With the signature of Governor Sarah Huckabee-Sanders, Arkansas is set to enact House Bill 1476—ushering in long-awaited reforms to its direct-to-consumer (DtC) wine shipping laws. Until now, Arkansas only allowed DtC wine shipments when the consumer was physically present at the winery’s premises at the time of purchase, severely limiting the ability of Arkansas consumers to purchase and receive all wines sold by domestic wineries.
The new law promises a clear and effective means for wineries to better reach Arkansas consumers while remaining compliant with the state’s laws.
What will change for wineries under the new law
HB 1476 largely follows the model DtC wine shipping bill that is in place in most of the country, though there are, as ever, unique details that wineries looking to ship into Arkansas will need to know. Once effective, DtC wine shippers active in Arkansas will need to:
- Hold a Wine Direct Shipper license issued by the Arkansas Alcoholic Beverage Control Division (ABCD). The initial registration fee for the license is set at $50, with an annual renewal fee of $25.
– Only “a winery, supplier or importer,” licensed by their state of domicile and the Tax and Trade Bureau, are eligible to apply for this license. - Conspicuously label all wine shipments with the words “CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED FOR DELIVERY.”
- Only ship wine brands that have been registered with the ABCD. Wine shippers must submit copies of their COLAs to the ABCD including all label extensions when they will be shipped into the state for the first time.
- Only sell or ship any wines to residents in wet counties/municipalities in the state. Thirty-one of the state’s 75 counties are dry or partially dry, although there are numerous exceptions to both the dry and wet status of counties that could make this rather complicated for wine shippers to manage. It is hoped that the ABCD will provide a clear list of where exactly wine can be shipped as the penalties for even accidental delivery to a dry region are steep.
- Ensure carriers will deliver only to residents who are 21 years of age or older and collect signatures at the time of delivery.
- Collect and remit all sales and excise taxes as if the sale occurred in Arkansas.
– Arkansas sales tax rate is 6.5% with additional local taxes ranging from 0-6.125%. Further, Arkansas imposes a special 3% tax on all sales of beverage alcohol in the state, which can be collected from the consumer like sales tax, though it is remitted separately.
– Arkansas taxes wine at $0.75 per gallon, plus $0.05 per case sold. - File regular reports with the ABCD detailing their activity in the state. This will include an annual report indicating the total volume shipped in the previous year along with a quarterly report to check if any shipments were delivered to a dry area.
- Accept the jurisdiction of the ABCD as to their activity in the state, comply with the rules of the state and abide by any rulings or judgments imposed by the ABCD.
Building a better DtC shipping program
The sudden move by Arkansas to adopt a more effective DtC shipping law is extremely welcome news for wineries and wine enthusiasts alike. Historically, the state’s restrictive DtC allowances have led Arkansas to consistently rank among the least popular states as a destination for wine shipments. Indeed, prominent members of the DtC wine industry have long considered Arkansas to be effectively closed to DtC shipping due to the on-site purchase requirement.
Going forward, Arkansas consumers will be able to more fully access the domestic wine market by connecting directly with wineries and importers in other states, joining clubs and purchasing through online marketplaces like consumers in almost every other state.
With the updated rules, it should be easier for both wineries to manage their compliance needs when shipping into Arkansas and for ABCD regulators to enforce their laws. While there remain some questions about the details of how DtC shipping will work in Arkansas going forward (clarity around wet/dry regions would be especially helpful), the new framework largely follows familiar patterns that have worked for years in most of the rest of the country.
HB 1476 is set to take effect 90 days from signature date, meaning the bill won’t be law until mid-July. The bill also grants the ABCD a further 90 days to develop the specific laws and regulations that will govern DtC wine shipping in the state going forward.
With this law change, Rhode Island is now the only state with an on-premises purchase requirement for DtC shipping, while Utah and Delaware continue to prohibit all DtC wine shipping, leaving us tantalizingly close to truly national DtC wine shipping.
Stay informed as Arkansas finalizes its DtC wine shipping rules.
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