Direct Wine Shipping Benefits

BENEFITS

 

• Increases Tax Revenue & Fee Income for the State of Maryland
  • The State of Virginia passed direct ship legislation in 2003 and collected $370,284 in FY2008 from excise tax ($316,074) and permit fee income ($54,210) from out-of-state shippers.  The State of New Hampshire collected $504,140 in FY2008 permit fees, despite having no excise tax.  In general, states that have enacted direct wine shipment approximate that direct ship sales account for 1% of their total wine consumption.  Using this calculation and accounting for Maryland’s excise and sales tax and permit fee collection, we estimate that HB716 will bring in $1.5 million in revenue to the state of Maryland; the Comptroller last year estimated it would cost $21,900 to collect that revenue.

 

• Supports Maryland Retailers
  • Retail licenses in some other states (Virginia, California) increase post-direct ship enactment thereby creating more local jobs.  At a minimum, the number of retail licenses generally stays the same (Nebraska, New Hampshire).
  • With Maryland retail licensees unable to acquire more than one license in the state, preventing any franchise opportunity, the Direct Shipper’s License would enable retailers to open virtual stores to increase sales and customer base.
  • Provides opportunity to Maryland’s boutique gift basket stores to include a bottle of wine in their baskets, increasing sales and customer base.
  • With increased wine consumption, the majority of additional wine sold in the state is sold through wholesalers and retailers.  In Virginia, 90% of the FY2007-FY2008 additional wine consumption is sold through wholesalers, most of which gets sold through retailers.
  • Wine consumption in Virginia increased 7.2% from FY2006-FY2007 and 2.2% from FY2007-2008

 

• Supports Maryland Wineries
  • Most visitors to Maryland wineries are Marylanders, and most wineries have limited distribution.  Some wineries have upwards of 90+% of their mailing lists composed of Maryland residents, and passage of HB716 would allow these consumers to order wine directly from wineries they visit on site or at wine festivals and other wine tasting events.
  • Would make Maryland compliant with reciprocity states like New York that have banned Maryland wineries from shipping to their residents because Maryland residents cannot receive direct shipments from their State wineries.

 

• Improves Consumer Choice in Maryland
  • Maryland consumers would be able to order wine from wineries they visited or read about to be delivered directly to their home in the event that the wine is not available in Maryland stores. Most of these wines are from small wineries that cannot afford the expense of working with a conventional distributor.  Maryland wholesalers currently carry only about 15% of all American wineries’ wines.

 

• Improves Consumer Choice for Traveling Marylanders and Gift Giving
  • Under HB716, Marylanders would be able to ship home wine they purchase in other states.  They would also be able to give and receive gifts including wine to and from out-of-state friends in the other 37 states that allow direct shipment.

 

• Enables Maryland Consumers to Join Wine Clubs
  • For consumers that want to join wine-of-the-month clubs, HB716 would allow an individual person to receive up to 24 cases a year to be shipped to their residence, enabling Maryland wine connoisseurs to participate in wine-of-the-month clubs and experience wines currently unavailable in the State.

 

• Complements Rather Than Competes with Three Tier System
  • Direct shipment helps to increase total wine consumption in other states (Virginia, Nebraska), most of which flows through wholesalers and retailers.
  • Wines purchased directly add to additional consumption in the state, not reducing demand from local retailers.
  • The majority of other US states have implemented an efficient tax collection system that the Maryland’s Comptroller can also put in place.