A Brief History of Wine Shipment into Massachusetts (as H4497 withers on the vine)

Wednesday, July 28, 2010

A summary of developments related to direct shipment of wine into Massachusetts over the past couple of years:

  • For the longest time, wineries outside of Massachusetts couldn't ship here at all.  But then a law went into effect that allowed wineries which produce less than 30,000 gallons a year to ship here.  The logic was that in order for the small wineries in MA to be able to ship out, the state should let similarly small wineries out of state ship in.
  • Good old Mitt Romney vetoed the bill because he thought it was discriminatory towards large out of state wineries, but the legislature overrode his veto and the 30,000 gallon cap went into effect.
  • You'd think this would have freed up a lot of wine shipment to Massachusetts but it didn't.  Why?  Because the cost and complexity of obtaining a permit that needs to be renewed each year is an excessive burden for small wineries.  It costs them a hundred dollars in annual permitting to ship the first bottle (plus administration costs) and they'd rather not take the risk of not selling enough wine to the state in a given year to justify the expense and hassle.  Massachusetts is just one state out of 50 after all.
  • Small wineries were further limited by the fact that UPS and FedEx (so called "common carriers") don't ship wine to Massachusetts because the state has inordinately stringent licensing requirements for vehicles that transport alcohol.  Each individual vehicle needs a permit.
  • Further, there is wording in Massachusetts law stating that each individual consumer can only receive a certain amount of wine per year and any individual winery that put said consumer over their annual volume cap could be held responsible for an illegal shipment.
  • In 2008, the Family Winemakers v. Jenkins case determined the 30,000 gallon cap was unconstitutional.  Family Winemakers represented California wineries, Eddie Jenkins was then the chairman of the Massachusetts ABCC.
  • The discussion around Jenkins focused on protecting small Massachusetts wineries, but if you're a small Massachusetts winery you must have been indignant while this debate was going on.  Why?  Because it never had anything to do with protecting small Massachusetts wineries in the first place.  It had to do with protecting the 3-tier system that channels wine from producer to distributor to retailers and restaurants.
  • Somewhat concurrently with her unsuccessful run for the US Senate against Scott Brown, Martha Coakley appealed this decision in her role as Massachusetts Attorney General.  When the appeal was denied earlier this year, there was dancing in the streets and it seemed direct shipment from out of state wineries to consumers would finally be a reality.  The local TV station even came over to interview me.
  • Though it seemed direct shipments would now be possible, the same laws that stifled small wineries are now effectively stifling all direct shipments of wine to the state.  Since it's unreasonable that each individual truck should need a permit, and impossible for a given winery to know a given consumer's annual wine shipment capacity, new legislation is needed to make the direction from Jenkins effective.
  • Massachusetts House Bill 4497 is that piece of legislation, but it's currently "stuck" in the House Ways & Means Committee.
The bill is the "model legislation" for direct shipment of wine.  They call it model because it strikes a balance between the rights of out of state wineries to ship directly with consumers interested in purchasing their wines -and- the rights of each state to collect tax revenue for the shipment and regulate the shipments.  Massachusetts isn't the first state to grapple with these issues and it won't be the last. 

Even if you don't drink wine or ever intend to get wine shipped to you as a Massachusetts resident you might be in favor of allowing legal direct shipment of wine.  Why?  Because it will increase tax revenue to the state by providing a channel for shipment and tax collection of wine which otherwise couldn't legally be shipped into the state.  The typical wines we're talking about here are ones that aren't available from retailers either because they're too small to warrant interest from distributors -or- are in such high demand that they only sell directly to consumers.  Believe me- as a wine enthusiast I'd love to buy all my wine directly from local retailers to save on shipping costs.  But many wines simply aren't available in the state.

Your call to action?  Contact your state representative and ask them whether they support the direct shipment of wine.  Ask them what's going on with MA HB 4497.  If this bill isn't sent to the floor for a vote by the end of the week it will likely languish until next year effective keeping the status quo for at least another year.  Let's enact this bill to allow the intent of Family Winemakers v. Jenkins to become a reality.


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