Massachusetts Direct Shipment Conversation Expands to Include Retailers

Wednesday, November 13, 2013

Imagine a friend in another state telling you about a great book. You go to to buy it only to discover it's not available for shipment to your state. That's what we're currently dealing with in Massachusetts when it comes to wine since current laws do not allow for the direct shipment of wine from out of state wineries.

The Massachusetts Legislature's Joint Committee on Consumer Protection and Professional Licensure met Wednesday to hear testimony on the direct shipment of wine to Massachusetts residents.

Along with a 7 other passionate wine consumers, I was on hand to share my thoughts with the committee. Arguments against direct shipment came from Frank Anzalotti of MassPack (a body that includes some but not all Massachusetts retailers). Although a representative from the Masschusetts wine & spirits wholesalers was on hand to delivery testimony on a non-related beer wholesaler issue he did not testify on the topic of the direct shipment of wine.

If you're new to the issue here's a brief history of wine shipment into Massachusetts.

The big story, as an observer of this issue over the past few years, is the potential inclusion of out of state retailers in the discussion. Tom Wark was on hand representing the American Wine Consumer Coalition. Joining Wark on the pro-shipment front was New York wine retailer Daniel Posner who serves as President of the National Association of Wine Retailers. They argued that in order to enable Massachusetts consumer access to a wide variety of imported wines, out of state retailers should be allowed to ship to the state.

Several bills related to the direct shipment of wine have been proposed this session but the weight seems to be behind H294 sponsored by Representative Theodore Speliotis of Danvers. The bill doesn't include retailer shipments but the bill would enable shipments from out of state wineries. Speliotis formerly chaired the committee he testified before this week. As sponsor of the bill, Speliotis obviously supports direct shipments of wine. However, under his watch as chairman in prior sessions the bill never made its way out of committee.

Speliotis, somewhat strangely as the bill sponsor, said his concern is for what might happen to Massachusetts retailers if direct shipments were allowed. He says he's concerned about small business in Massachusetts "when we open the doors to the Internet". This argument seem strange since consumers are already fully able to buy wine online in Massachusetts - including from the nation's largest retailer since they've gone through the trouble of obtaining a Massachusetts retailer license and buy all their wine from sold here from Massachusetts wholesalers. At issue is access to wines currently not distributed in the state.

Representing consumers nationally, Wark debunked the notion that allowing direct shipments would be bad for Massachusetts wholesalers and retailers. He pointed out that when Maryland allowed direct shipments wholesalers and retailers actually saw an increase in year over year sales along with broader consumer choice.

Posner, representing national retailers, described how out of state retailers remit taxes for wines shipped to New Hampshire as a point of comparison. Retailers pay $500 per year for the privilege of shipping to the state plus an 8% tax. This is particularly notable given that there is no sales tax on wine in New Hampshire when purchased from state liquor stores. New Hampshire has therefore created an import tax on wine and their state income increases each time a Massachusetts consumer ships to New Hampshire to skirt existing laws. I drove home that point in my testimony and when discussing this with WBZ-TV:

What I hope made an impression on the committee was the earnest testimony from 8 wine enthusiasts in attendance who each described how current laws limited their access to specific wines. These tax-paying Massachusetts residents each have interest in specific wines they can't shipped to them because of existing laws.

A representative from the Wine Institute (pro-shipment) described the fundamentals of why shipments can't occur now and how the bill(s) would rectify the situation. Things like per-consumer capacity restrictions and FedEx/UPS licensing requirements. That's the thing - it's not really up to the committee whether shipments will occur. It's only up to them to pass along a bill which describes how they should occur.

My message to the committee was, I hope, simple. It's time. Three years ago, existing laws were found to be unconstitutional. The state has yet to change laws to comply with that ruling. They need to move one of these bills forward but while we're at let's make sure we get it right which means including out of state retailers in the bill, defining a non-onerous licensing, reporting, and fee structure, defining reasonable volumes, and allowing in-state retailers to ship out of state.

What Happens Next?

The bill gets killed in its sleep while nobody is watching. Just kidding. Though it is what happened last time.

At some point the committee will hopefully vote to send an amended H294 forward for a vote in the House. Governor Patrick is in favor of the legislation so hopefully from there it would move swiftly towards becoming a law.

What Can You Do?

Head over to Tom Wark's blog to see a summary of the session including the American Wine Consumer Coalition's testimony.

And visit Free the Grapes' Massachusetts 2013 page for instructions on how to email committee members to encourage them to allow H294 our of committee and on for a broader vote. Now would be a good time to do it while it's fresh in their minds.

Thanks to CBS Boston WBZ-TV for their coverage of this issue.

I'd love it if you subscribed to the Wellesley Wine Press to keep up with future updates.


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