A Keystone Change – Pennsylvania to Allow Direct to Consumer Sales of Wine

Daniel Kostrzewa
June 9, 2016

After years of work and numerous failed attempts, direct to consumer (DtC) sales of wine is about to become reality in Pennsylvania. On June 8th, Pennsylvania Governor Tom Wolf signed HB 1690, which includes, among many other provisions, new laws that will make the state the latest to allow DtC sales of wine.

Pennsylvania technically currently allows DtC sales of wine. However, the difficulty of getting a DtC license, and the strict requirement that sales be fulfilled through state-controlled liquor stores effectively prohibits the practice. But the new rules resemble the standard DtC rules propagated by Wine Institute and Free the Grapes!, meaning that sales of DtC wine to Pennsylvania residents will look much like they do in any other state.

Once implemented, HB 1690 will update the current Direct Wine Shipper License to make it available to any person licensed as a producer of wine by the Pennsylvania Liquor Control Board (PLCB), another state, or another country.

This means that only properly licensed wineries, who actually do produce wine, can get the license. However, there are no provisions limiting the wine that can be sold to only wine produced by that licensee. While the new rules do allow licensed wine producers to apply for a Direct Wine Shipper License, federal rules concerning the importation of wine would likely effectively prohibit foreign wineries from selling DtC.

To receive a Direct Wine Shipper License, a winery will have to file an application with the PLCB. This application must be accompanied by a copy of the winery’s current producer’s license and a fee of $250. A winery must also receive a Sales Tax License, which must be shown to the PLCB (for information on receiving a Sales Tax License, click here). Renewal of a Direct Wine Shipper License will require paying an annual $250 fee.

Once licensed, wineries will be able to ship up to 36 cases of up to 9 liters each per calendar year to a Pennsylvania resident (this will be tracked by the individual, not the residence). Notably, there are no restrictions on which wine can be sold DtC, so even if a wine is currently sold through the PLCB, it can be sold DtC.

Other standard compliance rules will apply, such as:

  • Annual reporting of the total wine shipped by the winery over its last year of making DtC shipments. This report is due when a winery renews its license, and is not based on a fixed calendar due date.
  • Permitting state agencies to audit the winery’s records.
  • Selling only to Pennsylvania residents over 21-years of age.
  • Labeling packages to indicate that the package contains alcohol, and delivery requires the signature of a person over-21 years of age.
  • Delivery only permitted by licensed transporters.

There are also tax requirements on every sale of DtC wine. These are:

  • State sales tax of 6%.
  • Certain local county and city taxes, which could raise the total sales tax to up to 10%.
  • An excise tax of $2.50 per gallon of wine sold, which should be collected from the purchaser and remitted to the Department of Revenue.
  • These taxes must be reported and paid to the Department of Revenue every quarter, due on the 20th of the month.

A number of these provisions will have details that need to be worked out in the coming months. The PLCB will need to develop its application process and the forms used for reporting. It has 60 days to work out these details. So ultimately, there is a good chance that we will see DtC wine sales in Pennsylvania in the very near future.

There are a number of other provisions also in HB 1690, which will modernize several other of Pennsylvania’s alcohol rules. Notably, the new rules will allow the sale for off-site consumption of up to four bottles of wine by restaurants or hotels, who will need a Wine Expanded Permit. But also there are amendments to the rules surrounding sales of cider, and a ban on powdered alcohol. As we parse these new provisions, and as more details come out surrounding the new sale of DtC wine, we at ShipCompliant will make sure to keep you informed.

If you’d like to join the discussion around this, check out the Beverage Alcohol Community‘s recent post.

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Author

Daniel Kostrzewa

Daniel Kostrzewa is a Regulatory Counsel at Sovos. Within Sovos’ Regulatory Analysis function, Daniel focuses on domestic sales tax issues. Prior to joining Sovos in 2018, he worked as an attorney in Boston. Daniel received his B.A. in Economics from Boston College and J.D. from Boston College Law School. He is a member of the Massachusetts Bar.
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