Alabama is Latest State to Permit Direct-to-Consumer Shipping of Wine

Alex Koral | May 14, 2021

Alabama Governor Kay Ivey signed HB 437 into law on May 13, 2021, making Alabama the latest state to legalize direct-to-consumer (DtC) shipping of wine. With this step, only Delaware, Mississippi and Utah continue to prohibit this popular and valuable means of selling wine.

Alabama’s new DtC law will not become effective until August 1, 2021. Before then, wineries looking to engage the Alabama market can familiarize themselves with the regulations and requirements that are in place.

As set out in HB 437, DtC wine shippers must comply with the following conditions:

Violating any of these requirements can bring severe monetary penalties, particularly for repeat offenders.

In addition to these regulations on the Direct Wine Shipper Licensee, HB 437 establishes several requirements for common carriers and fulfillment centers, which may be involved in facilitating DtC wine shipments. As in other states, common carriers will be required to collect a signature from someone aged 21 or older at the time of delivery and maintain a record of those signatures for up to three years. Common carriers will also be required to file a quarterly report detailing each shipment of wine they facilitated. Direct Wine Shipper Licensees should then only work with carriers who do abide by these requirements.

Fulfillment centers, defined in HB 437 as entities that operate as bailment warehouses and logistics servicers for licensed Direct Wine Shipper Licensees, are also subject to a number of provisions that largely resemble rules recently imposed by Tennessee.

These rules on fulfillment centers include a licensing requirement ($500 per year) and identifying each location from which the fulfillment center might ship products into Alabama (an additional $100 fee per location). Fulfillment centers must also file a quarterly report detailing each shipment they facilitated. And they must agree to work only with compliant carriers and only ship on behalf of wineries that have active Direct Wine Shipper Licenses issued by the ABCB. Fulfillment centers will similarly face severe penalties and fines if they fail to comply with these requirements.

Notably, HB 437 explicitly states that entities involved in DtC shipping of wine, including Direct Wine Shipper Licensees and fulfillment centers, may not avoid liability for any violations by contracting with a third party to handle their DtC shipping obligations.This does not mean that DtC wine shippers cannot avail themselves of a service that helps them manage their own compliance needs (such as Sovos ShipCompliant). Instead, it more emphasizes the need for wineries to assume personal responsibility for their DtC markets and not rely on third party entities that claim to enable legal, compliant sales under their licenses.

It is always good news when a state opens up to permit DtC shipping and Alabama is a particular prize after the many years of effort it has taken to pass HB 437. DtC shipping of wine continues to be a safe and effective means for wine consumers to access thousands of wine labels that may not be widely available in their states and for those winemakers to engage with a national market. With only a few holdout states remaining, we anxiously await the day when all Americans can benefit from the DtC wine shipping market.

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