Wineries Are Navigating Regulatory Hurdles with Smart Solutions

In the United States, wineries and other beverage alcohol producers are required to navigate a complex maze of licensing and tax requirements.?There is a lot to manage, with 50 different state licensing systems, over 3,800 individual tax rates, and 2.6 million zip codes.? The complexities of licensing requirements and tax calculations can lead to endless errors, putting businesses at risk of legal compliance issues and serious financial consequences.?

To stay compliant, producers shipping across and within state lines must keep up with this maze of regulations.?

In our ALTA series of looking at compliant direct shipping and regulatory focus, we review the complexities and individual rules around Licensing - one of the four key pillars. The others include Age-verification, Tax Calculation and Collection, and Auditability. They come together to form ALTA.??

Rooted in the fundamentals of Prohibition and the 21st Amendment, licensing and compliance have historically been a central focus to regulators in the alcohol industry. While federal law mandates oversight, the requirements vary greatly state-by-state, some being reasonable and others just false barriers to DTC sales, but they are there, nonetheless.??

Technology allows for the management of these complex rules and regulations, in a way that was not possible 20 years ago. In fact, the U.S. Treasury Department in 2022 issued a 64-page report looking into ways to improve competition for small producers by, among other things, making it easier for them to navigate and compete in the complex regulatory environment.?

The good news is that the DTC market has matured over the past 20 years and successfully met these regulatory challenges. Aided by technology, compliance companies, such as Vinoshipper, provide cloud software and automation which allows beverage alcohol producers to meet licensing and compliance requirements. Producers receive peace of mind knowing all sales are legal in real-time and states can be assured all sales are recorded, reported, and auditable along with the accurate payment of taxes.?

The latest advancement is that states are moving online and away from paper to help speed up the process of reporting and collection of taxes. Ensuring accurate real-time data collection is vital for the quick reporting required. More states are moving to monthly rather than quarterly and annual reporting and so having all the data quickly and efficiently in one place is crucial.?

Utilizing integrated technology smooths the collection and remittance of taxes and provides states with an easily auditable system and assurance of full tax compliance.?

This year, Vinoshipper, in collaboration with the Craft Wine Association, released the National Direct Shipping Bill of Rights, an initiative to upgrade the 1997 Model Direct Shipping Bill language for the 21st century. This unified document serves as definitive standardized legislative language lawmakers can turn to for guidance when enacting or reviewing their beverage alcohol direct sales and shipping laws.? ?

States, rather that stick with old and out dated methodologies, should now be asking why do we do what we do, and how can we improve using modern technology. With cloud based systems, states do not have to do much development work to improve reporting, they just need to provide methods to upload data – many are making this transition now and that is good to see.?