Only a handful of states allow direct-to-consumer (DTC) shipments of spirits, and Tennessee isn’t one of them. But apparently that hasn’t prevented some businesses from selling and shipping spirits directly to consumers in Tennessee.
During separate investigations, undercover agents from the Tennessee Alcoholic Beverage Commission (TABC) purchased and received unauthenticated and untaxed distilled spirits from six different online retailers, according to a press release issued by Tennessee Attorney General and Reporter Jonathan Skrmetti. One special agent purchased a 750-milliliter bottle of Evan Williams Peach Whiskey from an online seller and had it delivered to a Tennessee address. Another special agent purchased 12 50-milliliter bottles of Sheep Dog Peanut Butter Whiskey from a different online seller and had it delivered to a Tennessee address. And so on.
None of the retailers have a license to ship spiritous liquors directly to consumers from outside the state, because there is no such license in Tennessee.
The TABC sent cease-and-desist letters by certified mail to each of the retailers. One such letter explained, “As a retailer, you are not eligible for a Winery Direct Shipper License, and thus any shipping of wine or other alcoholic beverages by you to consumers in the State of Tennessee is illegal.” Approximately 10 months after sending that letter, a TABC special agent purchased vodka from the retailer’s website and had it shipped to a Tennessee address.
In fact, after receiving the cease-and-desist letter, “each company continued to ship distilled spirits to Tennessee illegally,” according to the Attorney General and Reporter. And so, on July 14, 2023, the Attorney General and Reporter filed a federal lawsuit “to immediately stop the flow of illegal liquor shipments facilitated by six unlicensed out-of-state defendants” on the grounds that “the defendants unlawfully facilitated shipments of distilled spirits for which no state license is available.”
This isn’t the first time Tennessee has cracked down on illegal DTC shipments of alcohol, but it is the first time a Tennessee Attorney General is prosecuting a violation of law under the 21st Amendment Enforcement Act. If successful, it likely won’t be the last. The 21st Amendment Enforcement Act allows state attorneys general to seek injunctive relief against anyone believed to be illegally importing or transporting alcohol within a state.
Out-of-state businesses that may be selling distilled spirits online and shipping to Tennessee should take note.
Russell Thomas, Executive Director of the TABC, said he was happy Attorney General and Reporter Skrmetti decided to prosecute this case. “Our agents and staff worked hard to collect the evidence against these bad actors,” he said. “Too often, we find websites operated by unscrupulous individuals willing to deceive consumers.” The Law Enforcement section of the TABC consists of 38 special agents whose primary responsibility is to enforce the state’s liquor laws.
