ShipCompliant Blog

Untangling the complex world of wine direct shipping and compliance

Posts from the Wine Institute Category

Virginia Goes Circular on Third Party Shippers

August 4th, 2009
By Jeff Carroll - VP of Compliance, ShipCompliant

If you are licensed to ship wine into the Commonwealth of Virginia, you likely received the following letter last week from the Virginia ABC.

TO: All Virginia Licensed Shippers
FROM: Francis J. Monahan, Director, Bureau of Law Enforcement
SUBJECT: UNAUTHORIZED PRACTICES
DATE: July 22nd, 2009

In state and out of state Virginia shipper licensees may only sell and ship authorized alcoholic beverages from their licensed address through approved common carriers. Licensees may not contract with third parties such as fulfillment warehouses, marketing companies, or other businesses to receive or ship orders for them.

All orders must be received directly by the licensed shipper, at their licensed location, by their employees. Orders must be shipped through approved common carriers from their licensed location, by their employees.

Any licensee in violation is subject to being fined and/or having their license suspended or revoked.

If you have any questions you may direct them to: Enforcement@abc.virginia.gov.

Common practice for wineries in many states is to contract with third party shippers that are also known as "fulfillment houses" and "third party logistics" (3PL) providers. This memo has caused a minor panic in the industry because many wineries, especially in California, use fulfillment houses to pack and ship wine based on orders that winery employees receive. The circular would suggest that such practice is in violation of Virginia law even if orders are taken legitimately by employees of licensees, at their licensed location, and shipped through approved common carriers.

The circular also recommends that licensees not contract with “marketing companies, or other businesses to receive or ship orders for them”. According to the memo, “all orders must be received directly by the licensed shipper, at their licensed location”.

Wine industry representatives are working with the Virginia ABC to get further clarification on the recent circular. Please stay tuned, and we will update you as we learn more.

Virginia ABC Circular

Annual Filing Option Now Available for Direct Shippers in New York

July 16th, 2009
By Annie Bones, State Relations - Wine Institute

New York has recently amended its alcohol beverage tax regulations to allow certain wine distributors to file Form MT-40 (Wine Tax Return) on an annual basis rather than a monthly basis. Out-of-State wineries must be licensed by the New York State Liquor Authority as a direct shipper and submit the “Application for Annual Tax Return Filing Status for Certain Beer and Wine Manufacturers” (Form MT-38) in order to receive annual filing status. Form MT-40 should be submitted on a monthly basis until the Tax Department confirms that the request for annual filing status has been approved. Additional information can be found in the notice entitled, “Annual Filing Option Available for Certain Wine Distributors,” published by the Department of Taxation and Finance on June 24, 2009.

Form MT-38 Annual Filing Status Application
Form MT-40 (Monthly filing)

-Annie Bones, State Relations – Wine Institute

Tennessee Direct Shipping Applications Available – What You Need to Know

July 15th, 2009
By Jeff Carroll - VP of Compliance, ShipCompliant

Tennessee direct shipping license applications are now available. While Tennessee officially became a Limited state on July 1, wineries cannot legally ship to this state until their direct shipping license has been approved.

The application states that direct shippers may only ship to wet areas within the state; a condition that may make the state slightly less available than initially anticipated. This requirement is different than those of other states such as Florida, New Hampshire and New York, where clearly defined dry areas are prohibited from shipping. Major cities such as Memphis, Nashville, Knoxville, and Chattanooga are all considered wet areas that are open for shipping.

Tennessee direct shipping license applications are available by directly contacting the Tennessee Alcoholic Beverage Commission at (615) 741-1602. The license requirements and application can also be viewed online. Wineries that prefer a full concierge service for obtaining their license can order online through easywinelicensing.com.

To obtain a direct shipping license, wineries must first register with the Tennessee Department of Revenue. Once this step is complete, wineries pursuing a direct shipping license must submit the following to the State of Tennessee ABC:

  • License application (available from state)
  • $450 fee ($300 one-time application fee + $150 licensee fee, payable upon approval of application)
  • Copy of Certificate of Registration for Sales & Use Tax
  • Copies of all contracts with common carriers that will ship wine to Tennessee residents
  • Copy of the applicant’s organizational document (e.g. corporate charter or articles of organization)
  • A copy of applicant’s Federal Basic Permit

Tennessee direct shipping licenses expire December 31 of every year, and renewal applications must be postmarked by January 9 of the following year to avoid a $250 citation.

Licensed wineries can ship a maximum of one case per month and up to three cases annually to Tennessee residents. Retailers are still prohibited from direct shipping to Tennessee.

TN Cities With Liquor Store and Counties

Details on Submitting the Kansas Special Order Shipping License Application

June 30th, 2009
By Annie Bones, State Relations - Wine Institute

As of June 25th, wineries may apply for a Special Order Shipping License that allows them to ship off-site sales to Kansas consumers (on-site sales do not require a Shipping License). The initial costs for the Special Order Shipping License include a $50 license fee and a $50 registration fee. The license will be valid for 1 year from the date issued. The cost to renew a license is the $50 license fee plus a $10 registration fee. Wineries with a license will be able to ship up to 12 cases of wine to any one consumer or address each calendar year. Direct Shippers are required to confirm the consumer is at least 21 years old by physically examining a government issued form of identification or by using an age verification service approved by the ABC. Lexis Nexis, Wine Institute’s preferred age verification provider, is an Approved Internet Based Age and Identification Service Provider for Kansas.

The Kansas Special Order Shipping License Application and Instructions (Form ABC-800 rev.6/29/09) are posted on the Wine Institute website. In addition to the License application wineries are required to obtain a bond for $750, submit a Kansas Business Tax Application, and file form ABC-160 entitled “Irrevocable Consent to Jurisdiction” with the Kansas Secretary of State’s office. There is a $35 fee to file form ABC-160 and a $1 fee for each additional file stamped copy of the form. Wineries registered as a supplier in Kansas and doing business through the 3-tier system should have already filed form ABC-160 and will not need to file the form a second time. Wineries who have already filed ABC-160 can obtain a copy of their Irrevocable Consent to Jurisdiction letter on the Kansas Department of Revenue website. A copy of the Irrevocable Consent to Jurisdiction should be attached to the application or faxed to the Department of Revenue upon receipt. Special Order Shipping Licenses will not be issued until Alcohol Beverage Control has a copy of the document. The Kansas Business Tax Application should be completed by hand and mailed in with the Special Order Shipping License Application.

Wineries located outside of Kansas applying for the Special Order Shipping License are not required to complete Section 3- “Business Ownership Information,” Section 5– “Background Qualifications” or Section 9 “Management Services Disclosure” of the application. In Section 6, Part 2 and Section 8, Part 1 it is not necessary for out-of-state applicants to attach additional documentation.

Should you have any questions about the Special Order Shipping License Application process or forms please contact Annie Bones with the State Relations Department of Wine Institute at 415-356-7530.

Application
http://www.ksrevenue.org/pdf/forms/abc800.pdf
Business Tax Registration
http://www.ksrevenue.org/pdf/forms/cr16.pdf
Escrow Bond Form
http://www.ksrevenue.org/pdf/forms/abc803.pdf
Surety Bond Form
http://www.ksrevenue.org/pdf/forms/abc804.pdf
ABC-160
http://www.ksrevenue.org/pdf/forms/abc160.pdf

-Annie Bones, State Relations – Wine Institute

Reminder: Updated New York Excise Tax Forms for May Sales

June 29th, 2009
By Sarah Werner - ShipCompliant Research Team

The New York State Department of Tax and Finance recently sent a notice to direct shippers who filed and paid taxes on May shipments using form MT-40 to inform wine distributors and wineries that the paper form mailed by the state was an old version, reflecting old tax rates applicable only to orders placed before the May 1, 2009 excise tax increase. The notice requests taxpayers to send an amended return with any additional payments. The new form, with corrected tax rates, displays a revised date of “5-09″, and is available online. Forms downloaded from ShipCompliant or from New York’s website after May 1st displayed the correct tax amount.

Kansas permit applications available, Tennessee coming soon…

June 26th, 2009
By Jamie Jimenez - Marketing, ShipCompliant

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.

ewl_blog3Kansas 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.

Tennessee keeps the ball rolling on direct shipping

June 5th, 2009
By Jane Hwang - ShipCompliant Research Team

Governor Phil Bredesen signed Senate Bill 166 into law today. With the passage of the bill, Tennessee will legally open its doors to winery direct shipping on July 1, 2009. Tennessee prohibited direct shipments from out-of-state wineries long before the landmark Granholm case. Even onsite shipments of wine were disallowed when the Attorney General issued an opinion on the matter in February 2009. Attempts to pass direct shipping legislation in the past years have failed, unaided by a Tennessee wholesaler campaign against the bills during the 2008 legislative session. However, with the Governor’s signature, in-state and out-of-state wineries alike now have access to Tennessee wine consumers. Direct shippers can expect to pay an annual license fee of $150 (an initial application fee of $300 is required for new applicants) and remit monthly sales and gallonage taxes. Some less positive aspects of the new laws include a 3 case annual shipping limit from a winery to a consumer and restrictions on who can obtain the direct shipper’s license—retailers, unfortunately, are among the excluded.

Although retailers will not be among those celebrating on July 1, the passage of SB 166 is a huge victory for many direct shippers. Governor Bredesen’s signature signals a radical change in the state’s stance on wine sold through the direct shipping channel: Tennessee is the first state to reverse its stance on direct shipments for wine since Vermont in 2006. The effective date of this legislation is less than a month away, however, there is no word, yet, on when all necessary forms will be available, so stay tuned.

It’s Alive! (and Waiting for the Governor’s Signature) – Direct Shipping Bill in Maine

June 2nd, 2009
By Sarah Werner - ShipCompliant Research Team

On May 29th, “An Act To Increase Consumer Choice for Wine” (H 696) won initial approval by the Maine House of Representatives. On June 1st, only one legislative day later, the proposed act was passed by the Senate. The bill is waiting for Governor Baldacci’s signature before becoming law.

If passed, H 696 would provide for a direct shipping permit, which would allow wineries to ship up to 12 cases of wine per year to the doorsteps of Maine consumers over the age of 21. As with any direct shipping bill, the freedom to deliver wine to a consumer’s home comes with a few restrictions, but none are overly burdensome. Some specific requirements include:

  • Collection and payment of sales tax
  • Quarterly reporting and payment of excise tax
  • $200 license fee; $50 renewal fee
  • Photo ID verification and signature of recipient upon delivery
  • Licensees may not ship wine in a container smaller than 750 mL
  • Licensees may not ship to local option areas or areas identified as a prohibited shipping area

The expeditious passage of H 696 through the Maine Senate is a welcome event for wineries across the country. A bill that would allow winery-to-consumer shipping in Tennessee is also waiting for a signature from their governor. If both of these measures are signed into law, Maine and Tennessee will join Kansas in the ranks of previously prohibited states who have adopted favorable direct shipping laws in 2009.


UPDATE: The Senate introduced an amendment that addresses some carrier issues as proposed in Committee Amendment “A”. The bill must again be read (date set for 6/3/2009) by the House before being considered for passage into Law.


UPDATE 6/5/2009: The Maine legislature passed the bill to be enacted on June 5th, 2009 with a carrier amendment. The bill is now ready to be sent to the governor. Once received by Governor Baldacci, he has 10 days (not including Sundays) to take action, otherwise the bill becomes law without his signature.

Wine compliance tweets, posts, events, and information

May 22nd, 2009
By Jamie Jimenez - Marketing, ShipCompliant

Follow ShipCompliant on TwitterWith every blog post, we research the facts and analyze the data to provide you with an in-depth look of the issues at hand. Though our staff hears news daily and keeps track of industry events and happenings, not all this information makes its way to the blog.

We do, however, post updates, news stories, articles and interesting blog posts as we come across them. Follow @winecompliance on twitter to receive the latest wine compliance news, information, and tips on a more frequent basis.

Additionally, if you are interested in knowing what’s going on at ShipCompliant, staying up-to-date with the multiple events we put on throughout the year, and receiving the latest industry news, follow our new @shipcompliant account on twitter.

When Will The Wine Industry Rebound?

May 18th, 2009
By Jamie Jimenez - Marketing, ShipCompliant

Direct Shipping Seminar- 2008 Amidst lagging wine sales in 2008 and a sluggish economy, Silicon Valley Bank Wine Division founder Rob McMillan outlines critical issues facing the wine industry and growing economic and market trends in his “2009-2010 State of the Wine Industry” report.

“Wine businesses across the board are being pushed to new limits in the current environment,” said Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report.

Rob McMillan will reveal strategic and tactical recommendations to wine businesses as they adapt to current and anticipated market conditions and other insider information based on his expert research and surveys of nearly 500 wineries that may help you plan for your future at ShipCompliant’s 4th annual Direct Shipping Seminar & Users Conference. The conference will take place on June 11, 2009, at the Napa Valley Marriott.

Other conference speakers include W. Curtis Coleburn, Chief Operating Officer of the Virginia ABC, and Steve Gross, Director of State Relations at the Wine Institute.

Participating companies include: Wine Business Monthly, FedEx, Wines & Vines, Copper Peak Logistics, Bacchus Fulfillment, WTN Services, Pack n’ Ship Direct, Wineshipping, Benson Marketing, Microworks, Cultivate Systems, Active Club Management, WineWeb Enterprises, eWinery Solutions, Elypsis, WineWare Software, Missing Link/eCellar, VinNOW and EVT Solutions.

Register online today to confirm your spot.

Round Four of the Florida Direct Shipping Battle Comes to a Close

May 4th, 2009
By Jane Hwang - ShipCompliant Research Team

The streak continues. Once again Florida lawmakers were unable to pass any direct-to-consumer bills. Legislators presented two distinct direct-to-consumer bills for the 2009 legislative session but both have failed to advance beyond committee. Senate Bill 764 (House Bill 245 is its counterpart), the more restrictive of the two, would have required an annual $250 fee, a $1,000 to $5000 surety bond, a maximum production limit (capacity cap) of 250,000 gallons and a 12 case per year shipping limit. The bill survived three committee votes, but did not make it out of the General Government Appropriations committee. Senate Bill 272 (House Bill 251) would have placed no limits on production amounts or annual case shipments and the license and bond fees were much more wallet-friendly at $100 and $500 to $1000, respectively. Since neither of the bills passed by Friday, May 1, four consecutive legislative sessions have failed to produce direct shipping legislation. The Florida battle has probably been the most intense battle between winery and wholesaler associations over the years.

As of now, there are no statutes in place that regulate direct shipping to Florida residents. According to present law, out-of-state vendors must remit excise taxes and not ship to the five dry counties, but there are no other binding regulations. With no bill passed this year, Florida remains open under the administrative control of the Department of Business and Professional Regulation.

Wine Freedom in the South? Tennessee Direct Shipping Bill Passes the Senate

April 27th, 2009
By Jane Hwang - ShipCompliant Research Team

Tennessee, one of 13 states that still bans direct-to-consumer shipping, took steps towards ending that association on April 13, 2009 when the Senate-approved Senate Bill 166, which allows direct shipments of wine. Currently, anyone who transports wine into Tennessee by bypassing the three-tier system is committing a felony (see Section 57-3-401.b of the Tennessee Code) an act that bill sponsor Senator Paul Stanley says is already widely committed. Due to this continuous violation of existing law, Senator Stanley calls SB 166 a “common-sense bill.”  Senate Bill 166 requires out-of-state wineries to obtain a $300 license non-refundable application fee and $150 annual permit fee and also sets a shipping limit of 3 cases per calendar year per individual consumer.

During the Senate Committee hearings, there was lengthy questioning regarding enforcement mechanisms to ensure out-of-state wineries are in compliance. Senator Tim Burchett also voiced concerns about the lack of jurisdiction that the Tennessee Alcohol Beverage Commission has over out-of-state wineries, to which committee chair Senator Bill Ketron responded with a quote from Section 1.C.2 of the bill, which states that applicants must, “execute a consent to jurisdiction and venue of all actions… in the state of Tennessee.” Senator Ketron also noted other enforcement mechanisms such as a clause that makes direct shipping without a permit a Class (E) Felony. Primary Sponsor Senator Stanley addressed the doubts about enforcement and compliance by pointing to many other states that have successfully instituted and enforced direct shipping laws. In addition to mentioning the success of other direct-shipping states, bill supporters also noted that SB166 could bring in an estimated $10 million in additional annual revenue.

The approved version of the bill was passed in the Senate by a 22-8 margin with two amendments, imposed by the Senate Finance, Ways and Means committee. The first amendment reduced the total annual wine shipments allowed to one resident to 27-Liters from the original 108 Liters per year, with a one case per month limit. The second amendment was apparently inserted with no specific purpose except to appease the three-tier distribution system by stating that nothing in the direct shipping bill is meant to “diminish the three-tiered scheme.” The Senate-approved version of SB 166 also requires wineries to report the appropriate sales and gallonage taxes, and direct shippers must keep records of all shipments in case the Tennessee Alcoholic Beverage Commission requests such information. Now that the bill has moved through the Senate, it awaits discussion and approval by the House Government Operations Committee.

In February, Tennessee’s Attorney General chose to level-down by banning all direct-to-consumer shipments and transports of wine for personal use. Only two months later, however, the passage of SB 166 in the Senate demonstrates willingness to accommodate consumer demand by opening up the state to direct shipping.

Keeping up: Direct Shipping Legislation

April 24th, 2009
By Jamie Jimenez - Marketing, ShipCompliant

With Kansas now due to open for direct shipping on July 1st, and legislation pending in Florida and Tennessee that may change direct shipping laws, the direct shipping environment is shifting faster than usual.

You will not want to miss a state-by-state review of legislative updates from Steve Gross, the Wine Institute’s Director of State Relations during ShipCompliant’s 4th annual Direct Shipping Seminar and Users Conference. The event will take place on Thursday, June 11 at the Napa Valley Marriott.

Hear from Steve Gross and other distinguished speakers as they address important direct shipping updates including a state-by-state review, wine-industry market analysis and strategic direct-to-consumer marketing. Confirmed speakers include:

  • W. Curtis Coleburn, COO, Virginia ABC
  • Steve Gross, Director of State Relations, Wine Institute
  • Q&A session with Jeff Carroll, VP Compliance, ShipCompliant
  • Additional speakers to be announced soon…

This conference sells out quickly so register online today to guarantee your spot, or sign up to receive email alerts on other upcoming events.

Excise Taxes Updates, New York Up and North Dakota Down

April 23rd, 2009
By Annie Bones, State Relations - Wine Institute

The wine excise tax rate in New York will increase on May 1, 2009 from $0.1893 per gallon to $0.30 per gallon. Wine Institute was part of a coalition of industry members that actively opposed the NY Governor’s proposal for a wine excise tax and demonstrated the detrimental effects an excise tax increase would have on the economy. These efforts resulted in the original proposal for a $0.32 increase being reduced to only $0.1107 per gallon.

In other news North Dakota will no longer have a separate tax category for sparkling wine. Beginning July 1, 2009 sparkling wine will be taxed at $0.50 per gallon, the same rate as table wine. This is a significant decrease from the current excise tax of $1.00 per gallon of sparkling wine.

-Annie Bones, State Relations – Wine Institute

Kansas to Open for Winery Direct Shipping July 1st

April 20th, 2009
By Jane Hwang - ShipCompliant Research Team

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.

One Less Dry Town in Connecticut

March 9th, 2009
By Sarah Werner - ShipCompliant Research Team

Back in July of 2005, Connecticut passed legislation affecting direct shipments of wine the entire state. At that time, four towns in Connecticut were dry. As of February 9th, 2009, only three dry towns remain where wine cannot be shipped directly to consumers. The town of Wilton recently held a public hearing in which a board elected to amend Chapter 8, permitting the sale of alcoholic liquor within the city limits. The remaining dry towns are Bridgewater, Eastford and Roxbury, (which translates to the zip codes, 06752, 06242 and 06783, respectively). There is no news on whether or not any changes are expected in the three remaining dry towns.

Notice

Tennessee’s AG Rules Consumers May Not Bring Wine into Tennessee, Federal On-Site Provision No Longer Applies

February 27th, 2009
By Annie Bones, State Relations - Wine Institute

On February 24th, 2009, Tennessee’s Attorney General issued Opinion No. 09-15, which concluded that consumers may not legally carry any amount of wine on their person into Tennessee. This ruling, prohibiting consumers from carrying wine into Tennessee, means that the federal on-site provision does not apply to consumers in Tennessee. Wineries are therefore prohibited from making shipments via common carrier to Tennessee consumers under any circumstance. All wine must enter Tennessee through the 3-tier system without exception.

On a positive note, a number of favorable direct shipping bills (Bill H 1155, S 166 & S 1690) have been introduced and are currently awaiting action in the Tennessee legislature. If enacted, these bills would create a direct-to-consumer shipping permit for wineries, allowing for the payment of taxes and reporting. Wineries with a permit would be able to ship up to 24 cases a year to Tennessee consumers, depending on which bill might pass.

Annie Bones, State Relations – Wine Institute

Michigan Direct-To-Consumer Rules Clarified

January 28th, 2009
By Annie Bones, State Relations - Wine Institute

Many questions have resulted from a new law prohibiting wine retailers from shipping to consumers in Michigan that recently went into effect. The new law specifically bans common carriers (FedEx and UPS) from delivering retailer wine shipments to Michigan consumers. This law does not affect the existing regulations for wineries shipping to consumers under the permit structure. Wineries with an approved Direct Shipping License may continue to ship to Michigan consumers via FedEx and UPS. Information about how to obtain Michigan Direct Shipping License can be found on the Wine Institute website http://www.wineinstitute.org/initiatives/stateshippinglaws.

Annie Bones, State Relations – Wine Institute

Kentucky On-Site Requirement Invalidated, but Questions Remain

December 31st, 2008
By Jeff Carroll - VP of Compliance, ShipCompliant

On December 24th, the US Court of Appeals for the Sixth Circuit affirmed, in the Cherry Hill case, the judgment of the district court, invalidating the on-site purchase requirement.

The district court ruled, pursuant to the Supreme Court’s decision in Granholm v. Heald, 544 U.S. 460 (2005), that the in-person purchase requirement in portions of Kentucky’s statutory scheme discriminated against interstate commerce by limiting the ability of out-of-state small farm wineries to sell and ship wine to Kentucky consumers.

Although this decision sets an important precedent, especially in light of a contradictory decision in Indiana, several questions remain unresolved. Despite the justifiably positive news in the press, direct shipping to Kentucky seems unlikely in the near term.

The biggest obstacle is the fact that the common carriers (FedEx and UPS) have not approved the state of Kentucky for direct shipping. Among other reasons for not yet opening up the Bluegrass State, the carriers are not thrilled about dealing with the 53 Dry and 16 Moist counties.

Furthermore, in spite of the recent victory in Massachusetts where the 30,000 gallon capacity cap was declared unconstitutional, the Cherry Hill challenge of the 50,000 gallon capacity cap in Kentucky was not successful. So, even if the carriers approved Kentucky for shipping, only “small farm” wineries would be eligible for a permit.

Corbin Houchins provided great analysis of the original district court ruling two years ago, and I recommend revisiting that post for more information on Cherry Hill. He highlighted an additional question about the two case “per visit” limit, and how that would apply given the unconstitutionality of the on-site visit requirement.

Cherry Hill Decision

Happy Holidays

December 23rd, 2008
By Jason Eckenroth - President, Six88 Solutions

The ShipCompliant TeamHappy Holidays from the ShipCompliant Team! Thank you so much for your continued support. This picture was taken recently from the rooftop of our office in Boulder, CO.

-Jim, Pawel, Luke, Jane, Kim, Manzi, Elizabeth, Barclay, Kent, Michael, Jason, Jeff, Trent, Sarah, David, Mike, Colin, Ryan and Robb (not pictured: Mackenzie and Jamie)

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