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As wine shipments go legal, a few hiccups here and there

PIERRE--Direct shipments of wine to South Dakota consumers became legal Jan. 1 and they've quickly become popular. So popular, in fact, that some people have already exceeded their annual maximum of 12 cases. That's according to Jason Evans, a de...

PIERRE-Direct shipments of wine to South Dakota consumers became legal Jan. 1 and they've quickly become popular.

So popular, in fact, that some people have already exceeded their annual maximum of 12 cases.

That's according to Jason Evans, a deputy director for the state Department of Revenue. He presented a report Tuesday to the Legislature's Government Operations and Audit Committee.

He said tax collections during 2016's first two quarters exceeded $38,000. At that pace, the amount would be very close to the annual estimate he provided to legislators.

The state department built a system that allows wineries to directly report sales and carriers to directly report deliveries.

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Wine shipments are for personal use only, he said, with age verification required at the time of the order and at the time of delivery.

"We didn't want this to replace the South Dakota wholesaler, the South Dakota retailer," he said.

State law prohibits the department from publishing a list of licensed wineries on its website but there is a search function, according to Evans.

There are about 275 wineries registered so far. The license fee for shippers and carriers is $100 annually.

What's still unknown is traffic during the fall and holiday seasons. "It will be interesting to see in a couple years what those look like," Evans told the legislators.

He acknowledged the department was "kind of blind-sided" by shipments from warehouses, because the department doesn't collect tracking numbers.

In some instances, some wineries have submitted inaccurate tax returns and some unlicensed wineries and retailers are shipping products into South Dakota, including other alcohol products.

Evans said it was "very likely" they were shipping these before the wine shipments became legal, but the department wasn't finding them.

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For those consumers who already exceeded their 12-case limit, some were being creative with their names and addresses..

He acknowledged he was surprised by how much wine some people drink.

Shipments during the second quarter totaled 2,463 deliveries and basically ran double the first quarter.

The penalties for breaking the law are Class II misdemeanors for consumers. "We've kind of taken a soft approach so far," he said.

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