As many wine and direct shipping advocates are aware, the new year marks a step forward for Massachusetts: the legalization of direct to consumer shipping for U.S. wineries shipping to Massachusetts customers. In 2013 and 2014, former NFL quarterback Drew Bledsoe lobbied to pass a Massachusetts law in favor of direct to consumer shipping of wine because he could not ship wine from his Washington state winery to consumers in the Commonwealth. See, e.g., Massachusetts Legalizes Winery Direct Shipping, but Questions Remain; see also Wine Connoisseurs, Vineyards Eagerly Await New Direct Shipping Rules. And, while on its face, this new law sounds like a triumphant victory for a state that previously enacted legislation disfavoring the wine industry (e.g., Granholm v. Heald and Family Winemakers of California v. Jenkins), such news, unfortunately, has not come without additional concerns for industry members.
The new Massachusetts direct shipping law reportedly “accidentally delete[s]” a provision that previously allowed farm wineries to self distribute within the state. See As Deadline Looms, Farmer-Wineries Still Await Fix Promised by Legislators. In effect, this means that farm wineries cannot sell directly to retailers, a privilege that was previously allowed by Massachusetts law, and must instead make use of the state’s three tier distribution system and sell their wine to wholesale distributors before it can reach liquor stores and restaurants. For the thirty-four small wine and hard cider producers meeting Massachusetts’ “farm” definition, this change means each could opt to work with a wholesaler to distribute their wine to retail locations. Unfortunately, most of the Massachusetts farm wineries do not produce enough product to attract larger wholesalers and, even if they were to contract with distributors, doing so could cut a large portion of their profit margin. This is essentially why the Massachusetts law previously worked so well for lower volume producers: the freedom to bypass the wholesale distribution model and sell directly to Massachusetts retailers and avoid added costs or cuts in profit. It is reported that the removal of the farm winery’s ability to self distribute was not discussed nor mentioned when the new direct shipping to consumer law was drafted. According to Tom Wark at Fermentation, “The issue of self distribution was never debated in 2014 in Massachusetts. Whether wineries or cideries should be allowed to continued to sell direct to retailers was never at issue.” See Something Sneaky Happened On the Way to Direct Wine Shipping in Massachusetts. Mr. Wark reasons that “special interest” played a part in the removal of a provision Massachusetts farm wineries possess for many years.
In early December, Massachusetts legislators promised the wine community that the new law with the deleted provision would be corrected before it went into effect on January 1, 2015. As of December 31, 2014, however, The Boston Globe reported that winemakers were still awaiting confirmation that their self distribution privilege would be reenacted. Id. Accordingly, the Massachusetts House of Representatives adopted a revision to the new law that would include the age-old self distribution privilege for farm wineries. The revision was approved by the Senate and is awaiting signage by Governor Deval Patrick (as of December 31st). See Senate Backs Fix In Farmer-Winery Law.
Update January 5, 2015: After speaking with Kyle Schmitt at Homestead Hard Cider of Attleboro, Massachusetts this afternoon, it wast mentioned that the question of accountability for the deletion of a privilege farm wineries exhibited for 40 years still remains unanswered.
Update January 5, 2015: As reported by Massachusetts Live, the Massachusetts Governor did actually sign the fix into law. See Massachusetts Wine and Hard Cider Makers, Threatened by ABCC Advisory, Live to See Another Day. An “eleventh hour” new law was signed by the Governor on December 31, 2014 just in time for the new year, and carves out an exemption for state producers meeting the Massachusetts farm winery and cider definition, allowing such to self distribute to retailers. At the same time, the state will still allow direct to consumer shipping provided that the producer meets and follows the state’s laws.
For more information on wine or alcohol law, direct shipping, licensing, or other legal matters please contact Lindsey Zahn.
DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.