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Last Chance for Massachusetts Direct Wine Shipment Bill

Thursday, July 26, 2012

Boston State House
Photo by James Trosh

A bill that would enable wineries to ship directly to Massachusetts residents appears to be down to its last out with nobody on in the bottom of the 9th inning. And 2 strikes against it with nobody interested in coming to the plate. With the end of the 2012 legislative season coming soon and lawmakers are focused on other action.

Sound bleak? It is.

From Free the Grapes:

HB 1029, a positive direct shipping bill, was put on a second “extension order” in May for consideration later in the year. But industry representatives warn that the bill will be shelved unless it moves by the end of this month. There appears to be support for the bill if it can get a vote in the Assembly and Senate. But a squabble over unrelated bills stymies progress.
This situation should sound familiar to Massachusetts wine enthusiasts. It's the same thing that happened to HB 4497 in 2010 which would have similarly enabled direct shipments.

It's getting a little comical (in a tragic way) that the state still isn't in compliance with a 2010 Federal Court ruling that the state's current laws, which restrict shipments from any winery producing more than 30,000 gallons, were unconstitutional.

HB 1029 would bring the state into compliance with that court order, but more importantly it would bring common sense to a situation that's currently non-sensical.

The bill would address onerous restrictions currently in place that make it cost-prohibitive for carriers like FedEx and UPS to ship wine into the state. It would also outline how wineries obtain a license to ship directly and how they remit taxes to the state.

But most importantly, to me, it would prioritize the interests of the citizens of the state over wholesalers.

The tension in this situation lies between Massachusetts wholesalers, out of state wineries, and Massachusetts wine enthusiasts. But every citizen of the Commonwealth would benefit from direct shipments. Here's why...

When a wine enthusiast in Massachusetts wants to buy a specific wine directly from an out of state winery it's because that wine isn't available at retail in Massachusetts. Every bottle of wine sold in Massachusetts, whether it be at retailer or in restaurants, needs to pass through a Massachusetts distributor.

When a wine isn't available, the consumer doesn't substitute that wine with a similar bottle which is available from in-state retailers. The consumer usually decides to go to great lengths to have the wine shipped to a neighboring state with more sensible direct shipment laws.

Like New Hampshire. Which famously doesn't have sales tax, but shrewdly (and aggressively) collects 8% tax on direct wine shipments on top of charging wineries hefty annual fees for the right to ship to the state.

Did you catch what happened there? Our laws generated a nice bump of revenue for a neighboring state and inconvenienced Massachusetts residents. And every Massachusetts citizen lost revenue.

Making matters worse, Massachusetts retailers aren't allowed to ship wine out of state. Thanks to this restriction, state wholesalers are missing what could be a healthy boost in business. And every citizen is missing out on collecting excise tax as wine passes through the distributor.

All of this fighting is just about winery direct shipments. It doesn't cover retailer direct shipments which would be even more advantageous to Massachusetts wine enthusiasts, and an even larger source of revenue for the state.

Look at Virgina for an example of how this should be done. Since changing their laws to allow direct shipments they now enjoy a revenue stream of over $3 million dollars a year. Next time someone mentions a state budget deficit I suggest they consider this opportunity.

On his Fermentation wine blog, Tom Wark points out this retailer restriction:
The bill is in fact not a very good one. Under its provisions, consumers in the state would be prohibited from having imported wines shipped to them from out of state. That means no French, Italian, German, Austrian, Spanish or any other imported wines could be ordered by consumers since the bill does not allow out of state retailers to ship into the state. Rather, only out-of-state wineries would have the privilege.
I agree the bill doesn't go far enough. But it's a step in the right direction and one that Governor Patrick said he would sign if it came to his desk.

So let's do the right thing and get this bill passed.

Right now it's stuck in the Committee on Consumer Protection and Professional Licensure. When the committee heard arguments on it two years ago I was in attendance. This bill was just one item of many related to alcohol the committee was considering, and the speakers were primarily lobbyists from both sides.

I stopped by and talked to Representative Theodore Speliotis after the hearing. I think he was surprised to see a consumer at the meeting. I was disappointed there was no decisions or even meaningful discussion for the most part at the meeting. I explained to him my interest in receiving direct shipments of wine and asked him what I could do. He recommended I send him and others a message of support for this bill.

Our representatives needs to hear directly from us. So here's your call to action:

Visit the Free the Grapes website to send an email to Representative Speliotis and others explaining why you favor the direct shipment of wine.

Do it now. Thank you.

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