Rep. Hudson & Rep. Miro & Sen. Bushweller;
Reps. D. Short, Briggs King, Outten, Peterman; Sens. Hocker, Pettyjohn, Venables
HOUSE OF REPRESENTATIVES
147th GENERAL ASSEMBLY
HOUSE BILL NO. 60
AN ACT TO AMEND TITLE 4 OF THE DELAWARE CODE RELATING TO ALCOHOLIC BEVERAGE CONTROL LICENSES AND TAXES, AND DIRECT PURCHASING AND SHIPMENT OF WINE.
§ 526. Direct purchasing of wine and beer.
Notwithstanding any other provision in this title, a natural person who is a
Delaware resident may purchase sparkling wine, still wine and beer that is not
readily available to consumers throughout the State directly from a
manufacturer or retailer of such beverages domiciled outside of Delaware
provided that the following apply: (1) The
resident is 21 years of age or older; (2) The
sparkling wine, still wine or beer is for the resident's personal consumption
and not for resale; (3) The
total amount of sparkling wine or still wine purchased in 1 calendar year by
the resident may not exceed 60 750-milliliter bottles per calendar year; (4) The
total amount of beer purchased in 1 calendar year by the resident may not
exceed 6 cases of 12 ounce bottles or the equivalent; (5) The
manufacturer or retailer engaging in such direct sales holds a valid
manufacturer's or retailer's license issued by the state of its domicile; (6) The
package in which the sparkling wine, still wine or beer is shipped is
prominently labeled as containing alcoholic beverages; (7) The
package in which such sparkling wine, still wine or beer is shipped is received
by a person 21 years of age or older; (8) The
package in which such sparkling wine, still wine or beer is shipped contains an
invoice indicating the date of the shipment, providing a full and complete
description of all items included in the shipment, and stating the price
thereof. (b) A
person who is licensed in its state of domicile as an alcoholic beverage
manufacturer, importer, wholesaler or licensee and who may legally ship
alcoholic beverages out of state may apply to the Commissioner for a direct
shipper license. Only a person holding a direct shipper license may accept an
order for the purchase of sparkling wine, still wine and/or beer from a natural
person who is a Delaware resident. The license fee for a direct shipper shall
be determined by the Commissioner. The amount of the fee must approximate and
reasonably reflect the costs necessary to defray the expenses of the
Commissioner's service and activities in connection with this section. (c) All
persons licensed under this section to ship wine and beer shall pay a tax on
all wine and beer sold to residents in this State at the rates set forth in §
581(d) of this title. Taxes levied by § 581(d) of this title shall be
collected, as far as practical, from the direct shipper in the manner set forth
by the Commissioner. If for any reason the direct shipper who first handles the
taxable beer and wine to be shipped to Delaware has escaped payment of taxes,
those taxes shall be collected from any person in whose hands the taxable beer
and wine is found. In no case, however, shall there be a duplication. (d) Direct
shippers shall file invoices for each shipment with the Commissioner showing
the retail price of the product, the quantity shipped, the customer's name and
address and the tax collected and paid to the State. Such filings shall be
quarterly and arrive at the Commissioner no later than the 10th of March, June,
September and December. Direct shippers shall maintain the records for at least
3 years. (e) Under
no circumstance may the wine or beer be shipped directly to the resident.
Direct shippers must deliver the wine and beer by common carrier to a Delaware
wholesaler, who will in turn deliver the shipment to a holder of a Delaware
off-premises retail license. The retail licensee must then deliver the wine or
beer to the resident in a manner consistent with this title and as set forth by
Commissioner rules. The direct shipper shall pay a handling fee in the amount
of $4 dollars per case or partial case of wine and $2 dollars per case or
partial case of beer to the wholesaler who receives the shipment on behalf of
the Delaware resident. The wholesaler shall then remit to the retail licensee
one-half of the total handling fee.
(a) Notwithstanding any law, rule or regulation to the contrary, any person currently licensed in this or any other state as a wine producer who obtains a Wine Direct Shipper License, as provide below, may ship up to three (3) 9-liter cases of wine annually to a resident of Delaware who is at least 21 years of age for such resident’s personal use and not for resale. A resident of this State may receive no more than twelve (12) 9-liter cases by direct shipment in a calendar year and a Wine Direct Shipper shall require the person ordering the wine to affirm that they have not ordered in excess of that limit for the calendar year.
(b) Before sending any shipment to a resident of Delaware the Wine Direct Shipper Licensee must first:
(1) file an application with the Commissioner;
(2) pay a $100.00 application fee;
(3) provide to the Commissioner a true copy of its current license as a wine producer issued in this or any other state; and
(4) obtain from the Commissioner a Wine Direct Shipper License.
(c) All Wine Direct Shipper Licensees shall:
(1) not ship wine to any person who is under the age of 21; in any prosecution for an offense under this subsection, it may be an affirmative defense if the Commissioner finds that the licensee has made reasonable efforts to ascertain the age of the purchaser;
(2) not ship more than twelve (12) 9-liter cases of wine annually to any person for their personal use and not for resale;
(3) deliver wine for shipment into Delaware only to a shipper who has a “Carrier Permit” issued by the Commissioner as provided in §701A of this Title;
(4) ensure that all containers of wine shipped directly to a resident in this state are conspicuously labeled with the words "CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED FOR DELIVERY";
(5) if located outside of this state, report to the Commissioner and the Division of Alcohol and Tobacco Enforcement (“DATE”) quarterly the total amount of wine shipped into the state the preceding calendar quarter;
(6) if located outside of this state, quarterly pay to the Delaware Division of Revenue all excise taxes due on sales to residents of Delaware in the preceding calendar quarter, the amount of such taxes to be calculated as if the sale were in Delaware at the location where delivery is made;
(7) if located within this state, provide the Delaware Division of Revenue, DATE and the Commissioner any additional information deemed necessary beyond that already required for retail sales from the farm winery to ensure compliance with this section;
(8) permit DATE and/or the Delaware Division of Revenue to perform an audit of the Wine Direct Shipper Licensees records upon request; and
(9) be deemed to have consented to the jurisdiction of the Commissioner or any other state agency and the Delaware courts concerning enforcement of this section and any related laws, rules or regulations.
(d) The Wine Direct Shipper Licensee shall pay $100 biennially for its license with the Commissioner and provide the Commissioner a true copy of its current wine producer license issued in this or any other state.
(e) The Commissioner and the Delaware Division of Revenue may promulgate rules and regulations to effectuate the purposes of this law.
(f) DATE may enforce the requirements of this section by administrative proceedings before the Commissioner who shall have the authority to fine, suspend and/or revoke a Wine Direct Shipper License.
(g) Shipments of wine direct to consumers in Delaware from persons who do not possess a current Wine Direct Shipper License from the Commissioner are prohibited. Any person who knowingly makes, participates in, transports, imports, or receives such a shipment is guilty of a class B misdemeanor and for a second or subsequent offense a class A misdemeanor. Without limitation on any punishment or remedy, criminal or civil, any person who knowingly makes, participates in, transports, imports or receives such a shipment commits an unfair trade practice.
Section 2. A new section shall be added to Chapter 7 of Title 4 of the Delaware Code as shown by underlining as follows:
§ 701A. Carrier Permit
(a) Any person who desires to transport wine from a Wine Direct Shipper to a Delaware resident shall apply to the Commissioner for a “Carrier Permit” and pay an application fee of $100.
(b) The Commissioner shall grant a Carrier Permit to a common carrier operating under a certificate issued by the Interstate Commerce Commission or such other applicant the Commissioner finds consistent with the purposes of this section unless the applicant or persons associated with the applicant has had its Carrier Permit suspended or revoked by the Commissioner, in which case the Commissioner may, in the Commissioner’s discretion, refuse to grant a new Carrier Permit.
(c) The holder of a Carrier Permit:
1. shall biennially renew its license with the Commissioner by paying a $100.00 renewal fee and providing the Commissioner with such information as reasonably required by the Commissioner;
2. shall not pick up wine for delivery to a Delaware resident from any person that is not then licensed as a Wine Direct Shipper;
3. shall quarterly report the names and addresses of the Wine Direct Shippers for whom it made deliveries, the dates the wines were picked up, and the name and address that they were delivered to the Commissioner, DATE and the Division of Revenue;
4. shall deliver the wine to the address as instructed by the Wine Direct Shipper but shall not deliver the wine unless, in the presence of a delivery person, a person 21 years of age or older signs for the shipment. A delivery person who fails to obtain the signature of a person 21 years of age or older prior to delivery of wine shall, in addition to the payment of costs, be fined not less than $250 nor more than $500 and, on failure to pay such fine and costs, shall be imprisoned for 30 days. In any prosecution for an offense under this subsection, it shall be an affirmative defense that the individual who signed for the delivery but had not reached the age of 21, presented to the accused identification, with a photograph of such individual affixed thereon, which identification sets forth information which would lead a reasonable person to believe such individual was 21 years of age or older;
5. agrees to submit to the jurisdiction of the Commissioner and to the Courts of the State of Delaware; and
6. who is found to have violated any provision of this section, after a hearing before the Commissioner, shall be responsible for a fine and/or a suspension of its permit, or a revocation of its permit for repeated and continuous violations. Any fine imposed shall not exceed ten percent of the average gross monthly fees from utilizing its Carrier Permit in Delaware or $250, whichever is greater.
Section 3. The Commissioner shall study the impact of this Act on wine retailers located in this State and submit the results of such study to the Governor and each member of the General Assembly on January 15, 2016.
Section 4. This Act shall sunset 4 years from the effective date.
This bill would permit wine producers holding a valid license in this State or another state to obtain a license and ship wine directly to Delaware consumers so long as it is done through a common carrier with a “Carrier Permit”. The bill requires the payment of taxes and obtaining the signature of a person 21 years of age or older before delivery of the wine.