In May of 2005, in the case of Granholm v. Heald, the United States Supreme Court effectively invalidated the practice of reciprocity because it discriminates against wineries in non-reciprocal states. At that time, there were 13 reciprocity states. Today, there are only seven reciprocity states left (Oregon, New Mexico, Iowa, Missouri, Wisconsin, Illinois, and West Virginia), and at the end of 2007 there may be only two as Oregon, New Mexico, Missouri, Illinois, and West Virginia have legislation pending that would move their states into the “limited direct”, or permit state category.
West Virginia may be the first reciprocal state to change in 2007. Senate Bill 712 recently passed the West Virginia Congress and is expected to be signed by the Governor. This bill would create a permit system where in-state and out-of-state wineries can apply for and receive a license to ship up to two cases of wine per month directly to adult residents. Permitted wineries would be responsible for reporting monthly excise tax (beginning July 1, 2007), sales tax, and a schedule of shipments made in the previous month. The permit would cost “One hundred fifty dollars per year for a direct shipper’s license for a licensee who sells and ships only wine and two hundred fifty dollars for a direct shipper’s license who ships and sells wine, nonfortified dessert wine, port, sherry or Madeira wines” plus a brand registration fee of $100 per brand for three years. Common carriers shipping into WV would be required to collect an adult signature upon delivery of wine packages.
One thing to note about this bill is that it would level-down on self-distribution, meaning that in-state wineries would lose their privilege to ship wine directly to retailers. There are also some requirements that are a bit gray as they are written, but will hopefully be sorted out and clarified after the bill is signed by the Governor and the rules are promulgated by the Alcohol Beverage Control Commissioner.