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Free the Grapes! Fate of Wine Direct Shipping in Wisconsin Rests with Conference Committee, Governor

From the Free the Grapes! press release:

For 20 years, Wisconsin’s wine lovers have been able to purchase wine directly from wineries licensed to do so, as well as from in-state wine retailers. But consumers will lose these privileges if the Budget Bill passes as it is currently written, according to Free the Grapes!, the national consumer grassroots coalition (http://www.freethegrapes.org/).

“These anti-consumer provisions were slipped into the Senate version of the 384-page, $66 billion, two-year Budget Bill, rather than being considered in the light of day,” said Jeremy Benson, executive director, Free the Grapes! The association is encouraging consumers to visit its website at http://www.freethegrapes.org/ and use the website to send personalized letters to state legislators and Governor Doyle. The organization points out three provisions that will effectively cut-off consumers from their favorite wines and wineries, and punish Wisconsin’s emerging wine industry:

** A Low-Tech Throwback to Paper Signatures: Each of the growing number of states (34) that allow legal, regulated direct-to-consumer shipments, including Wisconsin, allow electronic signature at the point of delivery by freight companies like FedEx and UPS. The Budget Bill’s language would require freight companies to gather paper signatures of the recipient and report these paper documents to the State, a process they probably cannot comply with. Additionally, the language requires that drivers collect a written “attestation” that the recipient was not intoxicated at the time of delivery.

** Cumbersome Shipping Limits: While shipping limits are standard in other states, Wisconsin’s current Budget Bill will limit shipments per individual rather than per winery, the standard in most other states. Because wineries cannot be sure how much wine an individual has purchased directly from others, wineries will not risk the penalties of non-compliance. Only Indiana and Massachusetts have included a per consumer aggregate purchase limit in their existing statutes; these two states are considered “prohibited” by wineries and FedEx. The proposed language also reduces consumer benefits of legal direct shipping by lowering the case limit from three cases per winery per consumer, to three cases per consumer (from all wineries).

** Regressive Licensing Fees. The Budget Bill is proposing the most regressive and onerous winery licensing fees of any state. For many wineries, the license fee will exceed the profit on wines shipped and wineries will be forced to cut-off consumers from their wine club programs

The next step for the budget bill is in the conference committee to reconcile differences in the budget between the Senate and Assembly versions.

Free the Grapes! Fate of Wine Direct Shipping in Wisconsin Rests with Conference Committee, Governor

From the Free the Grapes! press release:

For 20 years, Wisconsin’s wine lovers have been able to purchase wine directly from wineries licensed to do so, as well as from in-state wine retailers. But consumers will lose these privileges if the Budget Bill passes as it is currently written, according to Free the Grapes!, the national consumer grassroots coalition (http://www.freethegrapes.org/).

“These anti-consumer provisions were slipped into the Senate version of the 384-page, $66 billion, two-year Budget Bill, rather than being considered in the light of day,” said Jeremy Benson, executive director, Free the Grapes! The association is encouraging consumers to visit its website at http://www.freethegrapes.org/ and use the website to send personalized letters to state legislators and Governor Doyle. The organization points out three provisions that will effectively cut-off consumers from their favorite wines and wineries, and punish Wisconsin’s emerging wine industry:

** A Low-Tech Throwback to Paper Signatures: Each of the growing number of states (34) that allow legal, regulated direct-to-consumer shipments, including Wisconsin, allow electronic signature at the point of delivery by freight companies like FedEx and UPS. The Budget Bill’s language would require freight companies to gather paper signatures of the recipient and report these paper documents to the State, a process they probably cannot comply with. Additionally, the language requires that drivers collect a written “attestation” that the recipient was not intoxicated at the time of delivery.

** Cumbersome Shipping Limits: While shipping limits are standard in other states, Wisconsin’s current Budget Bill will limit shipments per individual rather than per winery, the standard in most other states. Because wineries cannot be sure how much wine an individual has purchased directly from others, wineries will not risk the penalties of non-compliance. Only Indiana and Massachusetts have included a per consumer aggregate purchase limit in their existing statutes; these two states are considered “prohibited” by wineries and FedEx. The proposed language also reduces consumer benefits of legal direct shipping by lowering the case limit from three cases per winery per consumer, to three cases per consumer (from all wineries).

** Regressive Licensing Fees. The Budget Bill is proposing the most regressive and onerous winery licensing fees of any state. For many wineries, the license fee will exceed the profit on wines shipped and wineries will be forced to cut-off consumers from their wine club programs

The next step for the budget bill is in the conference committee to reconcile differences in the budget between the Senate and Assembly versions.

Proposed Wisconsin Budget Could Affect Direct Shipping and Self Distribution

The Wisconsin Senate amended and passed the proposed 2007-09 biennial budget bill to include a Direct Shipper’s Permit for wineries. As is, the amendment removes Wisconsin’s reciprocal language and allows permitted wineries to ship up to 27 liters per year directly to individual consumers. However, the bill would also restrict the amount of wine consumers can purchase directly from all wineries across the country to 27 liters per year.

If Passed, the amendment would also create a fee structure for the Direct Shipper’s Permit. For wineries that ship more than 90 liters annually into Wisconsin, the fee would be $1,000.00. Wineries shipping between 27 and 90 liters per year would pay a fee of $500.00, and wineries that ship less than 27 liters of wine annually to Wisconsin would pay a fee $100.00.

Furthermore, wineries wishing to ship directly to Wisconsin consumers would be required to obtain a tax registration certificate, report all wines shipped, their prices, along with the name, address, and age of the person to whom they were shipped annually.

Finally, the amendment would remove a winery’s ability to sell directly to retailers. Under the proposed law, wineries would be forced to sell their wines through a licensed wholesaler. Reportedly, wine distributors in Wisconsin claim the amendment was necessary to comply with Granholm. However, the amendment has received strong criticism from Wisconsin vintners who fear that the loss of self distribution privileges would cause significant losses in revenue.

The budget proposal will be considered next by the Wisconsin House of Representatives. As always, the ShipCompliant Research Team is closely monitoring the progress of Wisconsin’s Budget Bill and will report as updates occur.

Direct shipping bill passes West Virginia Congress

In May of 2005, in the case of Granholm v. Heald, the United States Supreme Court effectively invalidated the practice of reciprocity because it discriminates against wineries in non-reciprocal states. At that time, there were 13 reciprocity states. Today, there are only seven reciprocity states left (Oregon, New Mexico, Iowa, Missouri, Wisconsin, Illinois, and West Virginia), and at the end of 2007 there may be only two as Oregon, New Mexico, Missouri, Illinois, and West Virginia have legislation pending that would move their states into the “limited direct”, or permit state category.

West Virginia may be the first reciprocal state to change in 2007. Senate Bill 712 recently passed the West Virginia Congress and is expected to be signed by the Governor. This bill would create a permit system where in-state and out-of-state wineries can apply for and receive a license to ship up to two cases of wine per month directly to adult residents. Permitted wineries would be responsible for reporting monthly excise tax (beginning July 1, 2007), sales tax, and a schedule of shipments made in the previous month. The permit would cost “One hundred fifty dollars per year for a direct shipper’s license for a licensee who sells and ships only wine and two hundred fifty dollars for a direct shipper’s license who ships and sells wine, nonfortified dessert wine, port, sherry or Madeira wines” plus a brand registration fee of $100 per brand for three years. Common carriers shipping into WV would be required to collect an adult signature upon delivery of wine packages.

One thing to note about this bill is that it would level-down on self-distribution, meaning that in-state wineries would lose their privilege to ship wine directly to retailers. There are also some requirements that are a bit gray as they are written, but will hopefully be sorted out and clarified after the bill is signed by the Governor and the rules are promulgated by the Alcohol Beverage Control Commissioner.