As state legislatures get busy in 2017, many states are considering new direct-to-consumer wine legislation. Here's what you need to know:
In March, the governor signed a law removing the rule for "small farm wineries" that required customers to visit the winery in order to receive shipments from them. In addition, the bill changed the definition of "small farm winery" from one that produces less than 250,000 gallons to one that produces at least 800 gallons. This modest change also requires the “small farm winery” to obtain a wine wholesale permit, limiting its practical benefit to out-of-state wineries. A step in the right direction for a very restrictive state, but just a baby step.
Currently, only wineries making less than 50,000 gallons per year are permitted to ship direct to Kentucky residents. A proposed bill would remove that rule and allow any winery, regardless of size, in or out of state, to ship up to 24 cases of wine per year per person. The bill extends to retailers as well. The catch is that it is still illegal to ship wine to residents of dry counties in the state. As a result, common carriers like FedEx and UPS have decided not to ship there.
A bill has been introduced to eliminate the minimum bottle size restriction of 750 ml for DTC shipments, the only such restriction in the United States.
Currently one of the few states allowing DTC shipments without a permit, Minnesota is looking to join the majority of DTC states in considering a bill (House File 791) making a DTC permit necessary, and in doing so implementing new reporting requirements. Following a growing trend, the law would require winery DTC license holders to authorize third party service providers (other than common carriers) and require those third parties to file a report of shipments annually.
Bad news for wineries in Mississippi: a law that would have lifted DTC shipping restrictions in the state has been mothballed after failing to make it out of committee.
Will 2017 be the year for New Jersey? A proposed bill in the Garden State would improve the situation by allowing wineries of all sizes to ship direct to consumer. Currently only wineries producing less than 250,000 gallons are permitted to do so. Unfortunately, it leaves intact the rule limiting shipments to 12 cases per year per resident.
Legislators in Rhode Island will vote on HB 5350, a very reasonable and positive bill that would finally remove the onsite only visitation requirement for wineries (and retailers) to ship direct to the state. If passed, the bill would provide for shipment of up to 24 9-liter cases annually and cost a modest $100 annual fee. It also provides for the usual reporting and remittance of sales and excise taxes. It does prevent shipments to “dry areas”, but that is not significant in the smallest state in the Union.
Already passed by the legislature, Governor Jay Inslee is expected to sign into law a bill that doubles the number of permitted winery tasting rooms from two to four.
As occurs regularly, efforts to raise the amount of excise taxes on wine have been introduced in several states, including California, Indiana, Massachusetts, Montana, and New Mexico. Some may pass, others will not, but New Mexico’s proposed increase has been characterized as “neo-Prohibitionist” by one industry business association for raising the tax by a whopping 475%, from $0.45 to $2.14 per liter.