Geerlings & Wade - Cutting Through the Vines (2,787 words)
Both Pearce and Kober have a solid understanding of cataloging, each having spent years at direct marketing companies before joining Geerlings & Wade in 1996. They are assisted by the company's liquor counsel, whose expertise keeps the company compliant with the myriad laws. "Fewer than 10 national law firms specialize in alcoholic-beverage law; we use two of them in addition to our corporate counsel," Pearce says.
"It's not like you just have to learn one set of rules and comply," Pearce attests. "You have to learn each state's rules and deal with each individual regulatory agency," to say nothing of varying interpretations of their laws.
Following the alcoholic beverage laws is critical to the company's survival. If state regulators determined that the company had violated a law, the company could be fined or, in an extreme case, its license could be suspended or revoked.
One relief in the challenge of selling wine direct is that some states have passed reciprocity laws, allowing merchants and wineries in one state to ship to another state if it provides the same courtesy. Other states have passed, more recently, direct shipment laws allowing merchants to ship from any state, as long as the destination state's rules are observed.
The rules may include collection of excise tax by retailers (traditionally collected by the wholesalers), collection and payment of sales tax to the state, and constraints on the amount of alcohol you can ship to one person at one time or period of time.
Pearce adds, "In most catalog or mail order situations, if you haven't created 'nexus' for the company by either having a physical location with employees or direct salespeople on the ground, you aren't obligated to pay the state sales tax."
But as a quid pro quo for allowing companies to ship alcohol directly to its residents, certain states ask that you pay the sales and excise tax and agree to ship the quantities allowed, says Pearce.