Recent Illinois, Texas Bills Would Extend DtC Shipping Permissions

A recently introduced Texas senate bill (TX SB752) would extend direct-to-consumer (DtC) shipping permissions in the Lone Star state for both spirits and beer. These permissions would work largely in the same manner as DtC wine shipping in the state.

Specifically, TX SB752 would enable licensed Texas-based producers of beer and spirits to conduct in-state DtC shipping using licensed third-party carriers and consumer delivery services. Such shipments by producers will be subject to the same personal sales volume limits that Texas beer and spirits producers are already subject to.

The bill would also create new beer and distiller shipping licenses for out-of-state producers, granting them access to the Texas market, just as out-of-state wineries have enjoyed for years. These producers would need to get their respective DtC shipping license (either DtC beer shipping or DtC spirits shipping), which would only be available to domestic producers with valid production licenses issued by their home states. However, if the producer has an existing interest in a Texas retailer or wholesaler, they would be unable to get a DtC shipping license as Texas sees that as a violation of its strict tied-house laws. If passed, the new law would also require the following:

• Out-of-state DtC shippers would need to receive a Texas sales tax license, pay Texas excise taxes on their shipments, file regular shipping reports and agree to abide by the jurisdictional authority of the Texas Alcoholic Beverage Commission (TABC) on their shipments.
• Out-of-state DtC shippers also would be limited to the same consumer volume sales limits as Texas brewers and distillers, namely:
  • For beer: no more than 288 fluid ounces (a 24-can case) of beer per consumer a day, and no more than 5,000 barrels in total to all consumers annually.
  • For spirits: no more than two 750-mL bottles per consumer per 30-day period, and no more than 3,500 gallons in total to all consumers annually in unbroken containers of not more than 750 mL each.

TX SB752 also allows that all DtC shipments may be made to dry counties, just like with wine. All products that are currently and properly meeting federal label registration requirements (COLAs) would not need to do any additional Texas registrations to be shipped.

Illinois DtC beer shipping bill introduced

Illinois also introduced a new bill (IL SB 2193) that would extend beer-only DtC shipping permission in the state, largely along the same lines as what currently exists for wine. For example, all beer producers, both in-state and out-of-state, would be required to get the new DtC license if they want to ship into/within Illinois. Producers would also be required to register to collect Illinois use tax on their shipments, pay Illinois excise tax on their shipments and furnish the state with any shipping records upon request.

The bill would limit DtC beer shippers to shipping no more than 12 cases of beer per consumer per year. Notably, applicants for a DtC beer shipping license will need to list all third-party logistical services they would use to facilitate their shipments (i.e., fulfillment houses, but not carriers). Those third-party services would need to file a regular report on their shipments. These third-party logistic service rules are already in effect under Illinois’ DtC wine shipping rules.

In both the Texas and Illinois pieces of legislation, all packages must be clearly and legibly stamped to indicate that they contain alcohol. Furthermore, carriers must check IDs at the time of delivery and get a real signature from the recipient.

While it’s positive to see these types of DtC shipping bills introduced, history reminds us that there will not be a seamless path for either to become enacted into law. Both California and Maine curtailed bills for DtC spirits shipping in 2022. However, a Vermont bill went into effect last year that created new ways to sell Ready-to-Drink (RTD) spirits in the state, including permission for distillers to ship these products DtC.

It’s more important than ever for Texas and Illinois consumers and producers to contact their local representatives to show support for their state’s respective bill. Additionally, working with state guilds can help usher the legislation along and help avoid the interference that has doomed other bills. So far, 2023 seems to be building up to an important one for DtC beer shipping and DtC spirits shipping bills.