How Alcohol Arrives in Maryland
There are currently three types of permits that allow wineries to sell wine from out-of-state into Maryland:
the Non-Resident Dealer permit, the Non-Resident Winery permit and the Direct Wine Seller’s Permit.
The Non-Resident Dealer permit "[a]uthorizes out-of-state dealers to sell and deliver alcoholic
beverages ONLY to persons in Maryland who are authorized under Maryland law to receive them." This permit is
typically used for wineries to sell to Maryland wholesalers, costs $100 annually and is held by about 1,100 entities.
The Non-Resident Winery permit "[a]uthorizes out-of-state wineries who produce not more than 27,500 gallons of their
own wine per year to sell and deliver wine to retailers in Maryland who are authorized under Maryland law to receive
them." This permit is basically direct ship to retailers but is not widely used because retailers are not accustomed
to ordering direct, a process that entails more paperwork and calculating a higher mark-up. The permit also costs
$100 annually and is held by about 50 entities.
The Direct Wine Seller's Permit was conceived in 2003 as an attempt by the wholesalers and retailers to provide
consumers with the perceived choice of direct shipment. Walter correctly points out the permit’s basic process:
a winery signs up with a wholesaler to receive the wine delivered via common carrier, and the wholesaler then
delivers the wine to a licensed retailer selected in conjunction with the consumer. The consumer pays the common
carrier (FedEx, UPS) charges and can also be charged a convenience fee from either the wholesaler or the retailer,
neither of which practically charge anything. As this system details, the process is so convoluted – it forces a
consumer to adopt a purchasing behavior pattern that is well outside the norm and requires significant person time
investment – as to be unworkable for most wineries and consumers. More importantly, however, no winery can obtain
this permit if they have or will have shortly another alcohol permit or license from the state of Maryland thereby
excluding any winery that wholesales into the state or any Maryland winery that must have a manufacturing license.
To put it in perspective, the state of New Hampshire last fiscal year alone earned $520,000 in permit fees and
excise taxes (they do not charge sales tax) from their direct shipper’s program while Maryland has signed up
9 wineries in the six years of the Direct Wine Seller’s Permit and earned $150 cumulatively over that time.