Kentucky’s New DTC Shipping Rules Become Law

Kentucky’s new law to allow for the direct-to-consumer (DTC) shipping of wine, beer and spirits by producers became law on April 7, 2020. The effective date of the law is yet to be determined, as it will be 90 days from the date the legislature officially adjourns, which is expected to happen sometime next week. While we wait for the Act to take effect, we will work with the KY ABC and revenue agencies as they begin to put together the regulations, applications and coordinate the procedures for tax payments and reporting.

When the law becomes effective and producers have secured the required $100 annual permits, they will be able to ship in the following manner:

• Producers of wine and beer may ship up to 10 cases per consumer, per month.
• Distillers may ship up to 10 liters per consumer, per month.
• The products shipped must be produced by the manufacturer; produced for or by the manufacturer under a written contract with another manufacturer; or produced and bottled for the manufacturer.
• Products must be shipped from the producers “licensed premise” – we will be working with the ABC in an effort to include in the definition of a premise their shipments from a licensed fulfilment house in California.
• Age verification at both the time of order and delivery are required, and the consumer faces penalties if they place orders for delivery into a dry area of Kentucky.
• Out-of-state producers must pay Kentucky excise, sales and any local taxes. Since Kentucky currently has an 11% “wholesale tax” on wines sold through the three-tier system, DTC shippers will collect and pay an equivalent wholesale tax (which is to be calculated based on 70% of the retail price).
• All applicable taxes are to be itemized on a consumers invoice.

We will provide further information as the rules are promulgated and information and applications become available.