Massachusetts ABCC to Retailers: No Shipping Wine Out of State

Monday, August 17, 2009

Map of Massachusetts

It's been a rough year for Massachusetts wine retailers. Besides the down economy that's cast a shadow upon businesses of all kinds, and the tax hike that went into effect on August 1st, the Massachusetts Alcoholic Beverage Control Commission has issued warnings to retailers advising that they stop shipping wine to customers out of state. According to several wine retailers I spoke with, they are no longer shipping wine out of state as a result of this guidance.

Chapter 138 of the General Laws of Massachusetts lays out in not-so-clear terms how alcohol is to be sold in the state. The nuance in the way this works that I find most bothersome is that the law defines what you *can* do, not what you're can't do when it comes to selling alcohol. For example, out of state retailers are not allowed to sell wine and ship it to residents within MA. But you won't find anywhere in the chapter that says this directly- you'll only find that the only people who can sell wine to people in MA are retailers who have a license to do so, and the commission only issues licenses to retailers in the state. This is a different situation than most laws we are limited by as citizens where we are told what we can't do rather than what we can do, and for me, it leads to a lot of confusion as to whether we can have wine shipped to us from out of state retailers and wineries. It would be a lot more clear for everybody if the laws were expressed in this way, but such is the law and such is life.

The most meaningful passage in the code is this one from Section 2:

"No person shall manufacture, with intent to sell, sell or expose or keep for sale, store, transport, import or export alcoholic beverages or alcohol, except as authorized by this chapter"

Unfortunately, the chapter never really comes back and defines how one actually is allowed to sell alcohol and gives rise to the confusion in this area. This gives the ABCC the power to determine what licensees can and can't do, and results in the ABCC being named as the defendant in legal cases in this area. In Section 22, the code does discuss the matter of transporting wine within the state in excruciating detail. It says that each individual truck a carrier uses to transport alcohol needs to have its own license. My understanding is that FedEx *does* have a license for every truck they use, and they're the ones shipping (not the retailers themselves). Therefore, it seems that retailers *should* be able to ship. That's why FedEx's from/to tables say they can ship out of Massachusetts to states that allow it.

In interpreting the laws governing these issues as a consumer, there seems to be a disconnect between what a reasonable person can ascertain from reading the code, and the reality of whether they are successful when they try to order wine from out of state. For example, out of state wineries that produce less than 30,000 gallons of wine a year (ie, small wineries) are legally allowed to ship wine to MA. However, they often don't, won't or can't in practice. They don't because Ship Compliant tells them not to. They won't because it costs them $100 to get a permit to ship to the state, and they can't because UPS and FedEx don't ship here.

I spoke with ABCC Executive Director Ralph Sacramone and General Counsel William Kelley about this, asking them the following questions:
  1. Is the MA ABCC currently advising retailers not to ship out of state?
  2. If so, on what grounds?
  3. Either way, are MA retailers allowed to sell wine on the Internet and ship to consumers within the state of MA?
They declined to provide a response due to pending litigation. I'm not clear on what that pending litigation might actually be.

I spoke with a half dozen retailers on this subject and I was frustrated by what I heard as a consumer. Here's why:
  1. There seemed to be a feeling that if they disregarded the ABCC's interpretation on the matter, and the ABCC decided to punish them with a fine or worse yet a 1-day suspension of their brick and mortar business it could be devastating financially.
  2. As a consumer, it really bothers me when the government tries to stifle business. Whether we're talking about shipping wine into or out of MA it doesn't seem right that 2 parties (a retailer and a consumer) who want to get together and conduct business should be limited by the state alcohol control board. The last thing we need is artificial barriers to spending.
  3. The Internet has been a great source of hope for retailers that are able to leverage it properly. If the most innovative wine retailers in the state are not able to effectively take advantage of their e-commerce/social media presence as a result of this limitation and if the situation persists, we will absolutely lose the very retailers that are interacting with us in the way we want to be interacted with.
  4. Further, if these retailers are unable to sell to out of state customers, it limits their ability to buy certain wines in large quantities. This in turn limits their ability to buy wines at the deepest discount levels and that means higher prices for consumers within the state.
  5. If the ABCC reads the law this way and is able to enforce their interpretation of the law, what's to stop them from even tighter regulation? They could stop all sales over the Internet, over the phone, or any other restrictive action they might want to take.
The situation is unfortunately symptomatic of a broader set of issues that goes all the way back to prohibition. It's easier said than done, but I think it's high time to scrap this bizarre state-by-state control of alcohol distribution and align on federal standards for how wine flows from the vineyard to our glasses. It's the only way I see to break the tension between the 21st Amendment (which gives each state the right to determine their own alcohol laws) and the Commerce Clause (which limits states from stifling business). If you're interested in this area of the wine world, I'd highly recommend reading this piece from Tom Wark. It is the most concise and informative piece of writing I've come across to date.

Fellow Consumers: Feel free to drop me an email if you have questions about getting wine shipped to you in Massachusetts. I think about this issue all the time.

Question of the Day: What do you think of this situation?


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