ValleyFogBlog


Rules and Regulations at Direct2013 Conference: From Autograph Events to Pot Sales by Jennifer
Jason Eckenroth of ShipCompliant

ShipCompliant CEO Jason Eckenroth (photo: J. Waits)

Wine making has its glamorous moments, especially when doing “research” at tasting events or in fine dining establishments; but there are also countless mundane tasks associated with the wine business. There are the logistics of bottling (including ordering glass, foil, and labels), the challenges of an unpredictable harvest (and the associated scheduling of transportation for the fruit), and the endless amounts of paperwork.

Much of the red tape related to wine making is associated with compliance. Every state in the United States has its own rules regarding selling and shipping wine to consumers and trade. For each state that we hope to sell our wines in, we have to apply for various permits. Upon being licensed to sell/ship to a particular state, we also become responsible for taxes and reports. Rules can be incredibly complex and vary tremendously from state to state. For that reason, we are only gradually adding states to our repertoire of places that Waits-Mast can sell and ship wines to. It’s a time-consuming process that we are just barely beginning to wrap our heads around. One service, ShipCompliant, attempts to simplify the reporting process for wineries. Through its software, wineries are able to track and complete forms for all 50 states. Although we don’t currently use the ShipCompliant software, I’ve attended a few of their user conferences in order to stay on top of the latest news in the world of winery compliance and shipping.

ShipCompliant’s latest event was Direct 2013. Its 8th annual users conference was held on June 13, 2013 at the Napa Valley Marriott. During the full-day conference I picked up lots of tips about not only the rules of shipping wine, but also about regulations related to the marketing of wine. I also learned that the winery crowd likes to be well-caffeinated before talking taxes, reports, and laws, as there was no decaf coffee in sight when I arrived for the morning breakfast buffet and the default beverage at lunch was iced tea.

Pink glow

Pink Glow on the Stage at ShipCompliant event (photo: J. Waits)

After settling in to the main room for the opening keynote, loud rock music blared from the speakers (“Don’t Fear the Reaper!”), and a pink glow emanated from a kite-like swath of fabric near the podium. I don’t get out to fancy corporate conferences much, but I’m guessing that the funky lighting and loud music is a carefully researched technique to get early-morning audiences in a listening frame of mind. I did appreciate ShipCompliant staffer Ken Vasco’s humorous opening remarks. After asking the audience to reflect back on our childhood career aspirations, he asked, “Who wanted to be in beverage compliance?” As you’d imagine, laughter erupted. We learned that the company helped process 4 million wine orders in 2012, which were associated with around 650,000 pages of regulatory reports. ShipCompliant’s CEO and Founder Jason Eckenroth acknowledged that the amount of paperwork is out of hand and said that he personally did one client’s filings, writing checks for 3 cents in the process. He said that a big goal of the company is “eliminating paper.”

Regulatory Roulette

Regulatory Roulette (photo: J. Waits)

After an inspirational speech by Joseph Michelli (he implored wineries to “not let the grape down” and to define “your desired customer experience” in order to know and “wow” one’s customers), we moved into breakout sessions in order to learn more about wine regulations, mobile marketing, and ShipCompliant software. I’m always a sucker for rules, so I headed for the “Regulatory Roulette” session. Experts from the California ABC and a lawyer gave tons of advice and answered questions from the audience about a range of topics, including contests, autograph signing events, TTB labels, and more.

The first kernel of advice was regarding a new California rule in regards to alcohol bottle signing events. Apparently the ABC became interested and concerned about autograph events after celebrities started doing big signing events at retail stores (read about an interesting case here). Customers would wait in line to get a signature on a bottle of booze and then would purchase the item. What became problematic was not only that the signature required the purchase of alcohol, but also that the signature increased the value of the product. This new regulation allows for these types of autographing events in retail shops, but stipulates a few rules, including that the licensee must inform the ABC at least 30 days in advance and can hold no more than 2 signing events per year. Additionally, as a condition of the event, there can be no fee, no purchase required, and autographs can be given on other items besides bottles of alcohol.

Lori Ajax, the Deputy Division Chief from the California ABC also talked about winery events in general. She said that wineries need to be careful when pouring at special events. She added that non-profits which hold wine tasting events are required to get one-day permits and she advised wineries to ask to make sure that a permit has been secured. Additionally, non-profits holding auctions are required to get an auction license for the event. She also talked about restrictions against giving out “free goods” in connection with the sale or distribution of alcohol. This means that wineries cannot offer free shipping or offer items that are free with purchase. However, it’s OK to offer shipping or goods that are included in the purchase price. It’s also permitted to give away “consumer advertising specialties” like corkscrews or stickers, but the cost to the winery can’t be more than one dollar.

As far as marketing and social media, we also learned that the FDA holds wineries responsible for any health claims made on their websites. Wineries are advised to not make any health claims that are in violation of federal law and anything posted by a winery online (website, Facebook page, Twitter, and other social media) is considered advertising.

DTC Shipping Map of U.S.

Blue States Allow Direct to Consumer Wine Shipments (photo: J. Waits)

A highlight of the conference was the “Direct Shipping Legislative Updates” presentation by Steve Gross, Director of State Relations for the Wine Institute.  He joked that he won’t be able to retire until wineries are permitted to ship to all 50 states in the United States and then proceeded to share the progress that’s been made. Currently wineries can ship directly to consumers in 41 states plus the District of Columbia. Gross told us that Montana has a new permit system as of October 1, 2013. Out-of-state wineries will be able to ship into Montana, with a limit of 18 cases of wine a year per costumer. Arkansas also has new legislation on the works (it will probably be in effect by September), but Gross said that there are some problematic aspects to its permitting process. He said that customers will be required to purchase wine on-site at wineries, can only buy one case per calendar quarter, and can only have wine delivered to a residential address.

DTC Shipping in Massachusetts cartoon

Massachusetts may be next! (photo: J. Waits)

Gross told us that it’s likely that direct wine shipments will soon be available in Pennsylvania. He said that he anticipated that direct to consumer shipping will either become part of a “privatization/modernization discussion” or as will be the result of a “freestanding bill.” Additionally, he believes that direct shipping legislation could come to Massachusetts by the end of the year. He said that there was some great publicity surrounding this issue after a Tom Brady radio interview in which the football player complained about not being able to have Drew Bledsoe’s wine shipped to him in Massachusetts. Bledsoe, a former quarterback for the New England Patriots, owns the Doubleback Winery in Washington. Following this interview, there was a big media blitz featuring Bledsoe talking about the need for direct to consumer wine shipping in Massachusetts. After this successful PR push, there’s more momentum for a direct shipping bill which is awaiting a hearing in Massachusetts this summer.

Rick Garza

Rick Garza on Marijuana Regulations in Washington (photo: J. Waits)

Perhaps the most fascination presentation of all, though, was Rick Garza’s keynote about the state of Washington’s move to license and regulate both the manufacture and sales of recreational cannabis. Although other states and countries have decriminalized marijuana, Washington may be the first place where a system of regulations will be enacted in order to facilitate legal sales. Garza, the Deputy Director of the Washington State Liquor Control Board, was charged with creating a new system in order to regulate marijuana. He said the recently passed initiative (I-502) “creates the world’s first comprehensive system of growing, processing and retailing marijuana.” His team has been given until December 1, 2013 to come up with final rules and regulations for legalized marijuana in Washington. He said that there will be a 3-tier system of licensing, regulating, and taxing that will be similar to what is in place for alcohol. People will be able to apply for producer, processor, and retail licenses in order to grow, process, or sell pot. After learning a few other tidbits (there are more than 2,000 strains of marijuana), the panel concluded. At the end of the session, attendees were treated to the reggae sounds of Bob Marley as we exited the room. I guess the AV team was paying attention!

It was a great day, chock-full of information about the countless number of rules that wineries must follow. I was left feeling optimistic about the ability to soon ship to friends and relatives in Massachusetts, but also with a feeling of dread about the mounting pile of paperwork on our dining room table.


1 Comment so far
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Thank you so much for attending and for the terrific summary of our conference. It means a lot to us that you found the day informative. PS: we’ll include decaf options next year ;)

Comment by Jason Eckenroth




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