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Direct-Shipping Bill Introduced in Colorado

Wineries, wholesalers and retailers team up to craft consumer-friendly legislation

Eric Arnold

Posted: Tuesday, February 07, 2006

A bill that would allow wineries in any state to ship directly to Colorado consumers has passed easily through two committees since its introduction to the state legislature in mid-January. The measure, which is inching closer toward a floor vote, expands upon the state's current direct-shipping laws, which permit adult residents to order a limited amount of wine from local producers and some out-of-state wineries.

If the bill passes both chambers and is signed by the governor, there would be no case limit for consumers under the new law. In order to ship to consumers in the state, wineries would only have to pay $50 a year for a shipping license and pay excise taxes to the Colorado Department of Revenue.

In a rare case of industry cooperation, Colorado's wineries, wholesalers and retailers—plus a representative from the San Francisco-based Wine Institute—helped draft House Bill 1120 at the request of Colorado's director of liquor enforcement. "It was really helpful that we had the wholesalers there at the table, and they recognized and acknowledged that this was important for small wineries, [which] virtually all of our 64 wineries are," said Doug Caskey, executive director of the Colorado Wine Industry Development Board. "I was really surprised, pleased and gratified by the level of cooperation we had with the wholesalers and retailers."

Colorado currently permits direct shipping, but with significant restrictions and complications. Colorado is technically a reciprocal state, meaning it will allow shipments from other states' wineries as long as those states accept wine shipments from Colorado. However, Caskey explained, "there is a permit requirement for out-of-state wineries as well." That is one of several differences in the rules for out-of-state wineries versus in-state wineries. Caskey said those discrepancies would not hold up to a legal challenge in light of the U.S. Supreme Court ruling last May, which declared that states that permit direct shipping cannot discriminate against out-of-state wineries.

It turns out, though, that the existing laws aren't all that friendly to Colorado wineries either. "Because of some of the language that currently exists in the liquor code, UPS and FedEx resisted shipping wine intrastate," said Caskey. "Our wineries found it difficult to ship to consumers on the other side of the state. It was a perfectly legal sale, but UPS and FedEx were saying, 'No, we won't do that.' " HB 1120 would solve that problem.

Because of the level of cooperation involved in crafting the bill and its easy passage in committees so far, Caskey is confident that it will be smooth sailing from here. But, he acknowledged, that is only because the bill exclusively covers direct shipping to consumers, without addressing the more controversial issues that many other states are currently confronting, such as wineries' ability to sell directly to retailers and restaurants.

"We all agreed, the people who were around the table, that this is not the end," Caskey said. "[The other issues] will be discussed at a later date, and I'm sure that there will be other legislation introduced in next year's session." Nonetheless, he is optimistic about addressing upcoming regulatory conflicts. "I'm encouraged that we'll be able to resolve them quickly and amicably," he said. "We've laid a good foundation for future discussions."

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