Massachusetts Direct Shipping Update

Massachusetts Attorney General Martha Coakley will not appeal a January Federal Appeals Court decision upholding an earlier District Court decision which overturned the 2005 direct shipping law. In January, the 1st U.S. Circuit Court of Appeals upheld the 2008 district court ruling that found that the state law governing direct-to-consumer shipments by wineries was unconstitutional.  The court said the law has a discriminatory effect on interstate commerce because it favors instate interests by preventing direct shipments of nearly all out-of-state wine to Massachusetts consumers while allowing direct deliveries by all Massachusetts wineries.

The flawed shipment law provided that only wineries that produce less than 30,000 gallons a year and had not used a wholesaler for distribution in the last six months could ship directly to local consumers. The wholesaler backed law was enacted in 2005 and vetoed by then Governor Mitt Romney. It was enacted over his objection in 2006.

The Massachusetts Legislature is now considering legislation that will mimic the model direct shipping law which will establish a new regulatory framework for shipments by all wineries, large and small, including licensing, reporting and tracking requirements.

The Joint Committee on Consumer Protection and Professional Licensure in February reported favorably on legislation submitted by Senator Robert O’Leary (S 176) and Representative David Torrisi (H 317), two long time supporters of our model legislation. These two bills were combined into a single committee bill, H 4497. H 4497, ”An Act regulating the direct shipment of wine,” has been referred to the House Committee on Ways and Means. It provides for a $100 per winery licensing fee, requires monthly reporting and tax collections, limits shipments to four cases per consumer per year per winery and establishes stiff penalties for noncompliance. The bill also attempts to address a cost-prohibitive issue that has kept common carriers such as FedEx and UPS out of the delivery market.

We are currently working with the House Ways and Means Committee to improve the bill by addressing the common carrier issue and the four case limit. Once the bill clears this House committee, it will likely be approved by the full House. A much larger task looms for us in the Senate where the legislation faces likely opposition, led by the 2005 bill author. We are hopeful that the legislation can be improved and enacted into law by the end of the year.