Maryland makes out-of-state liquor sales a felony

From today, residents of the US state of Maryland who buy wine directly over the Internet will be comitting a felony if the source is outside the state.

From today, a new law will take effect in Maryland that will raise the penalty from misdemeanor to felony for any out-of-state liquor or wine dealer that ships alcoholic beverages into that state.

In taking this action, Maryland joins a growing number of states that have increased penalties against out-of-state alcohol beverage sellers. It is part of a backlash against the escalating number of Internet and catalog merchants skirting state beverage taxes and sales restrictions, state and industry officials said.

"Making it a felony elevates the whole issue," said Charles W. Ehart, the director of the Alcohol and Tobacco Tax Unit in the Maryland Comptrollers Office. The "goal" of the new law is to serve as "a deterrent to would be shippers," he said.

States including Maryland, Florida, Georgia, North Carolina and Indiana, among others, are increasing penalties because of the difficulty of pursing out-of-state vendors on misdemeanor charges, said David Dickerson, a spokesman for the Wine and Spirits Wholesalers of America, a Washington-based industry group that represents wholesalers and retailers.

Congress is also considering legislation that would allow state officials to go to federal court to seek an injunction against out-of-state sellers. The bill, the 21st Century Enforcement Act, was approved by the House 310-112, and has since been attached to the Juvenile Justice bill. The fate of this legislation is uncertain, Dickerson said.

Liquor sales have been highly regulated since 1913, when Congress gave states the power to oversee the import and sale of alcohol in their borders. Most states, such as Maryland, use a system of alcohol distribution that allows out-of-state sellers to sell in-state, provided they go through state-licensed wholesalers and retailers.

To operate on the Internet or via catalog, out-of-state liquor sellers must negotiate state-by-state agreements to sell alcoholic beverages. Most hurt by these state laws and restrictions are smaller breweries and vineyards that don't have the resources to negotiate such agreements. For them, tougher penalties will increase their barriers to entry, experts said.

But companies that don't play by the rules avoid local taxes and may also be selling to minors without knowing it, Ehart said.

Sellers who violate the laws will probably be given a warning before any legal action is taken, Ehart said. Enforcement isn't easy, but there are "people who are doing things legitimately have no problem sending me information about people who are not," he said.

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