Will Delaware be next for winery DTC shipments?
The direct-to-consumer (DTC) wine industry is big and getting bigger, growing 27% by volume in 2020, the largest increase year over year to date. Yet while residents of most states can let their wine come to them, Delawareans must don shirt and shoes and then visit a winery in person to receive a DTC wine shipment.
Most states allow wineries to make off-site shipments, meaning residents can order wine online — or by phone or mail — and have it shipped to their homes. Delaware is different: A winery cannot ship directly to consumers in the First State unless the consumer places the order in-person, at the winery. Arkansas and Rhode Island have similar restrictions.
This poses obvious challenges in the best of times. Throw a pandemic into the mix and it can become downright difficult for residents of Arkansas, Delaware, and Rhode Island to procure wine from favorite out-of-state wineries or explore new vintners.
House Bill 210, introduced May 20, 2021, would eliminate Delaware’s on-site sales restriction. The measure would permit licensed in-state and out-of-state wine producers to obtain a license to ship wine directly to Delaware consumers through a common carrier, and to use a fulfillment house if desired. However, it doesn’t authorize wine retailers to ship to consumers in the state.
The DTC license proposed by HB 210 would need to be renewed every two years, for a fee to be determined by the commissioner after the bill becomes law.
If the measure is enacted as introduced, each winery would be able to ship a maximum of three 9-liter cases per year to a single household. This is a low volume limit, according to Jeff Carroll, general manager for Avalara for Beverage Alcohol: A typical volume limit is two cases per month. Shipments to the state overall would be limited to 1,800 9-liter cases per winery per year.
As in other states where DTC wine shipments are allowed, wineries would be responsible for ensuring all wine shipments are labeled, “Contains alcohol: Signature of individual age 21 or older required for delivery” (or similar). They’d also be responsible for paying “the taxes normally due for wines.” As Delaware has no sales tax, only excise tax would apply.
Although the Delaware State Legislature adjourned June 30, 2021, without considering HB 210, it’s expected to take up the bill when it reconvenes in January 2022. Thus, Delaware residents could be able to enjoy the privilege of DTC wine shipments afforded to most other Americans by this time next year.
Move to authorize off-site DTC wine sales in Arkansas and Rhode Island
Arkansas permits very few DTC wine sales in the state. Currently, only a small farm winery licensed in Arkansas can ship wine directly to a private resident “without the private resident having been physically present or having made an in-person purchase at the small farm winery”; and sales are capped at one case of small farm winery wine per consumer per month. With the enactment of House Bill 1370 in March 2021, a small farm winery licensee may now ship one case of mead per month, too.
There have been several efforts to make Arkansas less restrictive over the years, most recently with the introduction of Senate Bill 546 in March 2021. Thus far, all bills have died or been withdrawn from consideration.
It’s a similar story in Rhode Island: Lawmakers regularly introduce measures to allow wine producers to ship a limited amount of wine directly to consumers in the Ocean State, to no avail. Three such bills (HB 6300, HB 6247, and SB 69) died in committee in early 2021.
DTC sales are still going strong, with June 2021 sales up 18% over sales in June 2020. To learn more about where your business can and can’t ship alcohol to consumers, read DTC Shipping 101: A survival guide for the beverage alcohol industry.
The 4 steps to age verification for direct shippers
Make sure you’re following the rules when it comes to selling to customers 21 and over.
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.