As a small, independent winery, I am sometimes overwhelmed with the multiple hats I wear, as I am sure many of my brothers & sisters are in this wine game. In any one day I am topping barrels, negotiating grape prices, coordinating label production with bottling schedules and designer decisions, submitting COLAs, working my accounts payable/accounts receivable, following up with accounts, selling new accounts, stroking a distributor, posting a blog, fulfilling consumer direct orders, responding to consumer inquiries, writing checks to charities…and/or a host of other less glamorous jobs. You other wineries are doing the exact same thing…everyday.
A few years back the Granholm decision delivered us to the promised land of simplified access and delivery to consumers in any state in the Union via e-commerce. Hallelujah!
OK — we all know it didn’t do that. In fact, in some ways, it complicated the process as every state instituted its own set of rules, fees, compliance technicalities, and reporting. Therein lies the complexity of States’ Rights vs. The Commerce Clause.
And as a small operation, the consumer direct compliance mechanism became even more of a nightmare. We all want to do the ‘right thing’ — but mostly we simply want to get our wines in the hands of consumers who really want our wines. A host of companies evolved designed to ‘help’ (read: ’monetize’) those of us who really can’t afford the time to do this all by ourselves…or the money to hire a ‘compliance expert’ to do it for us. So we either opt to not sell to someone in Texas (just as an example!), send it illegally and risk the consequences (never!), or pony up the bucks and find a ‘legal’ alternative.
In addition, for every gallon I produce, regardless of what channel (consumer direct, trade direct, or distributor) I pay a federal excise tax and a state excise tax. In several states, I pay state sales taxes…and in some states, I pay sales taxes by county. I pay income taxes, I pay compliance fees, I pay shipping & handling charges, I pay a host of other fees…and I still find a way to pay charities.
So I have a simple, modest proposal.
I propose that, in addition to the flat per gallon excise tax I pay to the federal government and the flat per gallon excise tax I pay the state, I’d gladly pay another flat tax to the federal government on every gallon I produce (regardless of what channel the wine is ultimately sold) to pay for the licenses & fees I pay to individual states and compliance companies in order to facilitate the shipment of my wines without hindrance to consumers directly in any state of the Union. The federal government can receive this up-front money and spread the taxes collected from every winery to the individual states as it wishes.
As a result, the government gets the tax revenues (even for wines not sold through the consumer direct channel), distributors are not overwhelmed with too many suppliers to purchase, warehouse & sell, wineries have unincumbered access to consumers regardless of state lines, and most importantly, the consumer has free choice of his/her purchase decisions.
For those outside of the business, it is the law that a winery desiring to sell outside of CA to a) have the proper licensing and b) sell through a licensed distributor. I have absolutely no issues with selling my wines to distributors who take care of this function. But the reality is that there are fewer than 400 distributors throughout the entire U.S. and well over 60,000 wine labels to sell through these gatekeepers. They just can’t effectively handle all of the wines. And without a distributor, a winery’s only choice is to sell consumer-direct. But the consumer-direct mechanism is a quagmire of financial, time & bureaucratic barriers. It is a classic Catch-22. As a result, thousands of fantastic wines are not available to consumers throughout the country.
So rather than fighting this system, again, I’d gladly pay an up front tax on every gallon I produce to level the playing field. Is anyone with me on this? Is it just too simple? I’d love to hear. Meanwhile, and as usual, drink charitably!
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