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Out-of-State Retail Wine Sales

Since the 2005 Granholm v. Heald Supreme Court decision addressing the interstate direct shipment of wine, the number of states allowing out-of-state wineries to ship directly to consumers has increased from 31 states to 42. The experience for licensed wine retailers (for example: brick and mortar wine shops, California Type 85 or 20 licensees and auction houses) however, has been somewhat different. The number of states previously available to retailers since 2005 has declined from 18 to 14 states, District of Columbia, and Puerto Rico.

Out-of-State Worry

And this is no laughing matter; a number of non-participating states increased their enforcement efforts against out-of-state retailer shipping. Iowa, Michigan, Illinois, Texas and others work with common carriers to track where shipments originate from then send their cease-and-desist orders to retailers who ship. In fact, in Illinois a bill (SB 2989) currently sits on the Governor’s desk awaiting a signature or veto. If he signs this bill, retailers who ship wine into the state and consumers who arranged their own shipping will be charged with a class-four felony, making them no different from someone in that state convicted of stalking or aggravated assault.

Four participating states are “reciprocal” states. Reciprocity means generally that if state X’s retailers are allowed to ship into state Y, then state Y’s retailers may ship into state X without the need to obtain a direct shipper license or permit in the destination state. These states are: IdahoMissouriNew Mexico, and California.

Some general requirements that apply to interstate retail shipments also include but are not limited to:

  • Age verification requirement
  • Customer volume limits (i.e. all regions but Alaska)
  • Direct shipping permits (i.e. LouisianaNebraskaNevadaNew HampshireNorth DakotaOregonVirginiaWest Virginia and Wyoming)
  • Producer consent (i.e. Virginia)
  • Label registration (i.e. Virginia, West Virginia)
  • Third party marketing restrictions (i.e. Virginia)
  • Direct shipment to dry areas prohibited (i.e. Alaska, New Hampshire, West Virginia)

Age Verification Requirement

Checking the age of your customer takes on a whole new level of complexity when you’re selling wine online.

First, you need a customer to let you know that she or he is over 21. This is generally done on a website with a pop up or a button that must be chosen before anyone is allowed into the online store. But that’s just the beginning of the age issue.

Even more challenging is managing the requirement that only adults 21 years of age and over can take delivery of an online wine order, and that they must actually sign for the delivery (it can’t be dropped off without a signature). Not only does this create extra costs for online retailers in the form of requiring a carrier signature, but it also creates additional costs (in money and customer goodwill) if shipments aren’t accepted after three attempts and are returned.

Shipping Carriers That Ship Wine

The USPS is not allowed to ship alcohol, based on a law from 1909 that is still on the books. UPS and FedEx ship wine. Here is more information:

To ship wine through FedEx or UPS, you must have an account with them, and must sign an alcohol shipping agreement as well. In addition, you’ll have to adhere to packaging requirements designed to prevent breakage and leakage. You are required to affix a special label identifying that the package contains alcohol. And, finally, you are required to use the Adult (21 years and older) Signature option. All of these additional requirements provide additional cost.

Full details on FedEx wine shipping requirements are available here. Full details on UPS wine shipping requirements are available here.

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Wit of Mandate - the official blog of Simas & Associates, Ltd., is made available by Simas & Associates, Ltd. to the general public for educational purposes only.  Specifically, the entries contained within Wit of Mandate are designed to provide the general public with general information concerning California and Federal law.  Wit of Mandate does not provide specific legal advice and does not create an attorney-client relationship between the reader and Simas & Associates, Ltd.  Wit of Mandate is not an effective or appropriate substitute for obtaining legal advice from a qualified attorney licensed in your state with experience in your practice area or forum of law.

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