DtC Shipping Essentials: Alcohol Not of Own Production

Lizzy Connolly
August 30, 2021

Understanding brand ownership and self-production requirements

We’ve previously discussed how direct-to-consumer (DtC) shipping of alcohol has numerous requirements and regulations for producers and retailers. Everything from getting licensed to brand label registration details to age verification protocols must be considered. But what happens when an alcohol producer (e.g., a winery, brewery, distillery or cidery) wants to ship alcohol that they did not produce? Many states limit the brands that a DtC shipper can sell, with these “not of own production” (NOOP) rules restricting shipping alcohol that a licensee does not own. 

Generally, producers should only sell what they’re authorized to sell, whether that be brands they produce themselves or those that they act as authorized brand dealers for. However, many DtC wine shipping laws were designed with the intention of enabling small wineries to enter a state’s market even if they were unable to access the state’s three-tier system. As such, it was often seen that DtC shipments would be limited to the “own production” of a winery. If a winery produces the wine, then it could ship it DtC. 

This quickly becomes complicated by the fact that many wineries are not one house production facilities. Wineries can be part of large and complicated companies that operate under lots of names and brand labels manners. Additionally, many act as importers for foreign wines. This then butts up against the roughly 20 states that do have some kind of NOOP rule limiting what brands may be shipped DtC.

Different states have different alcohol production definitions, requirements

While not every state limits the brands that a DtC licensee can ship to their residents, each state that does has its own nuanced definition of what qualifies as “not of own production,” and what brands a producer can legally ship. Tracking these rules requires following the clear chain of ownership established from the party that was actually manufacturing it. 

A major concern with NOOP laws is recognizing what entity will hold the necessary DtC license. Often, states with NOOP laws will require licensees to identify a specific address or location tied to an individual license. In the most strict NOOP scenarios, that state will say that only products produced specifically at that licensed premises can be shipped DtC. Even if that premises is under the same ownership as other facilities, it can only ship DtC what it produces.

Let’s say a winery has a production facility in Modesto, California but has facilities in other cities. What is considered “produced” by that winery? In that most strict interpretation, it is just the wine made at the main production facility. But another state could have a more lax approach to its NOOP law, allowing the company to hold a single DtC license for all their facilities and to ship everything they produce. Because these rules vary in how states interpret them, it’s important for producers to understand that level of nuance for each state in which they want to operate. 

Some states interpret these regulations more broadly, allowing that “anything you own” can be shipped DtC. Essentially, you don’t have to be producing the wine to sell it. A licensed DtC shipper could sell brands that they import or redistribute. However, they must be the primary American source, or at least an authorized brand owner. If that same winery in Modesto imports wine from Chile, but acts as the importer of record and has its name on the Certificate of Label Approval (COLA) documents, it potentially could still ship the imported wine DtC, depending on how the state’s NOOP laws are written.

A unique consideration for breweries

While DtC shipping laws were first created for wine, we now have other product types entering the market. While most of the considerations for NOOP rules will apply equally to all wine, beer, spirits and cider, there are some unique scenarios for producing and distributing beer that could conflict with NOOP rules.

For example, beer collectives have become increasingly popular recently. In this scenario, brewers in different states will band together and agree to act as local distributors of each others’ beers. However well this might work for three-tier sales, it is very likely to be problematic if that collective begins to ship DtC as a single entity in states with NOOP laws. Brewers in a contract brewing relationship will need to watch out for similar NOOP considerations. 

Overall, states wanted to ensure that alcohol producers are shipping only to the end consumer and are using the DtC model to shore up what that consumer might not be able to get through a state’s three-tier system. As such, many states do limit what you can ship to only what you produce. However, it is always important to understand each state’s individual reading of their NOOP laws so you know exactly which brands you can ship where.

Take Action

Take your DtC shipping to the next level. See how ShipCompliant Direct can help with your DtC compliance processes, from license management to production requirements and tax determination and reporting.

Sign up for Email Updates

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


Lizzy Connolly

Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on email

December 3, 2021
Top 3 Reasons to Monitor Brand Labels for Beverage Alcohol

The first step in bringing a new beverage alcohol product to market, whether for sale through the three-tier system or by direct-to-consumer (DtC) shipping, is registering it with the Alcohol and Tobacco Tax Bureau (TTB). This must happen to get a Certificate of Label Approval (COLA), which ensures that suppliers and producers comply with federal […]

North America Sales & Use Tax
December 2, 2021
Sovos Global Tax Determination Seamlessly Handles Black Friday, Cyber Monday Sales

While Black Friday and Cyber Monday 2021 didn’t break records for ecommerce sales, the numbers still showed that online shoppers were out in full force. A return to in-store shopping, global supply chain issues and the continuing pandemic were all cited as likely key factors in the small drop in online shopping numbers this year. […]

EMEA Tax Compliance VAT & Fiscal Reporting
December 2, 2021
How to Prepare for a VAT Audit

In our previous blog, we looked at the challenges that businesses face in submitting VAT and other declarations on an ongoing basis. However, the compliance cycle doesn’t end there as tax authorities will carry out audits for a variety of reasons to validate declarations. Why do tax authorities carry out audits? When VAT returns consisted […]

December 1, 2021
Looking Back at Beverage Alcohol Regulatory Change in 2021

As 2021 comes to a close, perhaps there is small comfort in knowing that the old adage of “the only constant is change” remains true for beverage alcohol. Rules and regulations on direct-to-consumer (DtC) shipping are adjusted, more states are opening options for DtC shipping and economic nexus continues to impact how suppliers, shippers and […]

North America Tax Information Reporting
December 1, 2021
IRS Grants Permanent Relief for ACA Recipient Forms 1095-B & C

The IRS released Proposed Regulations this week that permanently extends the time for businesses to provide the Recipient copy of Forms 1095-B and 1095-C. Rather than continue to issue annual Notices to extend the date to issue the statement to the recipient, these regulations propose to permanently amend §1.6055-1(g)(4)(i) i to automatically grant filers a […]