In 2022, wine producers and wine consumers can enjoy unparalleled access to each other through the market for direct-to-consumer (DtC) shipping of wine. The current map for DtC wine shipping of 47 states and the District of Columbia, is thanks in no small part to vigorous lobbying and advocacy efforts over the past few decades, especially in the years following the 2005 Granholm ruling.
Yet, despite those efforts from consumer and industry groups like Free the Grapes! and Wine Institute, there is an ongoing need for further action in state legislatures, both to continue to expand DtC wine shipping permissions and to prevent those who oppose DtC shipping from clawing back any existing permissions.
At the recent Sovos ShipCompliant Wine Summit (back in Napa after a two-year hiatus!) thanks to invaluable support from Wine Institute, I gave the State of the Industry presentation, a look into the active and upcoming legislation that could affect the DtC wine shipping industry in 2022. Here are some of the highlights.
But first, what about 2021?
Of course, no preview would be complete without a brief look back at the previous year, and there were some major headlines from 2021.
The biggest change in 2021 was the addition of Alabama to the DtC wine shipping map, which became effective last August. Also in 2021, Ohio expanded DtC shipping permissions for larger format wineries (those producing over 250,000 gallons per year), by creating a new “S-2” license for those wineries in particular.
Several states in 2021 also added new requirements for when DtC wine shippers use a third-party logistics service to facilitate their shipments. Tennessee, Kansas and Alabama each passed licensing and reporting requirements on fulfillment houses, which are all now in effect.
And, while not as critical as opening up a whole new market for DtC shippers, both Oregon and Wyoming expanded their volume limits for how much a licensee can ship to a single resident of those states, to five cases per month and 12 cases per year, respectively.
More information on all of these headlines, and more, can be found on the Sovos ShipCompliant blog.
What’s happening in 2022?
As ever, there are efforts underway to finally fill out the map of states that allow DtC shipping of wine. Unfortunately, a proposed bill to allow DtC shipping in Mississippi has already failed, and Utah is stuck on a complicated new system for allowing special order sales through its state stores. But in Delaware at least, HB 210 aims to open that state as the latest to allow its residents access to DtC shipments.
Bills in Alaska (SB 9) and Minnesota (HB 2576) would also create more clear cut rules for wineries to ship into both states. SB 9 in Alaska is particularly welcome, as even though wineries can fairly freely ship into that state currently, those permissions are only available under a decades-old Attorney General agreement that could be rescinded at any moment. Though going forward wineries would need to get licensed and pay Alaska taxes, that would be worth being able to stand on solid ground in the state. Similarly, the Minnesota bill would require some additional compliance requirements, but would also allow wineries to ship a lot more to their Minnesota consumers than they currently can.
Rhode Island is also looking to establish more amenable DtC shipping laws, as the state currently only permits DtC shipments when the Rhode Island consumer purchases the wine while physically present at the winery. HB 7594 (companion bill SB 69) would put in place the Wine Institute’s model shipping bill, with licensing and tax requirements, along with permission to sell remotely through clubs or the Internet. That bill is in opposition to HB 6300 (companion bill SB 2420), which, while allowing DtC shipping from remote sales, would impose a prohibitively expensive license.
While it was extremely welcome in 2021 when Alabama passed its DtC wine shipping bill, when rolled out, the licensing program turned out to be extremely difficult, leading many wineries to opt out of opening up their DtC markets to that state. HB 240 in Alabama, which would remove many of those licensing barriers, is therefore much needed and a much appreciated sign that the state wants to make itself an attractive destination for DtC wine shippers.
The addition of regulatory requirements on fulfillment houses in 2021 seemed to signal a move that other states would be apt to follow. However, there has not yet been a great tide of such legislation. Still there are efforts in some states, such as Louisiana and Wisconsin, to clarify that licensed DtC shippers can continue to rely on third-party services to facilitate shipments to those states, though it remains to be seen whether any restrictions or registration requirements will be imposed there.
Such efforts to better monitor third-party logistic services is part of a bent among states to regulate the DtC shipping market and levy enforcement actions on suspected bad actors. In 2021, Ohio and Michigan both instituted action under the 21st Amendment Enforcement Act against unlicensed shippers, and all signs are that such efforts will keep up in 2022.
But even licensed shippers in other states should remain vigilant of the need to keep in compliance with state rules when shipping their wine. All states retain the right to audit and police their licensees, and they continue to hear rumors and allegations of impropriety in the DtC wine shipping market. Sovos ShipCompliant maintains that the best defense to state enforcement is getting ahead of compliance needs, getting licenses, blocking even accidental sales to minors, paying taxes and diligently retaining records of such activity so you can quickly head off any claims or questions that a state regulator might have.
What wines may come?
The current $4.2 billion DtC wine shipping market is built on an ecosystem of producers, advocacy groups and third-party support services, all sharing the aim of making this a healthy and safe industry. It has taken decades of tireless work and striving to get where we are today, but we also cannot rest on the laurels of that work. There remains much to be done to further expand DtC shipping permissions and make this a more accessible market for all producers and consumers. As that work does happen, you can rely on Sovos ShipCompliant to keep you informed.
Learn more about DtC compliant shipping, including everything from getting licensed to understanding the potential for an audit.