Direct to consumer (DTC) shipping eliminates the middleman so that suppliers can sell directly to the consumer. There is no need for retailers or wholesalers. When it comes to DTC shipping for alcohol brands, there are certain regulations that must be followed and licenses that must be procured.
States that allow DTC shipping by alcoholic beverage type
Spirits
Distilleries are the most restricted arm of the beverage industry. For the most part, they have to follow the three-tier distribution system, and only licensed retailers are allowed to sell spirits to consumers. However, Alaska, Kentucky, Arizona, Nebraska, New Hampshire, North Dakota, and the District of Columbia are exceptions. To stay updated on each state’s DTC shipping laws, and any campaigns related to modernizing these regulations, check out the Spirits United Direct to Consumer Shipping resource.
Wine
Even with the proper licensing, not every wine producer can sell DTC. Wineries are the most established sector of the alcohol beverage industry and as such, are able to ship to consumers in 47 out of 50 states and the District of Columbia. According to the Wine Institute, in Mississippi, Delaware, Arkansas, Utah, and Rhode Island, wine can only be shipped DTC if it is an onsite shipment.
Beer
When it comes to breweries, only a small number of states allow for beer DTC sales and shipping. In general, producers must sell to wholesalers, and only retailers can sell to consumers as part of the three-tier distribution system. In Alaska, Nebraska, North Dakota, Ohio, Oregon, Virginia, Kentucky, New Hampshire, Vermont, and the District of Columbia, there are some laws in place that allow breweries to sell directly to consumers. Hard cider may be listed as wine, beer, or fall into a special category, depending on the state.
Applying for a DTC License
The first step in DTC shipping for alcohol brands is to become properly licensed. Practically every state that allows DTC also has compliance laws that involve getting a license. Essentially, becoming licensed means that you have agreed to follow all the laws pertaining to alcohol shipping.
Navigating the world of DTC alcohol licensing is complicated by the fact that each state can have different requirements and renewal dates. You may even have to provide different documentation according to individual state application processes. To help you get a basic idea of what the DTC licensing application process may be like, we have put together a list of guidelines that addresses documentation requirements and the consequences of non-compliance. For more specifics, visit your state’s Alcohol Beverage Control department’s website.
Hopefully, it is safe to assume that if you are interested in DTC alcohol shipping and logistics, you already have some form of an alcohol license. The next step is to make sure that you are adhering to consumer shipping rules that have been established by the beverage alcohol industry. Here are some basic considerations you will have to take into account:
What states will I be shipping to?
- What forms do I need to complete to comply with regulations in each target state?
What do I need to do to prepare for the licensing application process?
- What documentation do I need for each state?
- Am I required to submit to a background check or disclosure of ownership?
- Is all the necessary documentation in place and ready?
As you put together your applications, keep in mind that many states will ask for copies of any existing alcohol licenses. If you are licensed as an alcohol retailer, you will need to provide proof.
Any missing information or documentation can cause unnecessary delays in the application process. That is why it is important to have all your paperwork organized ahead of time. This could include a list of any other owners and managers along with their contact information.
How long does it take to get approved for a license?
It is important to be patient with the process. Remember that your application may be one of the hundreds that they are trying to review. You may have to wait several weeks or months for a final decision, so do your part to move things along by providing all the necessary documentation upfront.
Licensing Restrictions and Requirements
Once you receive your license, make sure that you fully understand the restrictions and requirements that come with it. You will be expected to abide by the rules that are specific to each state. There are serious consequences for non-compliance. If you are made aware of an issue, be sure to address it directly since the repercussions will only become more severe over time. Potential risks of non-compliance include:
- A cease and desist letter
- Costly fines
- Having your license revoked or renewal application rejected
- The loss of other business-related licenses
As a result of the COVID-19, states are looking at non-compliant alcohol shipping violations with increased scrutiny. States are invoking the 21st Amendment Enforcement Act, which means that federal junctions can be made against businesses that break state laws. In addition, you may be held responsible for any violations made by other partners in your DTC alcohol endeavors. When you enter into DTC and add to your business responsibilities, it can be easy to let compliance issues fade into the background. It is important to stay focused and make sure that you are working with trusted partners.
Shipping Rules for Alcohol
When it comes to DTC shipping and logistics, alcohol is unlike other products. It can be complicated to make online sales and there are strict shipping rules, including:
- You must use a common and reputable shipper, like FedEx or UPS
- You must obtain the DTC licenses particular to that state
- You must pay the taxes required by the destination state
In addition to obtaining the right license, you will also have to make sure that you are following regulations in each state that you will be shipping to.
Shipping across State Lines
Even in states where alcohol producers can sell DTC, there are further restrictions on the ability to ship across state lines. Once again, only wineries have any success convincing courts and state legislatures to ship among states. Currently, there are 14 states, plus the District of Columbia, that allow for cross-state shipping. Other retailers are taking this as a positive sign and hoping that they can also have some success in lobbying for more shipping opportunities.
While there are restrictions on DTC shipping in the alcohol industry, some states do make allowances. The key is to understand that shipping regulations vary according to state, be sure to thoroughly research licensing rules, and continue to ensure compliance in order to avoid fines and other consequences. Perhaps if regulators are able to see that producers can responsibly ship and distribute their products, more states will allow DTC in their jurisdictions.
FAQs
What is DTC shipping?
Direct to consumers of DTC shipping means that producers are able to sell directly to the consumer without having to deal with a middleman. With most products, this is a common practice, but the alcohol industry follows a three-tier distribution system (producer – wholesaler – retailer) and DTC is uncommon.
What is a DTC license?
A DTC license allows producers to sell directly to consumers and means that the license holder agrees to comply with all the regulations and rules that are particular to each state.
Can you ship alcohol directly to the consumer?
The ability to ship alcohol DTC depends on the type of alcohol and the state. A total of 47 of 50 states can ship wine DTC while spirits are subject to the most restrictions.
