U.S. Wine Shipping Restrictions Struck Down (Again)
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 20 November 2008 20 November 2008
Wine shipping restrictions contained in Massachusetts state law have been struck down by a U.S. court as being discriminatory and unconstitutional in the case of Family Winemakers of California v. Jenkins. The restrictions at issue were complex but effectively prevented 95% of wineries from shipping direct to consumers in Massachusetts. The restrictions prevented wineries from shipping if they produced more than a set annual case volume or if they had wholesaler representation in Massachusetts. The court applied the reasoning in the earlier U.S. Supreme Court decision in Granholm v. Heald. Similar challenges are pending in other U.S. states that have enacted shipping restrictions.
The U.S. courts' reasoning is interesting because similar arguments could be used in Canada, particularly against the imposition of liquor board markups as between shipments of wine between wine producing provinces such as Ontario and B.C. The basis of the legal arguments in Canada would be slightly different due to the fact that the U.S. and Canadian constitutions are different but the nature of the discrimination is similar.
Winery Ownership Legal Disputes in the News
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 08 October 2008 08 October 2008
A couple of prominent California wineries have been in the news recently regarding ownership disputes between "winemaker owners" and their partners. The first dispute relates to Pax Wine Cellars in Sonoma where the namesake winemaker, Pax Mahle, has been fired and is locked in a dispute with the majority owner . The second dispute relates to Napa flagship winery, Joseph Phelps, where a former employee (the winemaker) and the estate of the late Tom Shelton who was the CEO (and widely known throughout the industry) are also fighting over the value of minority ownership shares with the majority owners .
While these disputes are no doubt unique and while some disagreements are inevitable, these types of lawsuits do show the value of ownership and succession planning. Wineries are not unique to these issues - many, many businesses (particularly family owned ones) do not pay sufficient attention to succession planning until either a dispute arises or one of the key people leaves or passes away. Does your winery have a succession plan for key personnel? If not, you should contact your legal and financial advisors for assistance in implementing one.
Wine Law in the Globe & Mail
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 18 September 2008 18 September 2008
Yesterday's Globe and Mail contained an excellent article by Beppi Crosariol on Canada's arcane inter-provincial barriers for shipping wine . This site was referred to in the article and WineLaw's principal, Mark Hicken, was quoted and two photos were included.
The national coverage on this issue is appreciated. Hopefully and since we are in the middle of a federal election campaign, this will bring the issue to the forefront and there will be some action from the relevant governments and liquor boards to fix this problem.
We are currently working on an updated article on shipping law which has now been posted . Of course, if you have any questions, please do not hesitate to contact us directly .
BC Out of Province Wine Shipping Ends
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 10 September 2008 10 September 2008
The LCBO and the Manitoba liquor control board have recently threatened two BC wineries for direct shipping to out of province customers (see Vancouver Sun story ). In addition, they contacted the BC LCLB who is now warning wineries that it is illegal to make such shipments under the Importation of Intoxicating Liquors Act. The legal background to these issues is covered in my earlier article on shipping for the industry .
The impetus for all of this is, of course, lost revenue. Direct shipments to wineries in other provinces bypass the relevant liquor boards and their regime of markups/fees/taxes. However, Manitoba and Ontario do not have a monopoly on this type of behaviour. BC's rules with respect to wine coming into this province are exactly the same (see s.65 of the BC Liquor Control and Licensing Act).
With 2010 on the horizon, isn't it time for Canada's liquor boards to reform this system? A prohibition era system of liquor distribution is simply not appropriate for Canada in the 21st century ... particularly, as we try to encourage and expand an increasingly successful wine industry.
Update (Sept 19/08): Please see my updated article on shipping for more information on this issue . A thorough legal analysis will also be posted shortly. Please contact me directly for additional information.
BC's Real Sales Tax on Wine: 90% or More?
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 11 June 2008 11 June 2008
When you buy a bottle of wine in a store or restaurant in BC, your receipt will usually indicate that you paid 10% provincial sales tax and 5% GST on your purchase. Have you really paid 15% tax on your bottle of wine? Absolutely not.
It may surprise you to hear that the real tax rate on imported wine in BC is much, much higher. It varies with the price of the bottle but, for example, if you go into a BC liquor store and buy a bottle of $14 California wine, the real cost of selling that bottle to you is about $6.45 (including LDB operating costs). The remaining $7.55 goes to both levels of goverment with the vast bulk going to the BC government. If you express the part that goes to BC as a percentage of the actual cost of selling the wine, then the "real" BC sales tax rate is about 111%.