Jim Sullivan, Castello di Amorosa vice president public relations and marketing, responded via email Monday that the winery would have no comment at this time.
Documents describing all four defendants’ alleged violations of Michigan’s laws were obtained as public record copies from the office of the Michigan attorney general.
Similar sting scenarios were conducted by the Michigan regulator for the other three defendants following the delivery of cease-and-desist letters sent to their business addresses.
This is not the first time that Michigan has filed lawsuits against California companies allegedly shipping wine and beer directly to Michigan consumers. In October 2020 Nessel filed 21st Amendment Enforcement Act lawsuits against Go to Gifts Inc. based in Camarillo, doing business as The BroBasket, and the Vintner’s Collective, based in Napa Valley.
Companies like DH Wine Compliance in Santa Rosa are set up to help wineries maneuver through the regulations in shipping to other states.
“Law complexity has always been there, especially in recent times where new things come up or issues related to how state-to-state, wine-related statutes have been and are currently interpreted,” said Crystal Hollingsworth, out-of-state compliance specialist with DH Wine Compliance. “Our team is constantly talking with state compliance people, sometimes to verify the validity of what we hear to see if it is a personal opinion, or an actual letter-of-the-law determination based on how the legislation was written. We help navigate these regulations for hundreds of clients and collect and filter down requirements to them so the rules make sense and also so they know what each state will be asking for when it comes to reports and record-keeping. ”
She said some wineries maintain two customer lists, one for on-site and another for off-site sales rules. At other times, the wineries and regulators have done things the same way for years and now new rule-making is reinterpreting the laws to mean something else, such as redefinitions focusing on who actually crushes grapes for wine as part of their own production operations versus those that buy bulk wine.
Hollingsworth said other interpretations have extended a one-time annual fee to also apply equally to separate processes, increasing the cost. Some states, like New Jersey, charge different license fees based on how much wine is produced. The playing field is always in a state of flux.
According to Linda Fox, president of Compliance Connection Inc. of Santa Rosa, announcements about more states embracing direct-to-consumer (DTC) wine shipping are happening fast as markets continue to open up, evidenced by Kentucky becoming the 46th state to allow it in 2020 and Alabama set become the 47th state to permit DTC on Aug. 1. Back in 2,000, 32 states were opening up to provide DTC, with one or two more states added each year.
“At the same time, there are more fees to worry about and additional regulatory requirements, such as reporting where wines are warehoused, destinations where wines are shipped and to whom, sales taxes at the city level, excise taxes and details down to liters and gallons shipped not just cases delivered, in some instances,” she said.
Fox noted that in 2020 there was a marked increase in wine shipment record audits going back two to three years for tax reporting purposes. Overall, she said, there is little uniformity in state by state shipping rules and a lot of disparity.
“Something is definitely going on in Michigan,” Fox said. “I had a client there that moved a winery to a new location but did not update the license until the deadline for the yearly renewal. My client was served with a legal action for not reporting it sooner.”
Lisa Hayes, president and owner of Coastal Compliance Corporation, an alcohol compliance agent in Massachusetts, said 90% of her clients are in California.
“Fees are increasing, and wine laws are changing every day. I rely on liquor control boards for information, updates and alerts to pass along to my clients and agents. I also follow up with my own research – including going on the Wine Institute’s website to check the latest changes occurring in every state.”
Hayes said her clients do everything by the book and want to do what is right. “ I tell them if they are shipping to a new state, get a license right away.”
Jeremy Benson is executive director of Free the Grapes, based in Napa. It is a national coalition of wine consumers and wineries seeking to expand consumer choice with legal, regulated beverage alcohol DTC in all 50 states.
He said U.S. consumers are increasingly enjoying the convenience and safety of having such goods shipped directly to them because of COVID-related restrictions, but this is not true in a few states. For example, Utah, Mississippi and Delaware still ban alcohol DTC. Arkansas and Rhode Island place restrictions on consumer access to wine except through on-site sales at a winery premises.
“We keep the issue alive when it comes to laws that should be changed that limit consumer choice, especially in states where legislative action is being considered or under review. We also strive to energize consumers by showing them what they can do personally by reaching out to public officials, expressing their views and sending messages to their state representatives.”
May 26, 2021 at 01:51AM
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Michigan wine shipping lawsuit targets Napa vintner, 3 others - North Bay Business Journal
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