Nevada Restricts Residents’ Rights to Receive DtC Shipments of Alcohol

Earlier this year, SB 307 was enacted in Nevada, effectively eliminating the right for Nevada residents to receive direct-to-consumer (DtC) shipments of beer and spirits from producers, or any alcoholic beverage from out-of-state retailers.

Previously, Nevada DtC alcohol shipping permissions were among the most open, with the state allowing breweries, distilleries and retailers to sell and ship their products directly to Nevadans. In this move, however, the government has determined its residents should be denied access to broad swaths of the national beverage alcohol market.

Notably, though, the permissions for DtC shipping of wine by wine suppliers remain in effect, so Nevada residents can continue to enjoy that market.

Interpreting Nevada’s DtC alcohol shipping laws has never been that straightforward. The rules, found in NRS 369.490, are derived from the state’s personal importation laws, which set out when and how Nevada residents can carry in limited quantities of alcoholic beverages when they return home from out of state. Under those laws, there has historically been permission for the Nevada residents to both remotely submit an order for alcohol (e.g., online or through a club) and to have the alcohol shipped back to their home through a third-party carrier. Other chapters in the Nevada statutes then set out the broader compliance requirements that vendors selling and shipping under those provisions would have to abide by, including getting the necessary licenses and paying state taxes.

For years the statutes enabled DtC selling and shipping permissions for all “alcoholic beverages” and by all authorized “vendors” of alcohol. SB 307 diminishes this well-established framework by instead setting out that:

• 1) only wine may be shipped DtC and
• 2) only “suppliers” (defined as U.S.-based manufacturers or importers of alcohol) may get the necessary license to engage in DtC shipping.

In effect, this means that only wine may be shipped DtC into the state, and only by domestic wine producers. Breweries, distilleries and retailers, who had been getting licensed and paying taxes on their sales for years, must now cease their DtC operations in the state.

The truth behind DtC shipping of alcohol

This does align Nevada with most other states in allowing DtC shipping of wine only by wine producers. However, it is a disappointing reversal of recent trends to establish a broader market for DtC shipping of all alcoholic beverages. Surveys consistently find that consumers increasingly want greater access to DtC shipped alcohol and are frustrated with laws that restrict that access. That a state would reverse course and determine to shut down an existing market should be upsetting to those residents who had previously enjoyed its benefits.

Years of experience with the DtC wine shipping demonstrate that it is a healthy and safe market, with a broad commitment to compliance by those engaged in it, and which can be very lucrative to both the sellers and states (as they get lots of tax revenue from sales that otherwise would not occur). By providing an alternative route, DtC shipping enables consumers to access a vastly expanded list of available alcoholic beverages, primarily those small-batch or highly allocated products that generally cannot get the attention of wholesalers for distribution in a state’s three-tier system.

However, that safe, compliant market can only exist where states enable it to exist by enacting laws that establish a venue for legal DtC shipping. History—especially the so-called “great experiment” of Prohibition—shows that making sales does not eliminate those sales, but instead shoves them into dark corners where only those who are already happy to break laws can profit.

Nevada’s law change will not eliminate illegal or improper shipments of alcohol into the state, but will only prohibit those who want to do it right from being able to do so. In the end, Nevada residents will be the ones most harmed, as they now lose their direct access to breweries, distilleries and retailers around the country who had previously been able to sell and ship products that are otherwise unavailable for sale in the state. Meanwhile, brewers, distillers and retailers will continue to be able to ship into the other states that still grant them such permissions.

Nevada residents, though, should be heartened that their ability to have wine shipped to them DtC remains mostly in place. This would seem to be a great moment for them to reach out to their favorite domestic wineries and exercise their still existing rights.