA Department of Revenue to pay
sales and excise taxes
Part 5 – Interests in this License
- All of the limited partners must be listed
- Follow the application’s instructions and provide affidavit(s) if necessary
Part 9 – Previously Held Interests in Other Licenses
- All of previously held interests must be listed
Part 10 – Transportation and Delivery
- FedEx Ground should be listed. FedEx Express and UPS are not licensed to deliver DTC wine shipments to MA consumers at this time. The application can be updated by letter if FedEx Express, UPS or any other common carrier enters the market and intend to use their services.
Part 11 – Proof of Age for Sale to Consumers
- The Code for Direct Shipping Guidelines (http://freethegrapes.org/code-for-direct-shipping) recommends that direct shippers verify the purchaser’s age at the point of online purchase using an approved age verification vendor, such as LexisNexis or IDology.
Part 12 – Proof of Age for Delivery to Consumers
Shippers must use FedEx® ShipManager electronic shipping solutions or an approved third-party system
Shippers must enter a unique identifier – $AW, in the “Your Reference” field for all wine shipments
Shippers must select Adult Signature Service as a condition of delivery of the shipment
All wine packages must be labeled with a FedEx approved alcohol label
An Adult Signature Service “code” is embedded in the unique bar code tracking ID
Delivery scanners alert drivers of the adults signature requirement at point of delivery scan
If no eligible recipient is at the address, the scanner prompts driver to apply the proper status code and reattempt delivery at a later time/date
FedEx will obtain a signature from any person at least 21 years old (government-issued photo identification required) at the delivery address
FedEx Ground Control Processes for Alcohol Shipments: FedEx Ground requires Alcohol Shippers to sign a special contract addendum outlining labeling and information requirements
- Follow the application’s instructions
Step 3: Direct Wine Shipper License Application Checklist
- Check payable to ABCC or Commonwealth of MA for $300
- Transmittal Form
- Completed Application
- Articles of Organization as filed with the Secretary of State’s Office
- Vote by the Board of Directors or LLC Managers appointing a manager or principal representative
- A copy of your California 02 Winegrower license
- A copy of your Federal Basic Permit
- A copy of your FDA Registration
Alcoholic Beverages Control Commission
P.O. Box 3396
Boston, MA 02241-3396
Annie Bones, State Relations – Wine Institute
As we discussed in a previous post, Massachusetts opening to direct shipping is probably the biggest change that we have seen in direct wine shipping since the Granholm Supreme Court decision of 2005. Over the weekend, the Massachusetts ABCC updated their website with a brief advisory on the new direct shipping law that summarizes the law and provides instructions on how to complete the permit process, and how to comply with the reporting requirements.
Click here to download the Massachusetts direct shipping application (if you are having trouble downloading the application from the Massachusetts website, click here).
Here’s a quick summary of the new law:
- Only wineries that hold a TTB license and a license to produce in and export out of their state can qualify for the Direct Wine Shipper License
- Each licensed direct shippers can ship up to 12 9-liter cases of wine to any one individual per calendar year
- Direct shipping reports will be due
on an annual basis
- Sales tax is not due for wine products, but is due for any non-wine items such as merchandise
- Excise taxes will be due on all shipments
The 7-page application is fairly straightforward, but in addition to some of the usual information (like business and business owner information), you’ll need to answer a couple out-of-the ordinary questions. Note: We’re working to clarify how to answer a few of the questions with the ABCC, and will update this post once we have more information.
- First, register with Mass Tax Connect to pay excise taxes. You’ll need to include the date you registered on the application.
- List all businesses (carriers) that will deliver wine on your behalf; carriers must hold a Winery Shipment Transportation Permit
An early concern over the new Massachusetts wine shipping law was that it did not address the issue of common carriers having to license each and every truck that delivers wine. However, a bill to allow common carriers to obtain a fleet license for the delivery of alcohol is pending in the Massachusetts legislature. It seems somewhat unlikely that the fleet license bill will move this session. But, we believe that at least one of the common carriers will begin to license each of their trucks and therefore will be able to deliver wine to Massachusetts addresses as early as the beginning of February.
- List your winery’s methods for proof of age for sale and delivery to consumers.
See our informative post on 7 tips for better age verification, listing the different age verification methods for online wine purchases
- Include with the application a copy of 1) the license(s) you hold which authorize manufacture and exportation of wine; 2) your TTB Permit; and 3) your FDA Registration
- Finally, include a check for $300. Make the check out to the “Massachusetts ABCC” and denote the name of the licensee
We expect Massachusetts will represent an extremely important opportunity for wineries. If is approved, a process that may take as long as four weeks, you can start taking orders as soon as January 1, 2015!
UPDATE: For a step-by-step guide on filling out the application form, see our following blog post, “Massachusetts DTC Applications – How to Get Started“. Please note: Applicants do NOT have to register to pay sales tax; contradictory towtheyted on the application form, however, applicants MUST apply to pay excise tax at Mass Tax Connect.
The opening of Massachusetts for direct shipping is perhaps the most important change to the direct shipping market since the Granholm v. Heald Supreme Court decision in 2005. We estimate that within three years of opening for direct shipments on January 1, 2015, Massachusetts will easily vault into the top ten states by shipping revenue and represent over $60 million in additional revenue for wineries that ship.
Let us explain.
The value of opening up any given state for direct wine shippers is, we find, related to three primary factors:
1. The state’s population
2. The state’s proximity to an important wine producing state/region
3. Per capita consumption of the state
Massachusetts has a population of approximately 6.6 million people, just above the national average of 6 million people per state. It is similar in population size to Tennessee, Indiana, Arizona and Washington State. While not a hugely populated state, it is by no means sparsely populated.
Massachusetts’ Proximity to a Wine Region
Massachusetts has a very small wine industry. However, it borders New York, an important wine producing state and wine tourism venue. This bodes well not just for New York wineries, but it suggests that Massachusetts wine lovers will benefit from easy access to wines they have recently discovered on day trips and weekend excursions.
Per Capita Wine Consumption in Massachusetts
Only five states have a higher per capita wine consumption rate than Massachusetts. At 29 bottles of wine consumed per person annually, Bay Staters consume wine at more than a 50% greater rate than the average state. They like their wine.
Given these factors, and looking at how similar states, in terms of consumption and location, rank in the direct-to-consumer shipping channel, we believe that Massachusetts wine lovers will have wine shipped to them at a significantly higher rate than the average state.
For the overall winery-to-consumer shipping market, 0.213 bottles of wine per capita were shipped in 2013. However, the top 10 winery-to-consumer shipping states averaged 0.276 bottles per capita. We have every reason to believe that Massachusetts will hew closely to this average within three years after the state opens for shipments. In fact, we are confident is saying that by 2018, three years after Massachusetts finally opens for direct shipping, it will generate more than $73 million in wine shipments and rank #7 for value of shipments among all legal states. By 2023, the value of the Massachusetts direct shipping market will be over $100 million per year.
A number of people and organizations have worked very hard to open up Massachusetts for direct shipping and to give Massachusetts consumers the simple right to buy the domestic wines they desire, especially Coalition for Free Trade, Free the Grapes!, and Wine Institute. Many years, much lobbying, lawsuits, more lobbying, working the media and harnessing the power of the consumer finally brought it about. It’s not only long in coming and a sweet victory for everyone, but also a very profitable victory for wineries across the country.
Eight years after Massachusetts passed an unworkable and overly-restrictive direct shipping bill, and four years since the same law was ruled unconstitutional by a federal court, Bay State legislators finally passed a workable direct wine shipping law that will allow out-of-state and in-state wineries to ship wine directly to state residents. The new law was included in the 2014 budget bill (see page 257), and was signed by Governor Deval Patrick this morning. Set to go into effect on January 1, 2015, the new wine shipping law will make both wineries and Massachusetts wine lovers overjoyed.
Massachusetts is ranked among the most important states that still had not passed winery direct shipping law. Massachusetts is particularly important given the size of its population and its residents’ love of wine. Only four states have higher per capita consumption rates for wine than Massachusetts.
The new direct shipping law, passed as part of the 2015 fiscal year budget, provides the following conditions for shippers:
- Only bonded wineries may apply for a direct shipping permit
- Direct Shipping License Fee: $300/winery (separate permits required for each “affiliate, franchise or subsidiary”)
- Direct Shipping License Annual Renewal Fee: $150
- Shipments limited to twelve 9-liter cases per purchaser in a calendar year
- Reports to the state must be remitted annually
- Excise Taxes must be remitted on each sale
Over the next six months, the Massachusetts Alcohol Beverage Control Commission will be responsible for creating and making available license applications for direct shippers. We will report here on those developments as well as any others that impact direct shippers.
In January of 2010, the United States Court of Appeals for the First Circuit affirmed the judgment of the District Court in the case of Family Winemakers of California v. Jenkins. This ruling struck down the 30,000 gallon capacity cap, which excluded 98% of domestic wines from shipment to Massachusetts. Although this represented a big win for wineries, several problems remained, and it was up to the Massachusetts legislature to act.
Almost four years later, Bay State lawmakers will once again try to craft a replacement law and move it through the legislature. The first and most important step is a public hearing on Direct Wine Shipping in Massachusetts to be held in Boston on Tuesday, November 12 at 1pm Eastern Time in the Joint Committee on Consumer Protection and Professional Licensure.
Bill H.294, sponsored by Representative Ted Speliotis, is one of five bills related to direct shipping listed in the hearing schedule. It would allow wineries to ship up to 24 cases per year to individual consumers in Massachusetts, require annual volume reporting to the state and remittance of excise and sales taxes to the state.
One key issue that must be addressed to make any direct shipping law effective is that of a “fleet permit” for common carriers. A fleet permit allows common carriers like FedEx and UPS to obtain a single permit for alcohol deliveries that covers all their trucks in the state, in contrast to regulations that require a permit be obtained for each and ever delivery truck. Without a fleet permit as part of a direct shipping bill, it is unlikely that the major common carriers would deliver wine into Massachusetts no matter how good the rest of the bill might be.
Additionally, the current direct shipping law on the books has a “consumer aggregate” volume limit, which allows consumers to only receive a limited amount of wine within a calendar year from all sources. This kind of aggregate limit is mostly un-workable, as wineries have little idea what consumers have already received. The aggregate volume limit is not included in H.294.
Behind Pennsylvania (population 12,702,379), Massachusetts (6,547,629) is the second largest of nine states that are currently off limits for wine shipments. The other states include Alabama (4,779,736), Kentucky (4,339,367), Oklahoma (3,751,351), Mississippi (2,967,297), Utah (2,763,885), Delaware (897,934), and South Dakota (814,180).
Free the Grapes! Press Release
Huge win for wineries, but can I ship to Massachusetts now?
Why Can’t I Have a Boston Wine Party?
Massachusetts Remains Elusive for Direct Shippers