States Enforce DTC Rules

The continued growth of the direct-to-consumer (DTC) sales channel means that states will continue to make DTC shipping laws a priority for enforcement in 2020. An increasing number of states are investigating DTC shipments and conducting compliance checks on direct shipper permit holders and common carriers.

Wineries that ship directly to consumers outside of California are advised to review state DTC laws and regulations on a regular basis to ensure they are compliant with all shipping rules, tax obligations and record-keeping requirements in each state they ship in to. Members should be mindful that advising consumers to provide certain information in order to bypass volume limits or other state laws and regulations is generally unlawful and may subject them to the various state penalties for violating state laws.

In addition, it’s important to remember that using the services of a third-party service provider or advising customers to use the services of a third-party shipper does not relieve the winery of responsibility for any infractions of state laws regarding direct-to-consumer shipments. DTC laws allow a “licensee” and more specifically a “winery” to ship sales across state lines to a consumer using a common carrier. None of the state DTC laws allow for individuals to ship wine across state lines to themselves or for a third-party service provider to ship wine into a state that requires a permit on behalf of a winery that does not hold a DTC permit. State regulators have confirmed that this type of system is non-compliant and that participation in such a system by a winery does not relieve them from being subject to penalties.

On the Federal level, TTB has stated that failure by a winery to comply with state shipping laws may have serious consequences and, potentially, put their federal basic permits at risk. Industry compliance with regulations is necessary to preserve existing DTC privileges for wineries and continue to make progress on long-term efforts to open up new states for DTC shipping. The current DTC rules for wineries by state are available on Wine Institute’s website.