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Wednesday, February 10, 2016

Direct-to-Consumer Shipping from a Winery

You'd think the rules allowing wineries to ship their product directly to you would be easy to understand. But no, consumers are confused. Actually, wineries are, too. There are companies that make a living figuring this out and doing all the required paperwork for the winery. Trying to be compliant with the laws of 50 different states is nearly impossible for a small business.

At a high level here's what it looks like at the beginning of 2016:

States banning direct-to-consumer shipments:

Alabama, Delaware, Kentucky, Mississippi, Oklahoma, Pennsylvania, Utah
Some are Bible Belt states. In PA state civil servants run the alcohol biz all the way down to retail sales (you buy from a bureaucrat in a state-owned store). This is also the state with wine vending machines requiring you to blow in a breathalyzer on the machine when purchasing. Yes, these people are wacky. Delaware may be allowing direct shipments within a year.

States only allowing smaller wineries to ship:

Arizona, New Jersey, Ohio
These states set arbitrary size limits so if a winery produces over x cases a year they can't ship. Why? A decade ago the Supreme Court said if instate wineries could ship then you have to allow out-of-state, too. So these states set caps larger than any of their own wineries to skirt that ruling.

States that require you to visit the winery before they can ship:

Arkansas, Arizona, Rhode Island
The idea here is you visit an out-of-state winery and then can have some wine shipped to you. This is another way to skirt the Supreme Court's ruling. It's also a burden on wineries if asked to somehow prove you actually visited.

It's a lot more complicated:
  • States want yearly fees to process your license to ship to their state. It's not always worth the time and money. For instance, if it's a state where a winery might ship a case or two a year it doesn't make sense to buy a $300 annual license.
  • States want you to report what you shipped to their state and maybe pay them sales tax. It might be monthly or semi-annually. It may not be worth it for some of the smaller states.
  • Some wineries don't have a presence in other states. That is, they don't sell any wine there through normal distribution channels so they don't really care about compliance. This means they may ship to states that officially don't allow it. If they get caught it doesn't matter. The worse that may happen is they'll stop shipping to that state. At one time it was a felony in Maryland to do this. Until 2016 it was criminal to ship to North Dakota.
So almost every winery has a different list of acceptable states for shipping. Don't blame it on them if you aren't included. Blame it on your state legislature and the lobbyists from the liquor industry who want to limit your choices.