AG Jim Hood stings online wine vendors in complaint

Posted on Feb 8 2018 - 7:59am by Anders Culiner and Jack Hall

Mississippi Attorney General Jim Hood has filed a complaint against four national online wine distributors for apparent violations of state law.

The complaint, filed late last month in Rankin County Chancery Court by the Attorney General’s office and the Alcoholic Beverage Control division of the Mississippi Department of Revenue, takes issue with the fact that these four vendors send shipments of alcohol without verifying customer age, collecting internet sales taxes or obeying the laws of dry counties.

The four companies under investigation, Wine Express, Inc. of Mt. Kisco, New York; The California Wine Club of Ventura, California; Gold Medal Wine Club of Santa Barbara, California; and Bottle Deals Inc. of Syosset, New York, all declined interviews.

The investigation, which was spearheaded by the AG’s office and Department of Revenue, sent out inquiries to 63 online wine distributors, of which 22 sold and shipped wine into Mississippi, some without verification of a 21-year-old purchaser or without verification of a 21-year-old living at the shipping address used.

The AG office’s official press release said four vendors in question shipped wine into dry counties. Of the 82 counties in Mississippi, 36 still have liquor laws in place that would classify them as fully dry counties.

File photo: by Thomas Graning

The release said that for every $25 bottle of wine sold online by vendors, the state loses $6 in revenue if they do not collect internet sales tax.

The practice of shipping wine and liquor across state lines into Mississippi is illegal and may hurt the revenues of both state and local liquor stores. Further, Mississippi law states that purchases of alcohol by either a business or an individual must go through the ABC.

Wes Taylor, the proprietor of Burg Wine Limited in Oxford, said the state ABC will directly benefit from the AG complaint (as it collects an immediate 27.5 percent tax on alcohol) and that his business as a distributor will be brought up in the crossfire of interests.

“The difficulty I have faced, besides having to work with a middleman, is that of having smaller selection,” Taylor said. “People wait years to get on wine lists for the ability to buy cult wines. …  These wines wouldn’t be available to the consumer any other way except directly through the winery.”

Aaron Herrington, owner of High Cotton Wine & Spirits Warehouse in Oxford, said the average consumer might not always be aware of the laws regulating liquor distribution in Mississippi.

“Mississippi does not allow the direct shipment of alcohol despite the fact that there are states and companies that do ship to Mississippi,” Herrington said. “Ultimately, I think we’re limited in the way the state works.”

Herrington also said many people from out of state are unaware of the laws in Mississippi.

“Some people aren’t aware that shipping into Mississippi is illegal,” Herrington said. “It’s no one’s fault for thinking you should be able to purchase online.”

Herrington said he understands the market problems attributed to online distribution of wine and liquor.

“The state is prohibiting this type of shipment, and they’re pursuing it since the state is losing revenue due to the amount of the purchases being made online,” Herrington said. “Everyone in Mississippi, due to the way ABC regulates things, are subject to the same laws and no direct shipment to stores is a major reason for lost revenue.”

Herrington said he sees the policies benefiting the state and its trade interests.

“With stores outside the state that are shipping into Mississippi, it certainly is creating an unfair balance,” Herrington said. “I would expect to see a growth in sales if the option to shop online were to be prohibited.”

Adam Havard, a level two wine sommelier since 2013, said he considers online wine sales are a response to the low availability and high prices for wine in Mississippi when purchasing through the centralized liquor warehouse in Jackson.

“It would be wonderful to be able to order wines directly from the vineyards which produce them that otherwise I can’t get my hands on while in Mississippi, but at the same time, the laws of Mississippi are set up in a way which prevents this,” Havard said. “It generates taxable revenues which can be distributed to all those basic necessities in government.”

While Havard did not suggest subverting the state’s legal system to save a quick buck, he said he has ordered wine from an online dealer before because he would not have access to it otherwise.

“When I ordered wine online, I had it shipped to a friend’s house in another state and then picked it up,” Harvard said. “I’m not upset about (the AG’s complaint) since it is an illegal practice, and I’m not one to get tied up in twisting the rules or avoiding the system. However, I do think the law is an inconvenient one.”

This article was submitted to The Daily Mississippian from an advanced reporting class.