States Are Looking to Expand DtC Spirits & Beer Availability

Alex Koral
April 17, 2024

2024 is shaping up to be a banner year for legislative efforts related to the direct-to-consumer (DtC) shipping of beverage alcohol. While these proposed laws span a range of legal issues, the primary driver of the bills is expanding access to the DtC market for beer and spirits producers.

Currently, 47 states and D.C. permit DtC shipping by domestic wine producers—but only eleven and eight states do so for beer and spirits, respectively. As the DtC wine shipping market has blossomed over the years into a $4 billion annual market, it is no wonder that the beer and spirits industries would be vigorous in their efforts to achieve legal parity and grow their own available markets.

DtC Spirits & Beer Shipping Legislation

As of this writing, over a dozen states have active legislation that would establish new access for DtC shippers. (These bills are not only for beer and spirits, as they include Delaware HB 262, which would open that state to wine shipping for the first time.) The states that are looking at this issue range widely, both geographically and in terms of market share, from Hawaii to New Jersey, from South Dakota to California. The list includes two control states (Maine and Iowa), which is notable as debates around DtC shipping of spirits often raise questions of how it would affect a state’s control system.

These bills vary in the types of sales they would cover, with many of them applying only to either beer or spirits (or in the case of New York, cider only—though that state does have a separate bill for all alcoholic beverages).

Broadly, the bills are structured nearly identically to the existing rules that govern DtC shipping of wine and so would establish standard licensing and tax obligations, along with requiring the DtC shipper to accept the jurisdictional authority of the states they ship to. Many would also prohibit the shippers from shipping too much product at a time, and a few establish production caps, limiting DtC shipping to only smaller, craft producers. These rules have largely worked for the wine industry and provide the means for states to enforce their rules against out-of-state shippers, and there is no reason to not believe they also wouldn’t work for beer and spirits.

The spread of proposed legislation around DtC shipping of beer and spirits reflects both a commercial interest within those industries and growing desire among consumers to be able to have beer and spirits shipped to their homes. Consumers are increasingly aware of craft and unique products that do not get wide distribution and are therefore completely inaccessible through a strict three-tier system.

Unsurprisingly then, recent studies commissioned by Sovos ShipCompliant in conjunction with the Brewers Association and the American Craft Spirits Association have shown clear public support for changing laws related to DtC shipping of beer and spirits. Notably, this support is not limited to just regular alcohol consumers but is spread across the public at large.

However, it is far too early in the game to be too optimistic about any of these bills. The legislative process is a fickle one, with numerous pitfalls along the way, and most proposed legislation dies before its state’s session ends. Unfortunately, there are also many interests out there that are opposed to expanded DtC shipping, because they fear increased competition, or they dislike any threat to their market share, or because they are against any alcohol sales. These interests have worked concertedly in recent years to foment industry infighting and otherwise split the pro-DtC efforts, and they will certainly be out in force against this year’s tranche of DtC bills.

However, if consumers and industry members can align and pressure their elected officials to meet their wants, then we can hope to be sharing some positive news related to DtC shipping of beer and spirits in the near future.

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Author

Alex Koral

Alex Koral is Senior Regulatory Counsel for Sovos ShipCompliant in the company’s Boulder, Colorado office. He actively researches beverage alcohol regulations and market developments to inform development of Sovos’ ShipCompliant product and help educate the industry on compliance issues. Alex has been in the beverage alcohol arena since 2015, after receiving his J.D. from the University of Colorado Law School.
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