When engaging in direct-to-consumer (DtC) shipping of alcohol, compliance with different state laws is paramount and so keeping up with law changes is critical. In 2024, the rules in several states for DtC have already been adjusted or will change soon. Here is a review of the major rule changes DtC shippers should be aware of.
State-by-State Updates to DtC Alcohol Shipping Laws
- Massachusetts Tightened DtC Wine Shipping with “Own Production” Rule
Massachusetts has added an ‘own production’ requirement to its DtC wine shipping law. Under this new rule, licensed wine shippers will only be permitted to ship wines that either they produce or that are produced for them under an exclusive contract. Further, the wine shipper must own the brand name under which the wine being shipped is sold. These own production rules are common and are intended to prevent a DtC shipper from acting as a tacit out-of-state distributor, selling many brands that they have nothing to do with.
This has been an issue for the Massachusetts Alcohol Beverage Control Commission, which claims that 40% of wine shipments to the state have come from only 20 licensees. Whether this new law will improve this situation in the eyes of the ABCC remains to be seen, but residents of the Bay State will certainly see some reduction in the brands available to ship to them going forward.
- Nevada Revises Licensing Requirements for Fulfillment Houses
Nevada has technically not changed its DtC statute, but it has recently reviewed its law to read that fulfillment houses that facilitate DtC shipments of wine into the state must hold a Certificate of Compliance. Under this new interpretation, all parties sending alcohol into Nevada must be licensed, including agents of otherwise licensed entities.
Going forward, when a winery applies for a license to ship direct to a customer in the state, it must indicate the specific address where their shipments will originate. If that location is not owned by the winery, the application will not be approved unless the state has an existing record of a Certificate of Compliance for that address. By adopting this new requirement, Nevada joins a grip of other states that require licensing for fulfillment houses.
- Maine Announces New Fulfillment House License and Reporting Requirements
Maine has also added a licensing requirement for fulfillment houses servicing shipments to the state. This rule will take effect on January 1, 2025. fulfillment houses will need to register all locations they will ship wine from at a cost of $60 per address. In addition, fulfillment houses will need to file a quarterly report with the state. Further, Maine has adjusted their reporting requirements for Direct Shipper Licensees.
Starting January 2025, all licensees will need to file their excise tax return and shipping report quarterly, rather than an annual frequency based on the month their license was issued. While this will mean submitting more returns in a year, it will provide welcome uniformity to the state’s tax filing schedule. This also means that direct shippers will need to file a return in January to cover their shipments back to their last filing in 2024, and then file on a regular basis going forward.
- Nebraska’s Brand Registration Deadline Approaches
Nebraska now requires all brand/labels sold in the state to be registered with the Liquor Control Commission, including all DtC shipped products. An existing registration for three-tier distribution will suffice for DtC shipping—there is no need to double register if a producer is selling their brands in both channels. While the state’s brand registration law has been in effect for several months already, it had granted a term of leeway that is set to end on December 31, 2024.
One of the most exciting areas of DtC alcohol shipping has been the expansion of the channel to products beyond wine, with the spirits industry being particularly active in lobbying states to change their laws.
- New York Expands DtC Shipping to Include Spirits and Cider
To this, New York also passed a law to extend shipping permissions to include DtC shipment of spirits and cider products as of November 18, 2024. Distillers looking to begin shipping to New York are advised to take note of the laws surrounding shipping, particularly the state-specific reciprocity restrictions around which distilleries it will issue licenses to.
- California’s Temporary DtC Spirits Shipping Law Extended… Again
California also has been active for DtC spirits shipping legislation in the last few years. However, the state has not been able to pass a proper DtC shipping bill and has merely been extending its COVID-related shipping rule. The latest version, passed earlier this year, keeps the “temporary” allowance in effect until January 1, 2026.
Since this law is only applicable to in-state distilleries, it is in apparent violation of the Supreme Court’s Granholm ruling, and so stands on shaky ground. However, the state continues to promise that it will resolve the issue and pass a proper, nation-wide DtC spirits shipping law next year, which we’re all holding our breath for.
As DtC shipping laws change and continue to spread to additional states, we at Sovos ShipCompliant will be sure to keep you informed. Join us on December 17 for our annual year-in-review webinar, where we’ll discuss the regulatory changes in 2024 along with product updates and reporting best practices.