Legislation Stalls but the Time is Right for DtC Spirits Shipping

Lizzy Connolly
April 19, 2022

Direct-to-consumer (DtC) shipping is increasingly becoming a hot topic in the craft beer and spirits worlds, with both producers and consumers pushing for greater access. However, while 47 states and the District of Columbia allow wine to be shipped DtC, just six states and D.C. do so for spirits.

Several states have bills that could expand DtC shipping for spirits products. New York and California have received a lot of attention for the legislation they have in the works that could potentially vastly expand the market for DtC spirits shipping. We’ve highlighted some of the key points for each bill, as well as what expanded spirits DtC shipping actually means for the beverage alcohol industry.

What’s happening in New York?

New York Senate Bill 4245A would allow for intrastate and interstate shipment of liquor. In January 2022, it was referred to the Commerce, Economic Development and Small Business Committee.

Sovos ShipCompliant spoke with Brian Facquet, president of the New York State Distillers Guild, to understand how the legislation would impact the market.

The three-tier system has a clear distinction between suppliers, wholesalers and distributors, and then retail businesses. The system is wonderful, Facquet said, but it was created in the 1930s following Prohibition.

“We’re not saying anything about the world not needing a distributor or a retailer,” he said. “But the manufacturers have less power and less rights.”

Wineries across the country can directly ship their products to New York consumers, and have been able to do so for years. The state allowed for temporary DtC spirits shipping by New York producers during the height of the COVID-19 pandemic, and distillers were able to prove that it could be done appropriately and safely, Facquet said. However, that measure expired in June 2021.

What’s happening in California?

California also had a temporary measure in place that allowed distillers to ship products directly to consumers. However, that expired on March 31, 2022. California Senate Bill 620 aims to instill permanent DtC shipping for liquor.

“The bill was recently passed out of the Senate with substantial amendments,” according to the California Artisanal Distillers Guild. “We have to see what the amendments change, but it is hoped that small craft distillers can ship to our customers.”

Currently, California only permits out-of-state suppliers to shipping wine and cider DtC.

Dispelling the anti-DtC arguments

As with most legislation, there are parties in favor of the bills and those who stand in opposition. With DtC spirits shipping, opponents often stress their feared impacts on jobs, safe delivery, impacts on minors, and the proper payment of taxes.

On the contrary, Facquet stressed that more jobs will be created, as more shipping equals more jobs for common carriers (e.g., UPS and FedEx). Additionally, retailers have seen job growth from the increase in demand for local products. Data from the U.S. Bureau of Labor Statistics shows that since 2005 (when Granholm v. Heald allowed the wine DtC market to flourish) New York wholesalers had a 53% increase in jobs. Retailers added more than 3,600 jobs for an increase of 38%.

Common carriers have also already proven with DtC wine shipping that alcohol can be safely delivered. The sizable market for DtC wine shipping has also shown that the number of minors purchasing alcohol will not suddenly skyrocket. Third-party carriers are required to check IDs upon delivery and some states do in fact mandate age verification at the point of sale. Additionally, a recent Treasury Department report advocating states to further alcoholic beverage shipping noted the lack of evidence of problematic shipping related to minors.

Finally, DtC alcohol shippers have already proven to be compliant taxpayers. Sovos ShipCompliant alone has facilitated states’ securing hundreds of millions in tax revenue; from 2017 to 2020, there was $438 million in DtC tax revenue paid to states via Sovos ShipCompliant. More states opening up for DtC spirits shipping would only help those revenues continue to grow.

Local demand and beyond

DtC spirits shipping will also bring other benefits, Facquet noted. For example, New York distilleries are allowed tasting rooms, which are an important part of how smaller spirits producers build local fans. From there, consumers then go into retail locations and ask for those local brands. Essentially, tasting rooms are part of building demand for products to be sold through the three-tier system.

Beyond being a beloved local brand, distillers desire parity in the beverage alcohol world. With over 15 years of compliant, tax-paying DtC wine shipping, producers and consumers have shown that brands can be adored (and safely consumed) across state lines. The numbers also show that there is a strong desire for expanded DtC shipping options.

The Distilled Spirits Council of the United States (DISCUS) found that eight out of 10 consumers think distillers should be allowed to directly ship their products to legal-age consumers in any state. Approximately three-quarters said they would consider purchasing spirits online shipped directly from distillers to them from outside or within their state.

It’s difficult to know for sure how these pieces of legislation (and those yet to come) will play out. Stay tuned to Sovos ShipCompliant for the latest updates, and reach out to your local state representatives to learn more about the importance of consumer voices pushing bills forward.

Take Action

Learn more about DtC compliant shipping, including everything from getting licensed to understanding the potential for an audit.

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

North America Tax Information Reporting
September 21, 2023
Sovos Education Returns to Orlando with Statutory Accounting CPE

If you didn’t join us in D.C. or San Francisco earlier this year, you won’t want to miss one last opportunity in 2023 to take part in live continuing education. Sovos Education is returning to the Orlando area for a full week of statutory accounting CPE opportunities and we’re hoping to see you there. Sun […]

North America ShipCompliant
September 20, 2023
Prevent Consumer Confusion Around Hard Versions of Soft Drinks

A trend of the last few years has been the surge in new products entering the beverage alcohol market, from hard seltzers to RTD cocktails, along with the entry of well-established, traditionally non-alcoholic brands, like Hard Mountain Dew and Simply Spiked. While the growth of hard soft drinks is great for consumers, who benefit from […]

North America Tax Information Reporting
September 19, 2023
Form 1042 (and 945) Returns Electronic Filing Requirement Updates

We’ve previously discussed how the IRS released final electronic filing requirements for information returns effective with 2023 returns. One of those key changes is that businesses can no longer submit Form 1042 withholding tax returns on paper starting with tax year 2023 filings and beyond. But how will that actually impact businesses for the upcoming […]

EMEA VAT & Fiscal Reporting
September 18, 2023
Intrastat Thresholds: Current Exemption Values

Intrastat thresholds are value thresholds which decide if companies in an EU Member State qualify to file a return to tax authorities, based on their intra-community trading. These thresholds change annually, prompting businesses to conduct an annual recalculation to know their obligations. This blog contains all the Intrastat reporting thresholds for 2023, as well as […]

EMEA VAT & Fiscal Reporting
September 18, 2023
Intrastat Guide: Reporting, Numbers, Thresholds

Intrastat is an obligation created in 1993 that applies to certain businesses that trade internationally in the European Union. Specifically, it relates to the movement of goods – arrivals and dispatches – across EU Member States. The requirements of Intrastat remain similar across the EU, though certain Member States have implemented rules differently. As a […]