A Short and Quick Guide to Wine Importation Regulatory Process

row of Spanish wine bottles

By: Brad Berkman and Louis Terminello

Importing wine into the United State may initially seem like a daunting task. Licensing requirements and related matters appear to be complex with requirements at both the federal and state levels. With proper planning and guidance, the insurmountable becomes a manageable process. This article will act as a short guide to the initial licensing and regulatory concerns encountered by new importers.

Licensure At the Federal Level

  Importation of wine into the stream of commerce of the United States is regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB). Prior to importation, the potential importer must qualify to hold a TTB Basic Permit as an Importer. TTB examines the qualifications of the owners and officers through a personal questionnaire process that is executed under the penalty of perjury to ensure that the individual applicant is not impaired from holding the permit. Qualifications of applicants can be found in the Code of Federal Regulations. Printed below are the code sections showing the requirement for licensure and the required qualifications for licensure.

§ 1.20 Importers.

  No person, except pursuant to a basic permit issued under the Act, shall:

(a) Engage in the business of importing into the United States distilled spirits, wine, or malt beverages; or

(b) While so engaged, sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or through an affiliate, distilled spirits, wine, or malt beverages so imported.

§ 1.24 Qualifications of applicants.

  The application of any person shall be granted, and the permit issued by the appropriate TTB officer if the applicant proves to the satisfaction of the appropriate TTB officer that:

(a) Such person (or in case of a corporation, any of its officers, directors, or principal stockholders) has not, within 5 years prior to the date of application, been convicted of a felony under Federal or State law, and has not, within 3 years prior to date of application, been convicted of a misdemeanor under any Federal law relating to liquor, including the taxation thereof; and

(b) Such person, by reason of the person’s business experience, financial standing or trade connections, is likely to commence operations as a distiller, warehouseman and bottler, rectifier, wine producer, wine blender, importer, or wholesaler, as the case may be, within a reasonable period and to maintain such operations in conformity with Federal law; and

(c) The operations proposed to be conducted by such person are not in violation of the law of the State in which they are to be conducted.

  In conjunction with the personal questionnaire process, the applicant entity is disclosed including ownership structure. Among other things, certain signing authorization forms are prepared, and parties are assigned signing authority on TTB documents.

  In addition to the Importers Basic Permit, it is wise for the applicant to apply for a federal wholesaler’s permit. This permit will allow the licensee to ship alcoholic beverages in interstate commerce. The process for applying for this license is quite similar to the federal importers permit. For consistency purposes, below is a reprint of the code section establishing the requirement for this license.

§ 1.22 Wholesalers.

  No person, except pursuant to a basic permit issued under the Act, shall:

(a) Engage in the business of purchasing for resale at wholesale, distilled spirits, wine, or malt beverages; or,

(b) While so engaged, receive, sell, offer or deliver for sale, contract to sell, or ship in interstate or foreign commerce, directly or indirectly or through an affiliate, distilled spirits, wine, or malt beverages so purchased.

  Both federal permits, if the application process is managed properly and barring any unforeseen issues, should be issued within 45-60 days.

  It’s important to note that basic permits do not expire. They remain in effect until revoked, suspended, voluntarily surrendered or automatically terminated. Automatic termination can occur by operation of law when there is an unreported change in the licensed entity. In particular, change in ownership or stock transfers, among other things, must be reported to TTB on the appropriate forms within 30 days of the occurrence. If they are not reported, the basic permit will terminate by operation of law. It is essential that any contemplated change to the business be analyzed for its effect on the license and reported appropriately if required.

  As an additional note, the foreign winery/production facility must be registered with the FDA as a food facility. A registration number is assigned and must be available at the time of importation or the wine will not clear customs.

Product Approval

  Prior to importation, certain wines may be required to go through a formula approval process conducted by the TTB laboratory, though most do not. Generally, if there are added ingredients including flavorings, formula approval process is required. However, most wines produced and containing only grapes should not require formula approval. Other alcoholic beverages such as spirits and malt must be analyzed separately, as those products tend to have a more stringent formula approval process.

Certificates of Label Approval (COLA’s)

  All imported wine labels must be submitted to the TTB prior to importation and approved. Approval results in the issuance of a Certificate of Label Approval, more commonly called a COLA, which is required to be presented to US Customs at the port of entry, along with other documents.  TTB will examine the label to ensure that all mandatory labeling requirements are met. The wine label approval process can be complex, particularly for a first-time submitter. Certain pieces of information need to be affixed and positioned according to the regulations or the label will be rejected by TTB until brought into compliance. It would be beneficial, especially for the first-time submitter, to consult an expert when commencing the COLA process.

State Licensing

  As noted, TTB regulates the importation of beverage alcohol in foreign and interstate commerce. Prior to brand introduction in any state, it is incumbent on the importer to determine which state licenses are required prior to selling the wine within the borders of that state. As a general rule, some sort of non-resident permit is required, and often times brand registration as well. This is not a one-size-fits-all model, and these writers stress that each state’s requirements be examined carefully, and the appropriate licenses must be obtained.

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