Do You Need Your Own License to Ship Wine? The Answer is Yes.

Delaney McDonald
June 12, 2020

This is a common question wineries face when entering the direct-to-consumer (DtC) market, and the answer is yes. In order to ship wine DtC, a winery needs to have a DtC shipper’s license. This can be challenging as the rules and requirements to obtain this license vary by state. Because of this, an increasing number of businesses claim that they can eliminate this obstacle and handle all of the licensing needs for wineries that want to ship DtC.

But beware, wineries must obtain their own DtC shipper’s license in each state they wish to ship to in order to be compliant, with few exceptions. Relying on third-party licenses as a workaround or temporary solution can create a multitude of problems like fines, penalties, loss of other licenses, and even criminal charges.

What if I sell under a third party’s license?

Unfortunately, there are several problems with selling under someone else’s license. If you are the winery on record as the seller, or if the end consumer would name your winery as whom they purchased from, then you need your own license.

Here are some common scenarios and the difficulties that they present:

  • The third party has a marketplace that consumers purchase from. The winery just supplies wine. The problem with this case is that to sell an alcohol product, you need to own it in your own right. So, the third party either needs to be an “owner” of the wine or a legitimate retailer.
  • The third party acts as a retailer. In this case, they’ll need a retail license, and they need to purchase the wine from an authorized distributor which itself purchased the wine from the producer. Currently there are only 15 states that allow a retailer to ship wine DtC.
  • The third party has an ownership share to the winery. Some businesses add a ownership cede in their contracts stating the winery gives an ownership share to the third-party business—forcing their way into the winery’s group of owners. As part owner, the third party would technically own the wines being shipped, so if they have DtC shipping licenses they can sell and ship the contracting winery’s products. This can be the riskiest and most complicated scenario. The dispersion of ownership must be reported to several regulatory agencies, like the TTB and state licensing boards. It can also violate tied house rules, opening your business up to significant legal and financial risk.

Use your own license for DtC wine shipping

Wineries should not overlook their compliance obligations. States set up specific rules for DtC wine shipping, and they expect them to be followed rigorously. Attempting runarounds in order to avoid compliance headaches can lead to greater trouble down the line. So, use your own DtC shipper’s license.

Want to get licensed? Find out how.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Delaney McDonald

Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

E-Invoicing Compliance EMEA Tax Compliance VAT & Fiscal Reporting
July 8, 2020
Turkey: Penalties for Noncompliance with the Mandatory Electronic Document Framework

For rules to carry any real weight, the rule-maker must combine compliance with that rule with either a carrot or a stick. In the field of tax legislation, the rule-maker, in this case, the legislator or the tax authority, almost always goes down the route of the stick in situations of noncompliance. And the penalties […]

ShipCompliant United States
July 2, 2020
Direct Wine Shippers Have a New Tax Burden in Chicago

As of July 1, 2020, wineries making direct-to-consumer (DtC) shipments of wine into the city of Chicago will face an additional tax burden. Under Chicago ordinance O2020-801, the city’s Liquor Tax will now apply to all sales of alcohol to consumers in the city.  What Is The Chicago Liquor Tax? Chicago has long imposed an […]

Tax Compliance Tax Information Reporting United States
July 2, 2020
New Educational Course: Tax Compliance and Accounting for Captive Insurers

Finding relevant insurance accounting education has always been a challenge for insurance professionals. Insurance is a global industry. But, the financial reporting and tax rules for insurance transactions represent only a small niche within the extensive realm of statutory and GAAP guidance.  Captive insurance companies are yet another niche within that, which only narrows the […]

Sales & Use Tax United States
July 1, 2020
New Rules for Remote Sellers in Louisiana

Beginning July 1, remote sellers making sales into Louisiana must register with the Louisiana Sales and Use Tax Commission for Remote Sellers (“the Commission”) in order to be compliant with new requirements to collect, remit and report state and local sales tax. The information below is intended to explain what companies will be impacted, what […]

Sales & Use Tax United States
July 1, 2020
Back to Basics: Seven Things You Need to Know About CSPs & SST

Sales & Use Tax is complex and growing more so by the day. The number of jurisdictions, tax forms and rate changes makes managing these processes enough to deplete the resources of even the most experienced accounting and finance teams.  States have been working to alleviate the burden on companies by providing programs that allow […]