Of significance this holiday season, the Michigan Legislature recently adopted changes to the Control Code of 1998, impacting the ability of certain wine retailers to make deliveries to their customer base.
In response to a federal lawsuit challenging the ability of the State of Michigan to essentially discriminate in favor of locally-licensed retailers, and to preclude out-state sellers from making such direct sales, the State of Michigan was faced with two choices: Allow any retailer nationwide to sell and/or ship wine to consumers in Michigan, without paying sales, use or other excise taxes, and without the imposition of procedures that would limit the ability of such retailers to make sales to minors, or alternatively, prohibit direct shipments of wine and other alcoholic product to Michigan based consumers. The State chose the latter.
House Bill 6644 amended Section 203 of the Code. First it prohibits wine makers, whether domestic or located outside of Michigan, from accepting electronic or phone orders for the delivery of wine to the homes of Michigan consumers, unless the alcohol is transported by a licensed winemaker or wine producer with a direct shipping license issued by the Michigan Liquor Control Commission. Second, the new legislation prohibits a retailer, microbrewer or out-of-state seller from making direct shipments of beer, wine or spirits unless certain qualifications are met. Essentially, absent satisfaction with the conditions of Section 203, a retailer may not complete an order unless such purchase is picked up by the customer at the point of sale.
Direct shipping licenses may be available to wine producers and other retailer who qualify under the Code. Michigan based and licensed retailers may also deliver beer and wine to the home or other designated location of a consumer, if the new Code requirements are satisfied. The language of House Bill 6644 suggests that the changes to Section 203 of the Code may be forthcoming, and therefore we are monitoring the pending legislation to determine whether further changes will be implemented.
We at Varnum can assist wine makers and others who desire to act as direct shippers, and can assist local retailer to obtain the permits necessary to permit direct shipment of wine and other products to the homes of the customers. Action at this time will permit retailers to make sales to their customers during this upcoming holiday season.
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