Pros and cons of wine shipping
The Carroll County Times posted the article below about the pros and cons of direct wine shipping:
Pros and cons of wine shipping |
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| By Carrie Ann Knauer, Times Staff Writer |
Sunday, January 31, 2010 |
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DYLAN SLAGLE/STAFF PHOTO
Wines are shown at Black Ankle vineyards in Mount Airy Jan. 24.
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Each
side has a lot to say about why Maryland should or should not allow
direct shipping of wine to consumers. Here is a look at some of the
arguments.
Pro: Consumers would have more access
Adam
Borden, executive director of Marylanders for Better Beer & Wine
Laws, said wine consumers in Maryland only have access to 15 percent of
the wines in the country because that is all the wholesalers carry.
Maryland
law makes it a felony to ship alcohol directly to a consumer, so it is
hard to convince wineries to personally arrange a shipment on behalf of
a Maryland customer, no matter where it is being shipped, when a state
has a reputation as being one of three felony shipment states in the
country.
Because of the laws, Marylanders are also restricted
from participating in “Wine of the Month” clubs, receiving gift baskets
that contain wine, or even mailing wine to themselves from a vacation
destination.
“There’s not a single consumer I’ve met who does not support this initiative,” Borden said.
Thirty-seven
other states allow direct-shipping to consumers in some form, putting
Maryland in the minority. If other states can make it work, so can
Maryland, Borden said.
On the other hand: Wine buyers can use
the Direct Wine Seller’s permit to have special ordered wines delivered
to a retailer of their choice.
All wineries are eligible to use
the Direct Wine Seller’s permit, unless they hold any type of alcoholic
beverage license or permit in Maryland, have held such a license or
permit within the immediate past two years, or are wholly or partially
owned by a Maryland licensee or permit holder. Similarly, any product
sold to a consumer may not be in current distribution in Maryland or
have been distributed in this state within the past two years.
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Con: Direct-to-consumer shipping undermines Maryland’s three-tier system, which was designed for a reason
The
three-tier system was instituted after the end of Prohibition, and
Maryland law on alcoholic beverages outlines some of the reasons why
the state wanted to control alcohol sales and distribution: “to obtain
respect and obedience to law; to foster and promote temperance; to
prevent deceptive, destructive and unethical business practices; and to
promote the general welfare of its citizens.”
Jack Milani, of
Monaghan’s Pub in Baltimore and legislative chairman of the Maryland
State Licensed Beverage Association, said the three-tier system uses
wholesalers to collect the state’s excise tax on alcohol and report all
transactions.
“This way you know that excise tax and sales tax
is collected,” Milani said. “And you do have a way for servicing people
who can’t get what they want [through the Direct Wine Seller’s permit].”
Milani
said he views the issue as a matter of philosophy — do you believe that
alcohol is a different type of good that needs to be regulated?
“I
think there are those of us that think that alcohol should be
regulated, and when you get into this business, you know that you’re
coming into a regulated industry,” Milani said.
Local liquor
boards, which issue liquor licenses, have recourse for businesses in
their district that don’t follow the laws, he said, but these boards
would have no way to control an out-of-state manufacturer who does not
pay Maryland excise taxes on its goods sold here, or for selling to
minors, he said.
On the other hand: If 37 other states have
decided to allow direct-to-consumer shipping, there must be ways of
including these safeguards in a new way.
FedEx and UPS
contractually require their wine shippers to purchase their signature
verification services. This requires the shipper to clearly label the
box as containing alcohol with a sticker and pay the additional fee of
about $2 per box to ensure the box receives a signature of an of-age
recipient at the delivery address, said Adam Borden, executive director
of Marylanders for Better Beer & Wine Laws.
Pro: Maryland would have the potential of collecting more tax on increased sales
Since
the Direct Wine Seller’s permit was instituted seven years ago,
Maryland has collected $150 from excise tax and permits on these sales,
said Adam Borden, executive director of Marylanders for Better Beer
& Wine Laws.
His organization estimates that Maryland could
collect $1.4 million in additional revenue under direct shipment by
permit fee income, excise taxes and sales taxes. Those estimates are
based on numbers from Virginia, which reported $329,000 in 2008 from
direct shipment, and New Hampshire, which reported $520,000 for the
same year.
“Look at all the sales tax that Maryland is missing
out on,” said Lisa Austin, a Woodbine resident in favor of the state
allowing direct-to-consumer shipping.
As for it taking time to
administer, the Maryland Comptroller’s office has estimated the cost of
administering the program to be about $22,000 per year, Borden said.
Since Maryland wineries would also be able to ship more wine in-state
and out of state, there is potential for even more income there, he
said. n On the other hand: Out-of-state wineries and retail stores may
not report their sales to the state, and the state wouldn’t garner that
extra tax income.
The state does collect sales tax on other
goods sold over the Internet to Maryland consumers, but the law would
need to have some teeth to ensure the comptroller’s office would be
able to enforce sales reporting and tax collection on alcohol products
directly shipped from out of state, said Jeff Kelly, director of the
field enforcement division of the comptroller’s office.
Con: Shipping companies can’t be trusted to check IDs and people under the age of 21 may get access to alcohol
Jane
Springer, executive director of the Westminster-based Maryland State
Licensed Beverage Association, said retailers spend a lot of time and
money making sure that their employees are checking IDs and know who
they can and cannot sell alcohol to — a duty that shouldn’t be left to
the discretion of untrained delivery people.
“Bottom line, we
really are concerned about underage drinking and we really think this
is a serious threat to that,” Springer said. “We’re talking about
alcohol — it’s not potato chips or anything else you can buy on the
Internet.”
Last year in Annapolis, the organizations against
direct shipping submitted written testimony to the House of Delegates
Economic Matters committee showing cases where alcohol was delivered
into the custody of minors in other states over the past decade,
including more than 60 cases in a dozen states — and those were only
the cases that were caught.
“We did oppose the bill last year,
and if the bill is similar this year, I’m sure that MSLBA will be
opposing it again,” Springer said.
In addition, a survey by
Teenage Research Unlimited, commissioned by the Wine and Spirits
Wholesalers of America, Inc., found that in a survey of 1,001 people
ages 14 and 20, 2 percent said they had personally bought alcohol
online and 12 percent reported having a friend who has ordered alcohol
online.
On the other hand: Youths sometimes get away with buying alcohol in retail stores in Maryland.
Research
shows that youths are also more likely to get someone who is 21 to buy
them alcohol at a store for instant gratification, rather than waiting
for a week or more to get wine in the mail. According to Jeff Kelly,
director of the field enforcement division of the comptroller’s office,
local jurisdictions reported 485 incidences of businesses selling
alcohol to minors in fiscal year 2009.
Pro: Retail stores and wineries in Maryland would also be able to ship in-state and out of state
Sharleen
Kutrumbis of Vino 100 in Mount Airy, a wine specialty store that offers
tastings, wine by the glass and retail sales, said she has gotten
active in the issue after she opened her shop last year.
“We’re
a small new company and something like this, if the law were to change,
would probably make us or break us,” Kutrumbis said. “And I think
that’s the case for a lot of small retail wine shops like ourselves.”
Kutrumbis
said she received many inquiries at the holidays from customers who
wanted to ship specialty wines as gifts to people out of state, but she
had to explain that she couldn’t because it’s illegal.
Allowing
wine to be shipped would also help expand her business by allowing her
to use her store’s Web site to list and sell her wines.
“We have
a very different selection than what’s in our local market, and we’re
limited to people who know that we’re there,” she said.
Maryland
is a state that doesn’t allow an individual to own more than one liquor
store, said Adam Borden, executive director of Marylanders for Better
Beer and Wine Laws, so allowing storeowners to have a marketing and
sales presence on the Web could be beneficial to many individual
business owners.
On the other hand: Liquor stores could lose business if consumers can take their business elsewhere.
However,
data from other states shows that online wine sales make up an average
of 1 percent of total alcohol sales in states that legally offer that
availability.
Con: The current system works, people just need to give it a chance
Kevin
Fosnoski of Goska’s Liquors in Severna Park is one of a few retailers
who have taken part in a transaction using the Direct Wine Seller’s
permit. Fosnoski said he has one customer who has been doing it for a
few years, usually ordering between one and four cases at a time to
split with friends.
“Since doing it, they’ve become regular
customers for us,” Fosnoski said. “A lot of the wine that does come in,
it’s not for everyday use. It’s a special occasion wine, it’s wine for
collectors, something that they had on a visit to California somewhere
or New York or whatever, and it just brings back good memories for
them.”
Fosnoski said he thinks the current system works. It’s
not too much trouble for him to receive a customer’s shipment and hold
it for them, and stores are able to perform the required ID checks to
ensure minors aren’t making the purchases.
Fosnoski said he
doesn’t think there’s really that much consumer demand out there for
direct shipping, because if there were, more people would take
advantage of the current Direct Wine Seller’s permit avenue. “It’s kind
of just human nature, people want what they can’t get, and as soon as
you get, it seems like it’s not as important as it used to be,”
Fosnoski said.
On the other hand: It’s been seven years, and it still doesn’t work.
Rather
than spending more time on it, consumers have bonded together through
Marylanders for Better Beer and Wine Laws, and have come up with a new
system that they feel would work better and get them the wine that they
want. The group’s numbers have increased from 1,500 members last year
to more than 15,000 this year.
Reach staff writer Carrie Ann Knauer at 410-857-7874 or carrie.knauer@carrollcountytimes.com.
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