Alaska requires a license to ship alcohol directly to consumers
As of January 1, 2024, beverage alcohol producers must have a license to ship alcohol directly to consumers in Alaska.
While direct-to-consumer (DTC) licenses have long been required in most other states that permit DTC shipping, this is a new requirement in Alaska: Beverage alcohol manufacturers could ship to Alaska consumers without a permit prior to 2024.
Why did Alaska change licensing requirements for DTC shippers?
The licensing requirement changes, known as the Title 4 Rewrite, are due to the enactment of Senate Bill 9 in 2022. This bill gave the Alaska Alcohol and Marijuana Control Office (AMCO) a long runway to get the Title 4 Rewrite off the ground.
What is the Title 4 Rewrite?
The Title 4 Rewrite completely overhauled Alaska’s alcohol beverage control statute, licenses, and administrative processes, and established a new online licensing system. According to AMCO, it’s designed to promote a fair business climate while protecting the health and safety of Alaskan communities and establishing clear, consistent legal guidelines for all alcoholic beverage licensees.
Each license authorizes the licensee to take specific actions related to the sale or service of alcoholic beverages. That said, licensees may seek an endorsement or permit to expand their authorized activities.
What is an endorsement under the Title 4 Rewrite?
The type of license determines what, where, and how the licensee can sell or serve alcohol. An endorsement, if allowed, expands either the boundaries of the licensed premises or the activities permitted to occur on the licensed premises.
There are 12 different endorsements, including a bowling alley endorsement, brewery repackaging endorsement, manufacturing sample endorsement, multiple fixed counter endorsement, package store shipping endorsement, and restaurant endorsement.
Each endorsement is valid only in conjunction with a license, for the duration of the license. It’s possible to have a license without an endorsement, but you cannot have an endorsement without a license.
Endorsements must be renewed biennially, and the total fees vary. For example, the biennial fee for a multiple fixed counter endorsement is $200 with an initial application fee of $1,250 for each fixed counter covered by the endorsement.
How does the Title 4 Rewrite affect out-of-state manufacturers shipping DTC into Alaska?
Alaska’s new license for DTC manufacturers (the manufacturer direct shipment license) enables a manufacturer licensed in Alaska and other states to sell their products directly to consumers in Alaska, provided the products were ordered by a person located in Alaska for their personal use (not for resale).
Shipments must be made by common carriers that have been approved by AMCO to ship alcoholic beverages to persons in the state.
Each manufacturer direct shipment licensee may produce no more than 300,000 barrels in total of brewed beverages or 50,000 proof gallons of distilled spirits annually. Wineries, however, are not subject to annual production volume limits.
The Title 4 Rewrite also limits how much alcohol a manufacturer direct shipment licensee can sell and ship to Alaska purchasers. Manufacturer direct shipment licensees may not sell more than:
- 1.5 liters of distilled spirits to a purchaser in one transaction or more than 4.5 liters of distilled spirits to a purchaser in a calendar year
- 18 liters of wine to a purchaser in one transaction or more than 108 liters of wine to a purchaser in a calendar year
- 288 ounces of brewed beverages to a purchaser in one transaction or more than 13.5 gallons of brewed beverages to a purchaser in a calendar year
Other requirements for manufacturer direct shippers
Manufacturer direct shipment licensees must also comply with a number of additional regulatory requirements effective January 1, 2024. For example:
The licensee may sell alcoholic beverages only in response to a written or electronic order (phone orders are not permitted)
The orders must include the number on the purchaser’s proof-of-age document and must be signed and dated by the purchaser
The signature must be “reasonably determined by the licensee to match” the signature on the proof-of-age document
The use of age verification services in lieu of obtaining a copy of a purchaser’s proof-of-age document is not permissible
- The licensee must keep hard copies of each order along with the purchaser’s proof-of-age document and maintain a log that allows the documents to be cross-referenced
- Records of sales made under the Alaska license must be retained for at least two years and made available for inspection and audit by AMC and the Department of Revenue upon request
The licensee must ship orders within five working days of receipt
The licensee must ship to the physical address listed on the purchaser’s proof-of-age document; the address must be sufficient enough for the licensee to determine whether the residence is located in an area that has prohibited or restricted the sale of alcohol
The licensee cannot ship the contents of the order to anyone other than the purchaser
The licensee must label the shipping container so it’s clear it contains alcoholic beverages and requires the signature of a person who is at least 21 years of age upon delivery
The licensee must provide written or electronic information about fetal alcohol syndrome to the person submitting the order
Note that the regulations also prohibit licensees from selling or shipping to a person whose name appears on a list of individuals prohibited from accessing alcoholic beverages. The list is maintained by AMCO and stored in a statewide database.
However, it currently isn’t possible for manufacturer direct shipment licensees to comply with this requirement because they’re not permitted to access the statewide database containing the restricted persons list under Sec. 04.06.095 of the Title 4 Rewrite statute.
You can find the current regulations on the AMCO website.
Can DTC licensees ship alcoholic beverages into dry or damp communities?
The Title 4 Rewrite doesn’t alter existing alcohol local option restrictions: There are still both dry and damp communities in the Last Frontier. Dry communities do not allow the sale or purchase of alcoholic beverages, while damp communities limit the amount of alcohol that can be carried into the community or purchased in the community.
Interestingly, the new law prohibits a manufacturer direct shipment licensee from shipping alcohol into any ZIP code that has adopted a local option, whether damp or dry. There’s more information about local option communities, including which sales are otherwise permitted in each ZIP code, in the statute and on the AMCO website.
How do manufacturers apply for an Alaska direct shipment license?
To obtain an Alaska manufacturer direct shipment license, a qualifying manufacturer must:
Submit an application form to AMCO
Consent to the jurisdiction of AMCO, the Alaska Department of Revenue, and any other state agency or state court concerning enforcement of the Title 4 Rewrite
Provide AMCO with a copy of the licenses or permits issued by their home state and by the Alcohol and Tobacco Tax and Trade Bureau
Once obtained, manufacturers may not transfer their Alaska manufacturer direct shipment license to another person or to another location.
Note, Wine Institute is advising its members to wait to apply for the new license until all issues related to the Alaska Title 4 Rewrite have been resolved, “to avoid running afoul of the existing regulations.” The AMCO Board is currently reviewing the issue and may substantially change the rules governing manufacturer direct shipment licenses to make them both workable and consistent with the Title 4 statutory requirements.
More information regarding the Title 4 Rewrite and the associated regulations can be found on the AMCO website.
How much does the Alaska manufacturer direct shipment license cost?
The biennial fee for a manufacturer direct shipment license is $200. There’s also an additional $500 fee for new applications.
How are DTC shipments taxed in Alaska?
Products shipped to consumers in Alaska by a manufacturer direct shipment licensee are subject to the Alaska state excise tax. The Alaska wine excise tax is currently $2.50 per gallon.
There’s no statewide sales tax in Alaska, but many local jurisdictions levy local sales taxes. Numerous local taxing authorities require out-of-state businesses to collect and remit local sales taxes once they’ve established economic nexus with Alaska by making $100,000 in sales or 200 transactions in the state in the current or previous calendar year. Out-of-state sellers can find more information about economic nexus at the Alaska Remote Seller Sales Tax Commission’s information portal and in our state-by-state guide to economic nexus laws.
At this point, it’s unclear whether out-of-state manufacturers will be required to collect and remit local sales tax on their DTC alcohol sales. We’ll update this blog post once more information becomes available.
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