Direct-to-consumer (DtC) shipping of wine comes in two general categories: on-site and off-site. Both ultimately involve the use of a third-party common carrier to fulfill an order by a consumer, but they differ in how the consumer places their order.
“On-site” DtC shipments are those where the consumer was physically present at the winery’s premises when they bought the wine; “off-site” shipments are remote orders, ones made through the internet, a phone call or a club.
Generally, the distinction between on-site and off-site orders is not critical. But there are some states that apply different rules on how wine can be DtC shipped within their borders depending on how the order was placed, which a winery engaged in DtC wine shipping would need to recognize.
How are on-site and off-site orders regulated differently?
Both on-site and off-site orders ultimately involve the transportation of alcohol, often across state borders, and so they must abide by the laws of the jurisdiction where the alcohol will be consumed. That is, the state where the consumer will take possession of the wine sets out the legal conditions under which the wine can be shipped to the consumer. These requirements often involve licensing, limits on how much can be shipped and tax obligations for the winery.
It is important to note that no state allows a private individual to ship wine themselves, even when that is a consumer simply trying to ship wine they bought on vacation back to their home. While most states do permit citizens to personally import small amounts of alcohol for their own consumption, they also require this to be done through a personal import. That is, the consumer must maintain physical possession of the alcohol—either carrying it in the trunk of their car or in their checked luggage—throughout the process. Only authorized entities can use common carriers to ship alcohol to consumers’ residences.
This means that when a consumer does make an on-site order—say while touring through Napa or the Williamette Valley or the Finger Lakes—if they want to have that order brought to their home through a common carrier, the winery will have to handle the shipping for the consumer, and must do so in full compliance with the laws of the state where the consumer lives.
In most cases, the rules for shipping an on-site order are the same as those for shipping an off-site order. The licenses will be the same, the volume limits will be the same, the tax obligations on the winery will be the same (this is because when wine is DtC shipped, in almost all cases it is then deemed by law to be a sale in the destination state, meaning the destination state’s taxes apply).
However, there are a few states that distinguish between on-site and off-site DtC shipments of wine.
Rhode Island and Arkansas only permit on-site DtC shipments of wine, so consumers in these states may not place orders online or via other remote sources. Rhode Island’s law extends to all types of alcoholic beverages, giving more options for tourists from the Ocean State. Arkansas, unlike Rhode Island, only permits wine shipping and requires any winery that will fulfill their on-site orders to have received a license first and to remit the state’s excise tax on their shipments.
Delaware is often listed among the few states that don’t allow any DtC shipping, but technically the state does allow consumers to receive shipments of wine through what is called “federal on-site” shipping. This comes from a provision originally found in the Patriot Act, which sets out that states that permit personal importation of wine but do not have rules for DtC shipping of wine must allow residents to have any wine they purchased while out of the state shipped back to their homes, in lieu of being able to carry it onto their flights. However, this rule is overlooked and little used as most other states have simply adopted effective DtC shipping laws.
Georgia, Kansas and North Carolina all permit both on-site and off-site DtC shipping of wine, but only require licenses and taxes for off-site orders. Further, while each state has a limit on how much wine sold off-site a winery can ship to a resident, those limits do not apply to on-site DtC shipments. Georgia and North Carolina set a separate limit for on-site sales, but Kansas has no limit on how much a Kansas resident can have shipped to their home, as long as it was purchased on-site.
Besides these few states, though, the rules for shipping wine sold on-site or off-site do not differ. And then for Georgia, Kansas and North Carolina, the different rules may not be all that helpful for a winery. Unless a winery commits to only fulfilling on-site sales in these states, it would still need to get a DtC license and comply with most of the state’s laws for their off-site sales. While it may be nice to avoid some tax payments or ship “extra” packages of wine, it may end up being more of a hassle to distinguish the different sales and apply the different rules.
Nevertheless, the “on-site” v. “off-site” distinction remains a part of the DtC wine shipping market, and at least at a high level, wineries need to recognize the difference. And as other beverage alcohol categories look to expand their own DtC shipping permission and pull from the established rules for shipping wine, it is possible that these different types of ordering alcohol will gain new relevancy.
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