Friday, May 2, 2014

Direct Wine Shipments Getting Closer in MA

Massachusetts stands in a tiny minority of states that do not allow direct shipment of wines from out of state. Like many other wine lovers in Massachusetts, I wish I could get wine shipped to me from wineries and wine stores all across the country. There are wines I cannot obtain in Massachusetts that I wish I could order. Fortunately, there are positive signs that there may soon be some relief, though the potential new law doesn't go far enough.

Seven years ago, in 2006, a law was passed that barred many such shipments from entering Massachusetts but it was later ruled unconstitutional, a decision affirmed by the U.S. 1st Circuit Court of Appeals. Since that appeals decision on January 2010, several efforts have been instituted to create a legal framework allowing out of state winery shipments. To date, despite some passionate advocacy, all such efforts have failed but recent efforts are hopeful.

In November 2013, I urged my readers to support House Bill 294, which was authored by Representative Theodore Speliotis and introduced in January 2013. It was in the committee on Consumer Protection & Professional Licensure and received a public hearing. The Bill wasn't perfect, but it least was a step forward. Just last week, there was some good news on the direct wine shipment front, though a little unexpected as it didn't involve H294.

The Massachusetts House of Representatives has submitted their proposal for the Fiscal Year 2015 Budget. Attached to that budget, they have added two wine-related Amendments, one dealing with direct wine shipments. The amendment must still pass the Senate and be signed by Governor Deval Patrick, though as far back as December 2011, Governor Patrick indicated his support for direct wine shipments, noting he would approve such legislation. So, the Senate remains the biggest hurdle.

The direct shipment amendment was primarily sponsored by Representative Bradley Jones, Jr. as H230 though the final, approved amendment differs some from the original proposed bill. H294 is similar in many respects to the original H230 bill. I am going to explain a number of elements of the new amendment, as well as indicating the differences from the original H230 bill.

First, the Amendment begins by defining “direct wine shipper” as "any person who sells, delivers or exports wine to consumers in the commonwealth." That would include not only wineries, but also wine shops, online wine retailers, auctions houses, and more. It seems very hopeful except we quickly learn that not everyone who meets this definition can obtain a "direct wine shipper license." This definition was not a part of the original bill so maybe there was discussion of expanding the scope of these licenses in the future.

Second, essentially only wineries, those involved in the "business of manufacturing, bottling or rectifying wine," can obtain a direct wine shipper license. That means that wine shops, online wine retailers, auctions houses, and others cannot directly ship wine to Massachusetts consumers. I want to see this aspect changed too, and to allow all such entities to ship wine to Massachusetts. This amendment is a step forward, but more steps are needed as well. This is similar to the original bill.

Third, the fee for a direct wine shipper license is $350 for the first year, with an annual renewal fee of $150 renewal. That is greater than the $100 annual fee in the original bill. However, the original bill also required a bond from the winery and the amendment has no bond requirement.

Fourth, a winery may only ship up to 12 cases of wine, no more than 9 liters each case, per year to "a resident of the commonwealth." The original bill would have permitted up to 24 cases. This will mean that wineries need to maintain good documentation on their shipments to Massachusetts. Fortunately, the limit is also per resident, so multiple residents at a single house each could order 12 cases from the same winery. For example, a husband and wife could together get 24 cases from the same winery.

Fifth, the wineries must provide an annual report on the "total number of gallons of wine shipped into the commonwealth for the preceding year." That is much better than the original bill which required monthly reports.

Sixth, the amendment lists all of the penalties for violation of the new direct shipment law. The basic penalties include fines and/or license suspension, with potential revocation after three violations. There are additional penalties for shipping to minors. What is most interesting though is that the amendment states that violatiors "shall be deemed to have engaged in a deceptive act or practice under chapter 93A." This is the infamous Consumer Protection Act, which means violators could be open to additional civil penalties, as well as potential double and treble damages. Violating this amendment can have serious consequences. This was all in the original bill too.

Seventh, the original bill created a definition for an “Alcoholic beverages expert,” which is "an individual who is recognized for their written contributions evaluating alcoholic beverages in trade publications, newspapers, magazines, websites, newsletters, and other media for public distribution." That would apply to many wine writers, bloggers, etc. The original bill then created a special license for these individuals, allowing them to receive wine samples. However, all of this was omitted in the amendment and that was a mistake which should be rectified.

So, there are reasons to be happy, though we need to understand that further steps will be necessary. Massachusetts needs to leave the Dark Ages and allow wine lovers the freedoms they are granted in many other states. We want and deserve the ability to get wine shipped to us from wineries, wine shops, online wine retailers and others.

As I mentioned near the beginning, two wine-related amendments were attached to the proposed House budget. The second Amendment, sponsored by Representative Bill Straus of Mattapoisett, essentially allows Massachusetts wineries the ability to offer free samples of wine. In this amendment, no sample can contain more than 1 ounce of wine, and no more than 5 such samples can be served to a patron. Though I thought such a law already existed, it appears it was not part of the existing law. It is a curious exception as wine stores are legally permitted to offer samples, and wineries which attend farmers' markets are also legally permitted to serve samples.

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