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DTC – Direct to Consumers…

Well, Well Well:  Near bankruptcy leads to many things, including even allowing wineries to ship their products to states recently awakened to the benefits on new confiscatory tax revenues. How? Simple.  It does not take a genius, or a financial wizard to realize that many states are broke – flat broke.  They need revenue, and will do anything to get it. One way to do so is to allow “out of state” wineries to ship wines directly to consumers in their state. This is known in the trade a DTC – Direct to Consumers shipping. For years the distributors in a state, as well as some brokers lobbied against direct shipping. They posited that the wineries in the state – all 50 states have wineries – would suffer. (So might they.) This continued to be the argument even after the Supreme Court – better known as the Supremes – determined that to disallow shipping across state lines was unconstitutional.  But then again, the old Constitution was not relevant anymore!  Being on the brink of bankruptcy, needing cash, and spotting a cash cow, made the Constitution quite relevant – again!

Doing the math is simple. Here is what’s needed. State A developed new legislation that allows out of state wineries to ship to their state. Once that happens, the Alcohol and Beverage control entity of that state determines how much a new license will cost to ship wine into the state. That is easy to imagine as each license represents a fee – an annual fee.

Next my fellow Americans is the tax on the wine that is shipped into the states. The more wine shipped, the more taxes garnered. This soon adds up to black rather than red ink, and the race is on, how much wine can we “import” to our state, and how much tax can we gather?  Short answer – a lot.

In addition to the growing number of states that have seen the green light of money, Maryland joined the 21st century last July, So far in 2012 New Mexico and New Jersey have approved DTC shipping. Funnily enough, a license in NM will cost $50/annum while one in NJ will cost $938/annum. Why a license in NJ costs almost 19 times one in NM is anybodies guess – stronger unions we imagine. One way to address this is to have a single Federal license that allows shipping anywhere to any person 21 years or older. Establish one set of Federal regulations, one set of forms, and one compliance agency – TTB?  We posit that to do so will result in enormous savings for everyone who enjoys wine, and more state revenue.

All of this is nonsense of course, since each state has their own regulations, own licensing forms, own reporting mechanism, and own distributor lobbyist organization in the state.To actually ship to each state requires a mountain of paperwork, as well as a knowledge of each states regs. All of this add up to one important thing – the consumer and the small winery get screwed!  So what’s new…..?







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