Myth: Direct Wine Seller's Permit
MYTH: Maryland’s Direct Wine Seller’s Permit already allows consumers to access unavailable wines, making the Direct Wine Shipper’s License unnecessary.
FACT: The Direct Wine Seller’s Permit precludes commonly requested consumer behavior, has an overly convoluted application process and does not meet the reciprocal standards of other states.
One of the primary reasons for shipping wine is gift-giving, whether for a wedding, job well done or the holidays. Under the current Direct Wine Seller’s Permit system whereby wineries ship to wholesalers that deliver to retailers, a gift giver would have to coordinate with their intended recipient which retailer is most convenient for them, thereby spoiling any element of surprise. The gift would be delivered to the retailer, and either the retailer or gift giver would have to notify the recipient to pick up the package. Additionally, only American wines would be available as gifts because retailers are excluded from the Permit; retailers in other states are the only readily legal source of imports not available in Maryland. No other traditional gift requires the gift giver to go through such an arduous process.
The Permit has not proven to be very successful in the seven years since it was enacted. As of September 2008, only six wineries of the roughly 6,500 in America had signed up for the Permit, yielding the state a combined $140 in permit fee income and excise taxes collected. The permit does not require participating wineries to collect sales tax, which at 6% would amount to substantially more revenue for the state than either the permit fee or excise tax combined. Finding a winery that has a Permit or is willing to acquire one is anything but easy. In fact, for some consumers who have tried to locate a Direct Wine Seller or convince a favorite winery to acquire a permit in order to purchase their product, the process has proven frustrating at best, and in some cases impossible, due to lack of willing participants (wineries, retailers and distributors).
Out-of-state wineries are extremely hesitant to apply for the Direct Wine Seller Permit for several reasons. First, out-of-state entities are extremely wary of doing business in Maryland due to Maryland’s felony ban on wine shipping. Second, before even beginning the application process, an applicant (winery) is required to find and designate a licensed Maryland wholesaler approved by the Comptroller to facilitate the delivery of their product to the consumer through a licensed retailer. There are currently three licensed Maryland wholesalers participating in the program; however, there is no mandate for these participating wholesalers to work with a winery that wishes to utilize the existing Direct Wine Shipper’s Permit. Seven years of experience has demonstrated that these distributors inconsistently return consumer inquiries on the subject. Third, the process of obtaining the Permit is as convoluted as it is impractical: once the winery completes the application, it must then send it to the chosen distributor for signature. The distributor must then return the application to the winery, which finally submits it to the Comptroller with their $10 fee. Meanwhile, the consumer must negotiate with their local liquor store to receive the shipment, and many stores have refused to participate because of the hassle. Easy as 1, 2, 3, 4....? You be the judge.
Lastly, other states like New York that require reciprocity for their own wineries exclude shipments to Maryland residents under this program. The New York State Liquor Authority ruled in 2009 that Maryland’s Permit does not approximate New York’s direct-to-consumer delivery mechanism and that only allowing shipment to consumers’ homes or businesses would meet such a standard. As a result, Maryland wineries are prohibited from shipping to New York residents.
Consumers do not buy any other product in such a fashion or that requires the effort that is demanded by the Direct Wine Seller’s Permit. Even modifying the current Direct Wine Seller’s Permit to make the process easier does not address the fundamental problem that shipments not going directly to consumers violates the reciprocity requirement of other states. The process requires both the consumer and winery to be very committed, more so than for almost any other consumer transaction, in order to consummate the sale. As one past permit holder said of a Maryland customer’s order, “Doing as much work to send that case of wine to Maryland as it takes to send a whole pallet across country, it got moved down to the bottom of the list and stayed there.”