In a shockingly quick turn of events, the Mississippi governor has signed a bill that will enable the direct-to-consumer (DtC) shipping of wine, making it the 48th state to grant its residents greater access to the national wine market.
The bill, SB 2145, is set to take effect on July 1, 2025, which should mean wineries could begin getting licensed to start shipping later this year.
As drafted, SB 2145 largely follows the model DtC shipping bill that has been adopted by almost every other state in the nation. This requires would-be shippers to:
- Hold an active license issued by the Alcohol Beverage Control (ABC) division of the Department of Revenue, with an initial and annual renewal fee of $100.
- Ship wine only in containers that are conspicuously labeled with the words “CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 YEARS OR OLDER REQUIRED FOR DELIVERY.”
- Ship no more than 12 cases of wine per year per household.
- Not ship to any address located in a dry county. The Mississippi ABC maintains a list of 31 counties that are dry, though there are many communities within these counties that have voted to permit the local sale of alcohol, which could create a complicated map of where wine can and cannot be shipped to in the state.
- File a quarterly report to the ABC detailing the amount and type of wine shipped into the state.
- Work with carriers that will only deliver wine to persons who are at least 21 years old and can provide a signature at the time of delivery.
- Remit to the state monthly a tax of 15.5% on the listed price of the wine sold, which will serve as a substitute for the mark-up that Mississippi ABC would normally apply on wines that it distributes in the state (Mississippi is a control state for wine sold at wholesale).
Noticeably, SB 2145 does not include any provisions that would require DtC shippers to collect and remit that state’s sales tax on their shipments to the state. However, Mississippi does maintain rules around economic nexus for sales tax liability, which would likely apply to DtC shippers that hit the threshold of $250,000 in annual sales. This would ultimately make the tax situation in Mississippi for DtC shippers look a lot like it does for Wyoming, though it is uncertain at this point whether the 15.5% tax can be collected from consumers at the time of purchase or if DtC shippers will have to bear that burden directly.
- Accede to the jurisdictional authority of the Mississippi ABC and other relevant state agencies and abide by the state’s laws and regulations developed by the ABC to manage DtC shipments to the state.
While DtC compliance can get complicated, and the state may draft more hard-to-manage rules as it builds out its regulatory scheme for DtC shipping, overall, the rules should be generally familiar to wineries shipping into other states.
Where Mississippi shipping differs from the norm
However, there are a few key provisions in SB 2145 that demand closer attention.
First, the bill includes a provision that prohibits DtC shippers from selling wines that are available through the Mississippi control system, with a slight exception for wines that are identified as “highly allocated” by the state. This is a very unfortunate restriction that will do little but limit the ability of wineries to engage in both the DtC and wholesale markets in the state. Similar blocks on DtC shippers working simultaneously in the three-tier system have proved to be problematic in the few other states that have this prohibition in place.
Second, the bill includes strict penalty guidelines for anyone who makes, participates in, transports or receives a DtC shipment that in any way violates the state’s laws for shipping wine, including possible jail time. This means that the winery, carrier and consumer could be charged by the state if there is any problem with a shipment. While compliance with state law is of course fundamental to the DtC market, the threat of criminal conviction will surely lead many potential shippers to decide against selling to Mississippi consumers. It also begs the question whether common carriers will support these shipments, as they have historically refused to carry alcohol when they have faced the risk of prosecution.
Third, the bill explicitly prohibits the shipping of any “light wine or beer” to consumers in the state (spirits are not mentioned but are at least implicitly recognized as not included in the bill and not available for DtC shipping). While the prohibition on beer shipping is not all that remarkable (only about 12 states permit DtC shipping of beer), the block on shipping light wine is a disappointing limitation.
Light wines are defined under Mississippi law as wines with an ABW content of less than 5% (about 6.5% ABV), which will mean that the rule will mostly affect ciders and other non-grape “wines” that generally cap at lower concentrations of alcoholic content, limiting Mississippi consumers’ ability to access these products.
A word of caution
While the prospect of any new state for DtC shipping is exciting, wineries perhaps should be wary about jumping in right away.
For one, the rules around “highly allocated” products are highly ambiguous, with little direction around how a wine would achieve that status. Even though the state purports to maintain a list of what can be shipped, it is unknown when and how that list will be updated and maintained, making it uncertain whether wine shippers can rely on it when they are advertising products to Mississippi consumers without violating the state’s laws.
However, it is the possibility of criminal penalties, including potential jail time, for everyone involved in a shipment that violates the state’s laws, that brings the most peril. Indeed, when states have included such harsh penalties in their DtC laws in the past (such as Kentucky, prior to 2020), experts in the industry have recommended that the dangers outweigh the benefits and therefore wineries should consider not shipping there until the risks have been removed.
Of course, there remains a lot of time between now and July 1 for the state to adjust the specific rules and regulations that will govern DtC wine shipping, hopefully to relieve the problematic provisions. But SB 2145 is still a remarkable turnaround for a state that seemed out of reach to DtC shipping even just a few months ago. As the state develops its final rules and prepares to begin issuing licenses, we at Sovos ShipCompliant will make sure to keep you informed.