Spring is an active time for the wine industry. With the year already well underway and the promise of warm weather after a cold and stormy winter, most winemakers' attention is turning to tending the year’s harvest. Nonetheless, if there is room leftover to think of other things, those in the wine industry should make sure to consider a different type of crop that is itself beginning to germinate: state legislation.

With all 50 states convening their legislatures this year, there is the prospect for some major changes in laws impacting how wine is made, marketed, and sold in 2023. While the year is still young, with plenty of time for surprises and more bills to be introduced, we can already see some patterns among the proposed statutory changes affecting the wine industry that various states are considering.

Excise Taxes

Wine tax is perennially a top-of-mind issue, with both proponents and opponents of increases vigorously pushing their preference at state legislators. On the one hand, there are the states that benefit from the tax revenue and public health proponents who say that higher taxes will lead to lower consumption; on the other, there are industry members who note that consumption taxes are inherently regressive (affecting more those who can least afford it) and that there are better ways to encourage healthy alcohol habits.

So far, 2023 has been rather quiet in terms of bills that would affect wine excise taxes. Proposed tax hikes in Hawaii have already quietly died, leaving only Massachusetts and New Mexico with active legislation that would raise wine taxes. Massachusetts’ proposed bill would double the tax on all alcoholic beverages, whereas New Mexico has a couple of bills on its docket that could either drastically increase its wine tax (NM HB 230) or raise it by a more modest third of the current rate (NM HB 547). Of course, it is still relatively early days for state legislatures, so it is entirely feasible for other states to introduce their own tax hikes later in the year.

Where there is a lot of proposed legislation affecting alcohol excise taxes, it is mostly concerned with low-ABV spirits and other ready-to-drink products, mostly in lowering their tax rates. Since these products are much more like beer or wine, in terms of how they are marketed, sold and consumed, it is argued that they should also be taxed more like beer or wine. While there is merit to the fairness argument, wine makers should be aware of these changes if they affect consumers’ buying habits and lead to more competition for those consumers’ dollars.

Bottle Bills and Waste Reduction

One area that has seen particular attention so far in 2023 is environmental protection and waste reduction. Many states are rightly concerned with how best to handle bottles after they have been used, and so are seeking ways to expand (and fund) recycling efforts or otherwise encourage industries to use less impactful containers.

Indeed, in 2022 California extended its existing bottle bill to include wine and spirits bottles. The new rules, which will take effect in 2024 (with labeling requirements being enforced in 2025), are certain to have a major impact on the industry as California is both the largest producer and consumer of wine in the U.S. This expansion will continue to be a key story in 2023 as the state develops specific policies for how wineries should manage their new responsibilities.

Illinois, Maryland, Maine, Rhode Island, and Vermont have active legislation to create new bottle labeling and redemption obligations on wine products. This, however, may be just the beginning, as over a dozen other states have put forth proposals to investigate their waste management practices, crack down on false recycling-related labeling, or establish extended producer responsibility (EPR) programs.

As states seek to reduce the impact of waste, it behooves wineries to do their part. That said, there is plenty of opportunity for the industry to help shape these programs so that they are effective without undue impacts. For instance, something as simple as allowing recycling and bottle bill information to be made available through a QR code can enable greater compliance.

Direct-to-Consumer Shipping

As ever, direct-to-consumer (DtC) shipping of wine is at issue in state legislatures, though perhaps less so than in past years, as almost every state has some laws permitting it by now.

There is good reason to be optimistic that Delaware will finally pass a DtC shipping law, which would leave only Mississippi and Utah as still prohibiting it in all forms. It is also hoped that a bill will pass in New Jersey to remove that state’s production cap, which restricts any winery that produces more than 250,000 gallons per year from shipping to the state. However, both Delaware and New Jersey have competing bills around their respective efforts to expand wine DtC shipping, and there is some concern that they may work against each other and distract legislators from passing anything.

Minnesota also looks set to adopt a new law around DtC shipping of wine. Currently, wineries may ship no more than two cases per consumer per year but are otherwise largely unregulated. The new law would establish new licensing and tax requirements (similar to nearly every other state’s DtC shipping rules) in exchange for increasing the shipping volume limit. Alaska made a similar change to its DtC shipping laws last year, which are set to take effect in January 2024.

It had been expected that the trend of regulating fulfillment houses would continue in 2023. However, so far only Illinois has a proposed bill that would establish new registration and reporting requirements on fulfillment houses, which is notable as Illinois already regulates them (the law would then shift some of the liabilities and obligations from the winery to the fulfillment house).

Rather, most of the conversation around DtC shipping in 2023 has been taken up with expanding it to other product types. As of this writing, over a half-dozen states—including major markets like New York, Texas and Illinois—have proposed legislation that would extend DtC shipping permissions to brewers and/or distilleries (and in Washington, wine retailers). And that list does not yet include California, which has been mulling permanent DtC shipping rules for spirits products for quite a while now.

It is far from certain that any of these proposed bills will pass, but there is strong consumer interest in the DtC shipping of beer and spirits—just as there is for wine—so wineries should expect these efforts to bear out soon enough and will want to prepare for that day. However, greater awareness and interest in DtC shipping of beer and spirits may readily lead to more interest in DtC shipping, including wine, lifting everyone’s sales. That said, there are concerns any time a DtC law is cracked open that nefarious and onerous restrictions on wine shipping might also slip in. Still, these bills are in the early stages, so there’s time to wait and see how they develop.

Indeed, until the governor’s signature has dried on the page, all bills should be seen as purely speculative. So, while we can look around and see where a state’s legislative interests seem to lie, only the future will reveal what, if anything, has changed.