2011 Promises to be a Year of Change in the Massachusetts Wine Market
New Englanders will tell you: If you don't like the weather wait a few hours; it will change. This winter might be the exception to the rule (it's been relentlessly cold for months it seems) but the Massachusetts wine market bears similarities to the weather. Just when you think you've got it figured out it changes.
Take for example sales tax on alcoholic beverages. In 2008 the legislature increased the tax rate from 5% to 6.25% and lifted the exemption on alcoholic beverages. For the first time since prohibition consumers paid sales tax on top of excise tax. In 2010 voters repealed the sales tax. Now, a State Representative from Newton is proposing reinstating the tax on alcohol along with increasing the excise tax. Proponents of the previous iteration said the tax was earmarked for behavior health services. This time there's no pretenses about it; the tax (along with increases on cigarettes and candy) are classic sin taxes targeted at nothing more specific than increasing state revenue.
Then there's shipping laws. In 2008 Family Winemakers v. Jenkins said allowing small wineries to ship to Massachusetts while prohibiting large wineries was discriminatory. Attorney General Coakley appealed the decision but in early 2010 the appeal was denied and some expected direct shipment to begin. Lingering issues such as per-truck licensing requirements for carriers and per-consumer capacity restrictions were sought to be resolved by 2010's House Bill 4497 but the legislation never came up for a vote. Similar legislation in 2011 might make its way to the floor and direct shipment for wineries could become a reality.
So far, direct shipment to and from retailers has been a separate discussion. Massachusetts is the only state in the union that doesn't allow retailers to ship out. That could change in 2011 and a precedent could be established allowing out of state retailers to ship in. A recent editorial in The Boston Globe called for allowing direct shipment from out of state retailers in addition to wineries - and breweries too. Looming over this discussion at the federal level is HR 5034 that would tip the balance of power back to the states after a string of court decisions favoring the Commerce Clause over state rights to regulate the flow of alcohol as they see fit.
Massachusetts is a financially attractive wine market. Thanks to enthusiastic consumers and a passionate wine trade it's a great place to buy and sell wine. But I've got a hunch we're going to see some big changes in the next couple of years. Just like the combination of hot and cold days we're likely to see in April, if you don't like the way things are currently - just wait a while. There's never a dull moment.