Maryland is one of three felony states (along with Kentucky and Utah) which certainly puts us in a special category. What is most unusual is that we were a misdemeanor state starting in 1951 but became a felony state pro-actively as a result of our legislature being concerned about online underage abuse at the height of the Internet boom. As a result, our state passed the law in 1999 to make shipping alcohol a felony. We also have an exceptional work-around that the liquor lobby passed in 2003 to approximate direct shipping. The $10 Direct Wine Seller’s Permit allows wineries to ship wines to a licensed Maryland wholesaler that are not currently carried in the state. The box will then be transported by the wholesaler to a licensed retailer of the consumer’s choosing.
Sounds pretty clear, no? Well, the process is far from explicit, which coupled with the inconvenience of the permit has resulted in about 66 cases of wine being shipped into Maryland since the bill was enacted six years ago, generating a whopping $150 for the state (compare to NH which netted over $500k in 2007 alone). Conversely, the Maryland law on transporting alcohol is very clear: only one liter at a time via motorized transport on one’s person and no more than twice a month. We are obviously hoping to rewrite this law into a more conventional consumer direct shipping law as 37 states have.
How did this happen?
Like in so many states, the wholesalers have become very generous political patrons over the years and consequently are feared by many in the General Assembly. They are very good at convincing our elected officials that any new regulation or legislation will put them out of business, harming the local economy drastically. Our excise taxes are some of the lowest in the nation – $0.08/bottle for wine, $1.50/gallon for hard alcohol – and have not been changed since 1972 and 1955 respectively.
Is this just a way to control liquor being sold to minors, as may have been in the beginning, or is it a way to control who GETS to sell beer and wine?
The wholesalers and retailers opposing direct wine shipping inevitably advance four main arguments why it is a bad idea:
1) underage access by wily teens;
2) inability to pursue tax scofflaws;
3) encouraging out-of-state entities that do not pay local taxes to take business away from companies that do and making them out of reach of state authorities; and
4) loss of jobs.
All of these arguments are red herrings and have been disproven in so many states that is hard to believe they are still being used. Wineries are already shipping into Maryland, yet no public health emergency is taking place as a result. Moreover, the federal Department of HHS survey of almost 340,000 underage drinkers conclusively determined that the Internet is not a widespread source for alcohol when NOT A SINGLE RESPONDENT mentioned it (http://oas.samhsa.gov/underage2k8/Ch4.htm#4.3). This alleged behavior was also debunked by the FTC in their 2003 report on the benefits of direct wine shipping.
Regarding the evasion of taxes and inability to ride the offenders out of town on a rail, the proposed Maryland legislation requires the license-holder to submit to Maryland jurisdiction. The licensee would collect Maryland taxes and remit them on a monthly basis just like retailers in our state. The Comptroller’s office has not reported any problems collecting tax from corporations domiciled out of state with nexus in Maryland (think Best Buy remitting sales tax collected in Minnesota when you purchase a TV online).
What is interesting about legalizing direct shipping in other states is that the number of retail permittees stays the same or increases while the amount of wine sold increases faster than the imports coming in. This means that the established wholesale/retail/restaurant three-tier system sells more wine. In fact, direct wine shipping creates more jobs and does not affect the vast majority of liquor store retailers whose clientele do not visit Napa and could care less about shipping back a case of wine.
Who then profits and who is affected?
Consumers see potentially many thousands more choices, wineries can make a better, more stable living and retailers can now attract millions more customers than could walk through their bricks-and-mortar location.
Are there repercussions to any of you in this cause?
I run a food-focused venture capital fund that invests in specialty food companies. People in the wine business tend to know people in the food business, so I suspect my network will be the greatest asset that appreciates.
Can I send you wine from CA? From anywhere?
As former First Lady, Nancy Reagan, counseled us to do, “Just Say No” seems to be the motto of the state. You can only transport 1 liter of wine on your person at any one time via motorized transport into MD and no more than twice a month as an individual. Anything else is a felony.
So, what are you doing to change things and what can your friends in CA do to help?
We are making enormous strides to get this passed after 29 years in Annapolis. You can help by signing up for our cause (http://www.mbbwl.org) and petition (http://www.thepetitionsite.com/1/maryland-consumer-direct-ship-petition), donating a small amount to help fight the well-financed liquor lobby (https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=2184279) and tell anyone you know who lives near Maryland and drinks wine to get engaged in this issue. We will make this law in 2010 but need your readers support to help us do so.
Marylanders for Better Beer & Wine Laws
4315 Underwood Road
Baltimore, MD 21218
Tel: (443) 570-8102