Wine Law By the Case: Direct Shipping

Have you ever considered expanding your product to directly reach new customers outside the close proximity of your winery? Or, have you ever wished to make it easier for your current customers to enjoy your wine? If so, direct shipment may help you achieve those goals.

A majority of states allow for some limited direct shipment of wine by the winery to the customer.

However, as is typical for the alcohol beverage industry, there are regulatory compliance issues with which to contend.

For instance, some states may require a separate license to direct ship wine. In Missouri, the Application for Wine Direct Shipper is relatively simple and requires no application fee, but it must be accompanied by a copy of the current state alcoholic beverage license, as well as a copy of the winery license issued by the Alcohol and Tobacco Tax and Trade Bureau. Interestingly, Missouri issued 1,094 Wine Direct Shippers licenses in calendar year 2012.

Missouri issued 1,094 Wine Direct Shippers licenses in calendar year 2012.

In addition to a licensure requirement, there may also be limits on the quantity of wine that may be shipped to a person. Under this type of license, the wine must be shipped directly to consumers, not to a retailer, and must be for personal use.

In Missouri, the Wine Direct Shipper license does not allow the winery to use a third party shipper, such as a fulfillment or logistics company. The shipment must be direct. The wine must also have been manufactured on the winery’s licensed premises.

The winery may be required to use a carrier holding an applicable license mandated by the regulatory authority. There are typically taxation and reporting requirements, and there will also likely be labeling and signature requirements to ensure that the wine is not delivered to someone under the age of twenty-one, which is one of the primary concerns underlying direct shipment.

Of course, shipping into multiple states will require a winery to be aware of and in compliance with each state’s direct shipping laws. And, commercial carriers, such as FedEx or UPS, may impose their own requirements. These can include package preparation and an agreement with the carrier for the licensed winery to tender wine packages for transport to consumers.

In terms of some of the common violations made by wine direct shippers, according to the Missouri Division of Alcohol and Tobacco Control (ATC), annually, approximately 150 wineries violate Missouri’s limit of two cases of wine shipped, per month, per customer. However, the use of shipping compliance software could avoid this type of violation by catching over-the-limit shipments before they occur.

…annually, approximately 150 wineries violate Missouri’s limit of two cases of wine shipped, per month, per customer.

Additionally, in Missouri, January 31 is the reporting deadline to ATC for shipments during the previous calendar year. Violations can result in warning letters, fines ranging from $200-$400 or more, or suspension or revocation of the winery’s license. Failure renew the license before expiration can also result in disciplinary action.

Wineries should be aware of all these types of regulatory concerns.  While specific requirements will vary by state they will be targeting similar issues. Clearly, careful compliance is necessary to protect the winery’s state license and federal permit.

Entering the direct shipping market may expand your customer base and allow your faithful clients to unwind with their favorite bottle without leaving the comfort of their homes. But, is the burden worth it and will direct shipping ultimately result in adequate distribution for small wineries? I will address this topic and related issues in the next column. For now, Cheers from Missouri!

Jamie J. Cox, is an associate with the law firm Brydon, Swearengen & England P.C. in Jefferson City, Missouri. Jamie practices primarily administrative law and represents professionals before the Administrative Hearing Commission, as well as a number of Missouri licensing boards.