On October 3, Governor Gavin Newsom signed AB 1246 into law, making California the latest—and largest—state to enable consumers to receive direct-to-consumer (DtC) shipments of distilled spirits beverages. This landmark legislation marks a major advancement for California DtC spirits shipping, opening new opportunities for producers and consumers alike and reshaping the landscape of California alcohol shipping laws.
What is California AB 1246?
California AB 1246 is a groundbreaking bill that introduces DtC spirits shipping to California. Signed into law in 2025, it allows eligible distilleries to ship distilled spirits directly to California consumers using common carriers.
The law goes into effect on January 1, 2026, and is currently set to expire on December 31, 2026.
What does this mean for California craft spirits drinkers?
While the number of states that permit DtC shipping of spirits remains low, it is expected that California’s actions, following the adoption of DtC spirits shipping in New York in 2024 and Kentucky in 2021, will spur further states to act.
As the latest Direct-to-Consumer Spirits Shipping Report indicates, consumers remain overwhelmingly interested in the prospect of increased market access that DtC shipping offers.
When AB 1246 comes into effect on January 1, 2026, distilleries across the country will be able to ship their products to consumers in California using common carriers.
What will distilleries need to DtC ship to California?
To participate in California DtC spirits shipping, distilleries must comply with the following California Alcohol Beverage Control (ABC) DtC compliance rules:
- Hold a Distilled Spirits Direct Shipper Permit issued by the California ABC. The permit costs $30, with a $125 initial application fee, and will only be offered to distilleries that will provide a copy of their home state production license.
- Ship no more than 2.25 liters of distilled spirits per consumer per day.
- While the statute itself was silent on whether out-of-state spirits shippers are subject to California tax, the ABC has since clarified that DtC spirits shippers will need to register with the Secretary of State and remit the state’s excise tax on their shipments. However, at this time, it appears that only distilleries with standard nexus (physical presence or economic revenue) in California are subject to the state’s sales tax obligations.
- Distilled Spirits Direct Shipper Permit issued by the California ABC will cost $30, with a $125 initial application fee.
What makes this law unique?
AB 1246 stands out among alcohol shipping laws for several reasons:
- It currently lacks clear tax obligations for out-of-state shippers, though the state is expected to correct this through rulemaking or a fix-it bill.
- The law is drafted to be effective for only one year—January 1 through December 31, 2026. This temporary window puts pressure on lawmakers and distilleries to demonstrate compliance and push for a longer-term solution.
Presumably, there will be legislation in 2026 to extend DtC spirits shipping (hopefully without an expiration date), though surely lawmakers will be looking at how well the industry complies with the current rules before making the decision to extend or make permanent California DtC spirits shipping.
Where does the market go from here?
Regardless of the oddities and issues with the California bill, it is a remarkable step forward for the DtC spirits shipping market and a welcome shift in policy from the state, which had been dragging its feet for years on rectifying an instate-only shipping program. This new law brings the state into alignment with the Supreme Court’s past rulings on the unconstitutionality of DtC shipping options that exclude out-of-state parties.
The market for California DtC spirits shipping is still emerging, but its potential is enormous. If more states follow California’s lead, the industry could see a dramatic expansion in consumer access and brand growth.
By passing AB 1246, California is setting a precedent for modernizing alcohol distribution and embracing the future of DtC spirits law.
Conclusion
California AB 1246 represents a pivotal shift in how distilled spirits can be sold and shipped, with wide-reaching implications for distilleries, consumers and regulators.
For distilleries, it opens the door to a powerful new sales channel—California DtC spirits shipping—but also introduces new compliance responsibilities under California ABC DtC compliance rules.
Consumers benefit from expanded access to craft spirits, including offerings from out-of-state producers.
Policymakers gain a real-time opportunity to evaluate how well the industry adheres to California alcohol shipping law. The success of this one-year pilot will likely shape future legislation, making 2026 a critical year for the evolution of alcohol shipping compliance.
FAQ
What is AB 1246?
AB 1246 is a new California law signed by Governor Gavin Newsom that allows consumers to receive direct-to-consumer shipments of distilled spirits from eligible distilleries. It goes into effect on January 1, 2026 and is currently set to expire on December 31, 2026.
Who can ship spirits to California consumers?
Only distilleries that meet the definition of a California craft distillery (producing less than 150,000 gallons annually) are eligible. This includes both in-state and out-of-state producers.
What is the cost of the Direct Shipper Permit?
Distilled Spirits Direct Shipper Permit issued by the California ABC will cost $25.
What reporting obligations to distilleries have when DtC shipping into California?
Distilleries must file a report with ABC detailing the total amount of spirits shipped into California in the prior year. The current deadline is January 1.