A “De Facto” Ban on Shipping Wine

Joel Goldberg, one of the founders of  WineCAM (a consumer organization that represents michigan consumers) delivered a comment to an earlier post here at FERMENTATIONS. The information in his comment is important. For that reason I am duplicting it here in a more prominent place.

After a week of digesting the House-passed bill, one thing is crystal clear: this is NOT a partial victory for consumers. It’s a de facto shipping ban via regulation, rather than legislation. For Michigan wineries, it’s a total loss.

And for Michigan retailers who currently ship or deliver wine in-state — there’s a BIG surprise buried in the bill’s wording that few people yet know about.

First things first: in theory, the bill lets wineries direct-ship a grand total of 500 cases to Michigan consumers annually. In other words, a winery with a case-every-other-month wine club reach its annual quota at 83 people — and could not ship any additional wine to anyone in the state.

Wineries would need to both get a faxed ID AND use IDology or IDresponse or similar. They need to put not just an age label on the carton, but a pre-purchased MICHIGAN TAX STAMP. They need to report each individual sale, not just cumulative totals, to the state LCC. (In other words, the state will have records of just how much — and what — all individual wine consumers are shipping to their homes.)

Now here’s the real kick — unlike every other license issued by the state, the Direct Shipper License has NO FEE specified in the legislation. (Chris Ward originally put a $1000 fee in the bill — but pulled it at the last minute; I guess it couldn’t pass even HIS laugh test…).

Instead — the license fee would be set at a later date by the Michigan LCC, headed by Nida Samona. Yup, the same Nida Samona who publicly expressed strong support for a total shipping ban — and is an appointed bureaucrat, unaccountable to the public. Any guesses what sort of fee we’re looking at — for the right to sell and ship 500 cases of wine?

In other words, it’s likely that a few Michigan wineries would be desperate enough to jump through all the hoops because they would need those sales. It’s highly unlikely that any out of state wineries would bother, or any Michigan wineries that could possibly avoid the hassle.

The bill would also ban Michigan wineries from wholesaling to retailers and restaurants, which they have had unlimited rights to do for the past 35 years. The repercussions from this section alone are likely to do in a number of marginally-profitable wineries, or those whose business models rely heavily on self-distribution.

I mentioned up-front that the bill also had a hidden kicker for retailers — and here it is: this wholesaler-drafted bill BANS MICHIGAN RETAILERS FROM SHIPPING OR DELIVERING ANY WINE ORDERS, EXCEPT THOSE PLACED IN PERSON, AT THEIR STORES. If this becomes law, no Michigan consumer could legally telephone a local store for a delivery that includes wine. No consumer could go to a Michigan wine store’s web site and order a case to be sent anywhere in Michigan.

The bill accomplishes this by a definitional sleight-of-hand: it defines a Direct Shipper as the entity that actually MAKES the wine, and then says that only a licensed Direct Shipper can accept orders for shipment or delivery to consumers by means of fax, phone, computer, etc. Voila — the retailer delivery business is out of business.

This fact has not hit the press yet, nor are most retailers aware of it. Consider it their early Christmas present from the wholesalers!

So now we’re off to the Senate, where prospects appear much brighter. The leadership there is pro-shipping, and unlikely to pass the self-distribution ban; the challenge is crafting a bill that reasonably satisfies the consumers and wineries without creating a stalemate with the wholesaler-dominated House. We shall see…

Posted In: Shipping Wine


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