Slow and Steady Wins the Direct Shipping Map

TTB to experience 7% cut in proposed budget, improves COLA turnaround times

by Kate Lavin
wine shipcompliant direct dtc shipping
Janelle Christian of the Alcohol and Tobacco Tax and Trade Bureau answers questions posted by Charles Maniace of Sovos on Thursday in Rohnert Park, Calif.

Rohnert Park, Calif.—When it comes to direct-to-consumer (DtC) shipping news, opening Pennsylvania to wine deliveries is a tough act to follow. But a variety of speakers used ShipCompliant’s annual conference, held Thursday at the DoubleTree Sonoma in Rohnert Park, to update wine sales and compliance specialists on the progress of this and other DtC initiatives.

Janelle Christian, industry outreach program manager for the Alcohol and Tobacco Tax and Trade Bureau (TTB), said the agency’s 2017 budget has been very good and included a $5 million earmark for accelerating the processing of formula and label applications, but the proposed budget would cut funding to the the agency by 7% and not include the earmark.

The proposed budget “would definitely impact us,” Christian said of the decreased funding. The federal hiring freeze U.S. president Donald Trump instituted as an executive order early in his presidency has not been lifted in the Department of the Treasury, which includes TTB, and the agency is looking at ways to be more efficient and automate more processes. “Any decrease in funding and requisite staffing would impact our ability to serve you all.”

Part of the earmark funding already has been used to increase efficiency, with Certificates of Label Approval (COLAs) being approved within 10 days, down from a high of 70 days a few years ago. TTB refers to the goal of quick approvals as 10-10-10: An answer for labels, formulas and sampling analyses will be returned within 10 days 85% of the time.

Christian said one trick to getting your labels approved quickly when submitting multiple labels is to leave notes in the comment field for a specialist, so that person can look at them all at once. The most common reasons for label applications to be returned include:
1) Errors or missing data
2) Appellation conflict
3) Brand label doesn’t meet minimum requirements (all necessary information must be on same label, not front and back)
4) Name/trade name conflict (application vs. label)
6) Appellation information missing on a vintage wine

The most common errors for filing include:
1) Late filing (must be submitted by the 15th day at the end of a reporting period)
2) Person submitting filing doesn’t have signing authority (often in cases of new hires)
3) Entry of incorrect information
4) Clerical/data omissions
5) Inaccurate text

Home of Granholm
Teri Quimby, a commissioner with the Michigan Liquor Control Commission, said contrary to popular belief, a regulator’s goal is to have compliance, not impose sanctions. Prior to the conference she looked into the most common wine industry violations from her office and found they all related to the Michigan Direct Shipper License. “It’s only $100, just get it!” she appealed to the crowd.

Another common oversight happens when a shipping label covers the warning about delivering to someone 21 or older. It’s not enough that the box is printed with “Adult Signature Required,” the words must be visible.

Quimby said the technology in her agency’s office is far behind what is common in corporate America, but they are working to get more processes digitized.

Across the nation

Steve Gross, vice president of state relations for the San Francisco, Calif.-based Wine Institute, said that while no states as large as Pennsylvania have opened in 2017, “We’ve won a lot of small battles that are going to keep you able to do the business that’s important to you.”

These battles include introducing shipping bills in the control states of Alabama and Mississippi, where legislators said the wine industry would never find a sponsor for an alcohol-related bill. Wine Institute also worked to soften the language in many pieces of state legislation that would put up barriers to DtC wine shipments. Currently wineries presented with a permit can ship deliveries to Alabama’s ABC stores, and Gross advised staff to make sure the permits are current.

Gross gave a DtC update for every state. Most notably, Oklahoma voters passed a direct-shipping ballot initiative, but a lawsuit filed by retailers is challenging it.

Illinois, Michigan and Missouri all are facing lawsuits from retailers who say it is unfair wineries can ship to consumers but they cannot. A bill in New York state is tackling the same issue. Illinois also has enacted rules saying wineries must identify their fulfillment houses at the time of licensing.

A study from Rutgers found that New Jersey is losing up to $4 million per year by not allowing direct shipments from large wineries, so legislation targeting the 250,000-gallon capacity cap is likely to appear in late 2017 or 2018. If such a move proves successful, Ohio would be the only state with such a cap for wineries allowed DtC shipping licenses.

Alaska and Minnesota are the last two states where wineries can ship wine without a license, but that is likely to change. Minnesota is putting together a permit system, and as part of the compromise Wine Institute is trying to negotiate a higher cap on cases shipped.

Arizona set up penalties for out-of-state wineries that violate shipping laws, and such acts could cost up to $150,000. Meanwhile, Maryland is cracking down on wineries selling other wineries’ products.

As for Pennsylvania, the state is going to require a SKU report showing how much of each wine you shipped into the state and how much you shipped to each ZIP code retroactive to the time of licensing. “You could already owe them three reports,” Gross said, prompting grumbles from the audience.

Wineries shipping to North Dakota must pay local sales tax in addition to 7% gross receipts tax. Colorado plans to start collecting sales tax from wineries that sell more than $100,000 worth of wine in the state, but details are still being ironed out. 


Currently no comments posted for this article.