Here Comes The Anti-Amazon Wine Law

AmazonWine copyFor a moment there, wine lovers in Maryland and wineries across the country thought that the state of Maryland had begun the process of getting its act together where wine shipping was concerned. Maryland wine lovers and wineries across the country thought Maryland had finally come to its free market senses and started the process of opening its borders to real access to wine.

Now it appears they are backsliding and in a particularly pernicious way.

Senate Bill 990 (authored by Senator Joan Conway-D), and probably best dubbed The Anti-Amazon Wine Law, is beginning to work its way through the Maryland General Assembly. The intent of the bill is to protect local wine sellers from competition. In effect, SB 990 outlaws the use of the new Amazon Wine Site by Marylanders as well as other similar wine sites such as Lot 18 that don’t actually sell wine but rather link willing Maryland buyers to wineries selling their own wines.

The synopsis of the bill reads like this:

“Specifying that a direct wine shipper’s permit entitles the holder to sell specified wine by receiving and filling orders that the consumer transmits directly to the permit holder; and prohibiting an order to be transmitted to the permit holder by a retailer, a wholesaler, or any other third party, including a marketplace site on the Internet in which sellers offer products to customers.”

The actual language of this remarkably short bill reads thusly:

“AN ORDER MAY NOT BE TRANSMITTED TO THE HOLDER OF THE DIRECT WINE SHIPPERS PERMIT (ie: wineries) BY A RETAILER, A WHOLESALER, OR ANY OTHER THIRD PARTY, INCLUDING A MARKETPLACE SITE ON THE INTERNET IN WHICH SELLERS OFFER PRODUCTS TO CUSTOMERS.”

They are talking about Amazon.com.Maryland map

The original direct wine shipping legislation passed in 2011 was a half effort to begin with. Because only wineries, and not out-of-state retailers, were allowed to get the new wine shipping permit, it is illegal today to ship French, German, Italian, Spanish, Australian, Chilean, New Zealand or any other non-domestic wine into the state because in the United States it’s only retailers that sell these non-domestic wines.

Now it appears that Senator Conway and supporters of SB 990 still want to allow Marylanders to have wine shipped to them from domestic wineries, but they kinda want to make it harder for Marylanders to find the wines they want. In other words: “Let’s give Maryland wine lovers what they want, but let’s make it more difficult for them.”

What Led To This Terrible Bill Being Introduced?
So why on earth would Senator Conway and other Maryland legislators want to ban Amazon.com and others from introducing wine to consumers and then pointing them to the wineries that sell these wines? It’s a good question.

ConwayOne thing I know for sure is that the good Senator Conway didn’t come up with this idea on her own. No, this distinctly bad idea was brought to her either by a constituent that is either a wholesale or retailer or a member of the Maryland alcohol regulatory bureaucracy. And I’d be willing to bet that the idea for this distinctly bad, anti-consumer, anti-free trade idea was sparked in December when the Baltimore Sun ran this story on Amazon.com beginning to offer their wine service to Marylanders.

Why is This a Terrible Idea?
You have to understand what Amazon.com Wine does and what it is to appreciate the particular absurdity of the Maryland bill. Amazon.comWine does not sell wine. Amazon.com does not own any wine inventory. Amazon.com is not a wine retailer. Rather, Amazon.com Wine merely presents winery products to those viewers on their site. If the viewer finds a wine they like, they click the “buy” link. And when they go to their shopping cart to pay for the product, they discover that Amazon.com isn’t in fact selling the wine. Rather, the product is being purchased direct from a winery. In other words, Amazon is advertising the wine for the winery, and taking a fee for advertising the wine and shepherding the sale over to the winery. In fact, this is what the buyer reads when they attend to their shipping cart:

“Your order contains wine and requires an adult signature at delivery. Please confirm that both you and the intended recipient of the item are at least 21 years of age. Once you submit the order, Amazon will provide the order to the seller who will review the order information. The order may be rejected by the seller.”

More importantly, the winery must have a Maryland wine shipping permit in order to have their wine advertised to Marylanders on the Amazon.com site. Other third-party marketers and advertisers work the same way.

Maryland’s Anti-Amazon Wine Law Is So Badly Written It May Not Be Enforceable
In addition to this being a stupid, anti-competitive, anti-consumer, anti-wine bill, it possesses the additional problem of possibly being unenforceable. You see, even if it were still illegal for any out-of-state winery to ship wine to a Maryland consumer, it would not be illegal for a 21-year old Marylander to purchase wine from an out-of-state winery. Maryland has no authority to tell its citizens from whom they can purchase legal products. They only have the authority to control how wine enters and moves about the state. That means they can control the shipment of the wine into the state, but not the purchase of wine by residents of their state.

For example, it is currently illegal for an out-of-state retailer to ship wine directly to a Maryland resident. However, there is nothing illegal about a Maryland resident purchasing wine from an out-of-state retailer. They just can’t have the wine shipped to them.

But wait, there is more. The language of this bill seemingly prohibits a California winery that is permitted to shipped wine to Maryland from having an order transmitted to them from Amazon for shipment to a California address. This of course is absurd. Maryland can’t tell a California winery how, why or when it can ship wine to a California address. Yet according the bill, if a California winery has a permit to ship wine into Maryland, it must not receive any orders transmitted from “A RETAILER, A WHOLESALER, OR ANY OTHER THIRD PARTY, INCLUDING A MARKETPLACE SITE ON THE INTERNET IN WHICH SELLERS OFFER PRODUCTS TO CUSTOMERS.”

Maybe this absurd language in the bill is just placeholder language and is awaiting amendment when the process moves forward. But frankly, knowing what I know about the legislative disposition toward wine in Maryland and the way Senator Conaway and others have gone about legislating on wine in the past, I’d have to guess this is the bill language that is intended.

SB 990 is scheduled for a hearing on March 8th at 1:00pm in the Senate Health, Education, Environmental Affairs Committee. If by chance you live in Maryalnd and would like to express your opinion the bill’s sponsor, Senator Joan Conway, her email address is: joan.carter.conway@senate.state.md.us

This is the sort of absurd and ridiculous thing that happens when lawmakers remain in the clutches of a privileged, anti-competitive, protected cabal. They write bad law and announce in the process their disdain for citizens and consumers. It will be fascinating to see how this issue plays out, particularly if the bill passes.

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27 Responses

  1. Anthony - February 25, 2013

    She is the same one that hates guns and keeps pushing for new gun laws. The dems want to take away our wine, and our guns!

  2. Tom Wark - February 25, 2013

    @Anthony

    Lord knows, what fun are guns without some wine?

  3. Kurt Burris - February 25, 2013

    Silly law. But, here in California it is easier to sell a gun to a neighbor than a bottle of wine. And I, for one, think sharing wine among neighbors does way more to promote civility than firearms. But then, I am a Democrat, and want to take all your guns, money and other freedoms too.

  4. Arnold Waldstein - February 26, 2013

    This is indeed stupid.

    Not a fan of Lot 18 nor Amazon’s initiative nor believers that either will be successful, but this legislation is indeed retro and stupid.

    Thanks for being my info source on this issue.

  5. NEWS FETCH – FEBRUARY 26, 2013 | Wine Industry Insight - February 26, 2013

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  6. Gregg Burke - February 26, 2013

    Tom why do you hate retailers? I know you don’t, but come on! I can not speak for any other retailer in any state but NJ. Here we have some of the most intense compitition, from other local merchants to big box stores as well as the internet. Adding amazon to that list makes it even harder. I will happily phase out any brands who are on amazon. I will not support people who activly try to cut my throat. With that being said I agree with you that this type of legislation is crap. Cheers

  7. Don Phelps - February 26, 2013

    Good article Tom – thanks for putting it out. Why do legislators think they can legislate social standards is beyond me.

  8. Tom Wark - February 26, 2013

    Gregg,

    I appreciate your perspective and I think understand your concern. I’ve been working for a number of years to help you (retailers) ship wine to consumers in states outside yours that want to do business with you. But as long as states (like NJ and MD) continue to throw up barriers to free trade like this proposed MD law and the law in NJ that bans out-of-state retailers from shipping in to the state, I think you’ll find that folks like Amazon will become involved. Why? Because the kinds of anti-competitive laws that NJ and other states insist on passing provide an opening for companies like Amazon.

    What we are talking about here is simple: Protectionist laws that serve small constituencies that have political access. Despite working on retailers’ behalf, I know a number of them that want protection from competition. What I don’t here are wine retailers expressing a concern that their local food stores or shoe stores or clothing stores or book shops deserve to have laws passed that ban their competitors from shipping into the state. Why is wine so in need of protection and why are wine consumers so in need of being screwed by protectionist laws?

    • Tom - February 26, 2013

      Apparently the bill was introduced at the behest of the Maryland State Alcohol Retailers Association, which mostly covers package stores and maybe 20% of the wine sold in Maryland.

      As a retailer myself, I don’t agree with protectionism and most of the wine shops here in DC actively participate with their fellow retailers of all kinds of things to promote shopping at local businesses. The only thing that brings some contemplation of protectionism to my mind is that alcohol-related businesses often can’t advertise sale prices. Even on twitter. So if the regulatory system bans retailers from getting word out that would make them more competitive, then I can sympathize that they might want some protection from competition too.

      • Tom - February 26, 2013

        Sorry, it’s MSLBA — Maryland State Licensed Beverage Association — that wanted the bill, not anything called a retailer’s association specifically (although MSLBA represents retailers, mostly package stores) . Here’s the description from their website:

        The Maryland State Licensed Beverage Association, Inc., is a non-profit trade association whose members are alcohol beverage licensees throughout the State of Maryland.

        MSLBA was formed to represent the interests of the retail alcohol beverage operator in legislative and executive matters in connection with the sale and distribution of beer, wine and liquor, and to promote friendly relations between members of this association and allied branches of the beer, wine and liquor industries.

    • Gregg Burke - February 26, 2013

      Hey Tom
      NJ changed the shipping laws late last year for out of state winery shipments. Wineries are required to collect sales tax but that is it.

      • El Jefe - February 26, 2013

        hi Gregg – Not exactly. Here’s the scoop:

        http://wi.shipcompliant.com/StateDetail.aspx?StateID=57

        Yes, just excise and sales taxes – however, the fees to get a permit are very high, and you also have the additional cost of establishing a nexus and paying corporate income taxes. By the time you are done you’re paying a couple thou for the privilege of collecting taxes for the state of NJ. Most wineries can’t or won’t absorb this so there’s not a lot of direct shipping happening…

        • Gregg Burke - February 27, 2013

          I did not know about the fees. It does not surprise me from a state that will squeeze every cent possible out of every person. Thanks for the info.

  9. Bob - February 26, 2013

    This law is a done deal. it was submitted in both houses by committee chairpersons. ZI’m sure some $$$ greased the way for it as well. Even the direct shipping bill that got passes was introduced by a shill for the wholesalers when it was clear they could no longer stop them. It’s way easier to just pick a mail drop in DC and ship it there.

  10. El Jefe - February 26, 2013

    By that definition they could decide that my internet web site/ecommerce provider is a third party.

  11. Kurt Burris - February 26, 2013

    Gregg: I can’t imagine that direct shipping from Amazon will hurt your business that much. I have actually ordered alcohol from NJ to be shipped to California but only after i found that no CA distributor carried what I wanted. You have a good 2 to 3 dollar a bottle built in price advantage from the shipping cost, as well as immediate delivery and the benefits of being able to talk to your customers.

    • Gregg Burke - February 26, 2013

      Kurt
      It will have an effect, I do not think it will be a big effect on sales. But when you are being squeezed on all sides any additional pressure can suck. Online wine sales have become a real zero sum game. Unless you are a larger retailer where you can buy and store hundreds of cases at a clip and have space to package and ship them out. With only 1000 sqft I do not have that option. The 2 or 3 dollars does not even cover the cost of the packaging. I am gussing that the NJ retailer was Wine Library? If so they are 33,000 sq ft and exactly what I was describing. Cheers

  12. tom merle - February 26, 2013

    Since any schmo can set themselves up as a Third Party Provider, apart from MD, why don’t retailers create such an entity for shipping to various states and take a commission that equates to their margin if they were to ship from their store?

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  14. Richmond - February 27, 2013

    I have been trying for years to find a legal way to purchase a bottle of Vin Jaune from the Juras in France, but it is not sold in Maryland. Vin Jaune is imported to the US but is such a small demand item that no one wants to bring it to Maryland. The various distributor reps I talk to give the same advice; go to a DC store and they can order you a bottle of what ever you want. The reps would love to sell me what I want, and the same goes for the various store owners, but the system will not allow it. Go figure.
    Maryland is dysfunctional and will stay that way. As someone pointed out, there is too much $$$ being thrown at the Delegates who are more than happy to sponsor poor legislation.

  15. Josh - February 28, 2013

    …and Maryland keeps voting for Democrats! How’s your own medicine tasting there?

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  18. richard - March 16, 2014

    I also would like to see this law changed. As a Marylander and wine consumer, I belive I would benefit from being able to buy wine via internet and have it shipped to my home. However, this is a horribly written article, collapsing under the weight of the author’s biases and a litany of fallacies. The author’s purposes would be better served by trying to stick to facts, rather than concocting a pompous smear piece peppered with insults and illogical assertions. It’s a good thing to share this information, but the grandstanding and absolutism in the writing willfully distort to try to convince the reader, meanwhile undermining the validity of the author’s viewpoint. This article would have been more convincing to those who have not made up their minds without the logical fallacies, etc.

    • tom merle - March 16, 2014

      Richard

      You yourself post a comment that is full of insults, when the original post simply set forth the facts of the situation ncluding the results of decreasing competition. Where are the logical fallacies? Why through around such charges without some sort of back up. This is not a legistative analyst report , but an editorial observation that sticks to the situation. Your comment would be more persuasive if you avoided undocumented hyperbole and distortion.

  19. Jennifer - April 9, 2014

    This post is both informative and disheartening as a MD resident and avid MD Wine drinker, volunteer, and enthusiast. So I followed the link to the Maryland General Assembly page to check the history of SB0990 filed by Senator Conway and what appears to be its clone in the House (HB1420), filed by Delegate Barkley. Here is the status and history of both bills according to my exploration of the General Assembly of Maryland website:

    SB0990 Bill Status: In the Senate – Unfavorable Report by Education, Health, and Environmental Affairs; Withdrawn

    SB0990 Senate History:
    2/18/2013 First Reading Senate Rules
    2/20/2013 Rereferred to Education, Health, and Environmental Affairs
    2/22/2013 Hearing 3/08 at 1:00 p.m.
    3/18/2013 Unfavorable Report by Education, Health, and Environmental Affairs; Withdrawn (document link: http://mgaleg.maryland.gov/2013RS/votes_comm/sb0990_ehe.pdf)

    HB1420 Bill Status: In the House – Rereferred to Economic Matters

    HB1420 Senate History:
    2/18/2013 First Reading House Rules and Executive Nominations
    3/6/2013 Rereferred to Economic Matters

    Now I am not one for legal speak, but my analysis of this information is that neither SB0990 nor HB1420 are “in effect” despite the 1 July effective date highlighted in the summery of both bills. This conclusion is further strengthened by the amount of MD wines (152 as of 8 April 2014) available on Amazon Wine and that over the last year I have talked to 2 of the 11 MD wineries that are now selling on Amazon about their experience.

    Let us rejoice that the “Anti-Amazon Bill” in MD was stopped in the Senate, but question what “Rereferred to Economic Matters” means for HB1420. If I am incorrect in my conclusion, I welcome discussion and if anyone speaks the foreign tongue of legal-speak, I would love to know what is likely happening with HB1420.

    Thanks again for the great post and keeping us (the consumer) aware!

    Jennifer

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