UPS and FedEx Approved as Direct-to-Consumer Alcohol Carriers in North Dakota

Following North Dakota’s implementation of SB 2147 last week, which is explained in detail here, North Dakota announced that alcohol carriers FedEx and UPS have submitted applications and are now approved for shipping direct-to-consumer orders into North Dakota through the end of the year. SB 2147 updated the existing direct shipping law with the requirement that alcohol carrier and fulfillment logistics companies get “Alcohol Carrier” and “Logistics Shipper” licenses, respectively, in order for wine direct shippers to use their services for shipments to North Dakota consumers. FedEx and UPS therefore may now be used for wine direct shipping by North Dakota licensees who ship from their licensed premesis.

Wineries and Retailers licensed to sell and ship to North Dakota consumers should remember, however, that until logistics shippers (aka fulfillment warehouses) are licensed under SB 2147 requirements, only in-house fulfilled orders can be shipped. North Dakota periodically publishes a list of licensed entities on their website located here under the link title “List of Alcohol Licenses”.

Update 10/15/2013:
FedEx will halt shipments effective November 1st, 2013. Please see this post for more information.

Logistics Shippers and Carrier License Applications Required in North Dakota

An update to North Dakota’s existing direct shipping law is going into effect today, August 1. Passed earlier this year, the new law maintains much of the existing law surrounding direct shipping, but also adds two new licenses, “Logistics Shipper License” and “Alcohol Carrier License”, in addition to new shipment reports.

Since April of 2010, fulfillment warehouses have been prohibited from shipping into the state on behalf of their winery or retailer clients. Effective today, a fulfillment warehouse can ship into the state once they apply and are approved for a “Logistics Shippers” license. Also effective today, an “Alcohol Carrier” license is required for any carriers shipping direct-to-consumer orders into the state; this includes common carriers such as FedEx and UPS. According to a recent newsletter sent out by North Dakota’s Office of the State Tax Commission,

“All direct shippers, logistics shippers, and alcohol carriers MUST be licensed BEFORE shipping… and must ensure the alcohol beverage is being shipped and delivered by licensed direct shippers, licensed logistics shippers and licensed alcohol carriers.”

No Logistics Shipper or Alcohol Carrier licenses have been issued as of yet. This means that, in effect, until carriers become licensed, direct shipments into North Dakota will not be compliant. Alcohol Carrier and Logistics Shipper licenses may take a week to be processed.

Licensees should also be aware of new shipment reports. The law now requires each of the three aforementioned types of licensees to electronically report shipments into the state. Each licensee must keep records and will be required to report the name and license number of the other licensees they used for each shipment. All licensees will be required to report the name and address of the recipient, the type and quantity of alcohol shipped, and tracking numbers. Direct shippers may file the existing annual electronic report for all 2013 shipments (“Schedule H” for sales of liquor and wine); the new direct shipper reporting requirements will go into effect beginning with the 2014 filing period. Alcohol Carriers and Logistics Shippers must report monthly. To ease the reporting burden, the Office of State Tax Commissioner publishes license names, numbers and addresses of licensees on their website.

ShipCompliant clients should note that we added “Carrier Prohibited” rules for FedEx and UPS to our database that will cause all shipments to North Dakota to be not compliant effective today. Once we receive confirmation that the carriers are licensed, we will remove each rule to allow shipments from approved Alcohol Carriers. Similarly, we applied a “Third Party Shipper Approval Required” rule to North Dakota that will cause shipments from non-approved fulfillment houses to fail compliance checks. Currently, no fulfillment houses are approved, but we will update this rule immediately after getting confirmation of each approved Logistics Shipper.

Application Links:
Alcohol Carrier License Application
– $100/year
Logistics Shipper License Application
– $100/year
Direct Shipping Permit Application
– $50/year Renewals will be sent out in November for the 2014 licensing period

Big Changes in Arkansas for Wine and Spirits Brand Registrations

Big changes regarding alcohol regulations continue to unfold for Arkansas this year with the passage of HB 1480, now Act 1105 (signed into law shortly Arkansas’ recent direct shipping bill). Act 1105 effectively changes the current wine and spirits brand registration process. Below is a table comparing the current requirements with the new requirements outlined in the Act, which will go into effect mid-August.

Of the changes outlined above, the biggest to note is the new fee requirement of $15 per “brand label” and “brand label size” and the implementation of annual renewals. The Act defines a “brand label” as “…the label carrying the distinctive design of a brand name of a spirituous liquor or vinous liquor”. In the past, Arkansas has not required additional sizes to be separately registered, nor did they explicitly require notification of new brand label extensions.

Also noteworthy is a new license requirement for wine and spirits suppliers. The $50 license will allow producers and importers to continue to sell to Arkansas wholesalers. Those already licensed as an “Arkansas Small Farm Winery” (needed to sell wine directly to Arkansas retailers) do not need to obtain additional licenses to sell to Arkansas distributors; their existing license will suffice.

Updated procedures are not public yet, however as time draws near the effective date, Arkansas will surely release information on their implementation process. Keep an eye on the ShipCompliant blog for updates.

Limited to On-site Sales, Arkansas Passes Bill to Allow Direct Shipping

On March 21, 2013, House Bill 1749 became Act 483, signifying its passage into law. Once enacted mid-August, the state of Arkansas will be added to the list of states that allow wineries to ship wine directly to consumers — but with many limitations.

Aside from the low cost of the license, the requirements under this new shipping law limit the abilities of licensed out-of-state wineries, arguably more than any other state that currently allows direct-to-consumer wine shipping. These limitations include requiring all shipments to be purchased in person at the winery, and affixing a special, ABC-provided, shipping label to each shipment.

For those wineries interested in navigating these one-of-a-kind requirements, Arkansas consumers will no doubt enjoy the ability to ship home a case of wine after visiting their favorite wineries. No license applications or information are available as of yet. Below is a breakdown of the licensing process, as well as the requirements and restrictions to operate, as stated in the new law:

Restrictions/Requirements (not limited to the following):

  • Consumers must be physically present at the winery when purchasing the wine to be shipped to Arkansas consumers (onsite orders only)
  • Every shipment must be affixed with a shipping label provided by the ABC, costing up to an additional $10 per label
  • Collect and remit sales and excise tax, “as if the sale took place on the premises of a Arkansas Small Farm Winery”
  • Ship only to a private residence – added difficulty, as shipments require an adult signature
  • Customer volume limit of one case per customer, per quarter

Licensing Process

  • Registration with the Arkansas Department of Finance and Administration Alcoholic Beverage Control Division (ABC), including a $25 annual fee.
  • Provide the ABC with a copy of the winery’s home-state license as well as the winery’s TTB Federal Basic Permit

Your DIRECT source of Wine Shipping Information

The ShipCompliant Blog brings you a steady flow of legislative updates, regulatory changes and other important news impacting wine shippers. If you find this information valuable, you won’t want to miss DIRECT 2013, ShipCompliant’s 8th annual Direct Sales and Shipping Seminar taking place June 13, 2013, in Napa, California.

This full-day seminar will feature multiple breakout sessions to discuss, in detail, some of the most important issues to wine direct shippers today, including:

  • Regulatory Roulette: A Discussion of Key Regulatory Issues Impacting Your Business
  • Integrating a Mobile Marketing Strategy into Your Sales Efforts
  • Third-Party Marketing: The Regulatory Landscape You Need to Know
  • Best Practices for Managing your Fulfillment Efforts in the Age of Amazon
  • Shipping Analytics: How Do You Measure Up?
  • ShipCompliant Support Lab: 1-on-1 Training
  • ShipCompliant University (three tracks)
    • Back to Basics: ShipCompliant 101
    • Compliance Made Easy
    • From Sale to Shipment

You’ll also get to hear from best-selling author and keynote speaker, Dr. Joseph Michelli, as he shares his share his extensive, in-depth research into key differentiators that define the success of companies like Starbucks, Zappos, and The Ritz-Carlton Hotel Company. And more importantly, how wineries can incorporate these strategies to create their own “creaveable” brands.

Wine Institute Director of State Relations, Steve Gross, will give a detailed state-by-state overview of recent and upcoming changes affecting wine direct shippers. Pat Kohler, Director of the Washington State Liquor Control Board, and Deputy Director Rick Garza will provide insight on recent changes in Washington state that have industry-wide impacts.

Seating is limited, so register today to confirm your seat at this eighth-annual exciting and informative conference.

Is the Marketplace Fairness Act Fair for Wineries?


In short, yes, for a couple of reasons:

1. Wineries already pay sales tax in most states
2. The vast majority of wineries will likely be exempt from the law

So what is it, exactly?

Senate Bill S. 743, more commonly known as the “Marketplace Fairness Act“, is a pretty simple bill that would give states the ability to require out of state businesses that have “remote sales” in excess of $1 million annually to remit sales taxes. Each state would be able to opt in to the Act, but only after they have simplified their tax structure, either by joining the Streamlined Sales and Use Tax Agreement or to follow the steps outlined in the bill to simplify their sales tax requirements.

Will it pass?

With broad bi-partisan support, S. 743 passed out of the Senate with a vote of 69 to 27. However, a tough battle is expected in the House, and therefore the Marketplace Fairness Act has a long way to go before it is enacted with a signature from President Obama. Amazon.com is supporting the bill (presumably because they would like to move forward with their plans to build warehouses in each state to support same-day shipping), while eBay is one of the main voices in opposition.

What will it mean for wineries?

A lot hinges on the definition of “remote sales”. Keep in mind the fact that state legislation to allow wine shipments typically includes a provision that also requires wineries to register for and pay sales tax. As it stands in the Senate version, and based on our interpretation of the current language, sales by wineries to states where they are already required to pay sales tax would not be counted when considering the $1 million threshold for remote sales.

Based on some quick analysis, there are a few hundred wineries in the US that ship more than $1 million worth of wine to consumers each year. BUT, if you include sales only to those states (Alaska, Colorado, D.C., Florida, Iowa, Kansas, Minnesota, Missouri, New Hampshire, Oregon, and Wyoming) that do not require wineries to pay sales tax, then we estimate that less than 25 wineries would exceed the $1 million cap. In other words, the vast majority of the 7,000+ wineries in the US would be exempt from this law.

Wineries are already accustomed to calculating, collecting, and remitting sales taxes in most states. So, for those wineries that would not be exempt from this law, it would probably not be that big of a deal to add a few more states (initially the states of Iowa, Kansas, Minnesota, and Wyoming) to the list of states to which they would be required to remit sales tax. They already have the technology and processes to do so.

The bill would take effect, at the earliest, on October 1st, 2013. Once effective, the 22 “Streamlined” sales tax states would begin requiring sales tax for remote sellers with over $1 million in sales. After that, each of the remaining 28 states would choose whether to opt in to the Act and start requiring sales tax from remote sellers.