Last Monday, The New York Times published an article with implications for anyone who likes to buy wine online. Titled “Wines Are No Longer Free to Travel Across State Lines,” the piece detailed the intricacies of interstate wine shipping. Its conclusion? Consumers from all but 14 states can no longer legally ship wine across state lines.
The repercussions of this are enormous. Consumers in less prominent wine markets, such as Maryland or Montana, cannot access a wider range of top wines via wine clubs, online retailers, and out-of-state retailers. It also endangers wine retail shops that depend on out-of-state markets.
VinePair investigated what this really means for wine lovers across the country. It’s complicated because shipping is not federally regulated, and individual state laws include variations and reciprocal agreements.
Here are the most important things to know about interstate, direct-to-consumer wine shipping. We outline how interstate wine shipping procedures work, why this is happening now, and how all of your favorite wine resources could be affected.
Why Interstate Wine Shipping Is So Complicated
Direct-to-Consumer (DTC) alcohol shipping is governed by individual state regulations, and any person or business looking to legally ship wine needs a DTC license. For most alcohol retailers, the license is covered by their off-premise wine sales licenses. A California retailer, for example, can generally legally ship wine to residents of California.
If an out-of-state entity wants to obtain a license to legally ship wine to another state, however, it must apply for a separate, specific DTC license.
According to Alex Koral, industry relations advisor for ShipCompliant, a company that works with wineries to facilitate compliance, there are currently 42 states that offer out-of-state entities licenses to ship DTC in their states. Residents of Utah, Oklahoma, Delaware, Alabama, Mississippi, and Kentucky may not receive any DTC wine shipments, for the most part; in Utah, non-compliance is actually a felony.
Why This Is Happening Now
“While it is true that the consumers residing in the states that do not permit out-of-state retailers to sell to their residents will no longer be able to order any alcohol from an out-of-state retailer, they technically have never been legally able to do so,” Koral says.
Many retailers and wine clubs have been shipping wine across state lines for years, a practice that Koral noted has technically always been illegal. Recently increased pressure from state regulators is casting a spotlight on offenders.For instance, for years both FedEx and UPS have held policies stating that they only ship wine from licensed entities. Only in the past year have both have begun putting more effort into enforcing these policies. Now, carriers like FedEx and UPS will refuse to ship the wine, leaving many retailers no way to fulfill interstate orders.
Can I Still Order Wine From an Out-of-State Winery?
In short, yes. In 2005, the Supreme Court ruled that states allowing in-state wineries to ship bottles DTC cannot prohibit out-of-state wineries from DTC shipping. Thus, states allowing in-state shipping from wineries must also allow interstate shipping from wineries, making DTC shipping much easier for wineries.
Retailers, on the other hand, have a much steeper hill to climb. Although 42 states currently allow wineries to obtain DTC shipping licenses, only 10 of these states allow retailers to apply for these licenses. Three additional states — California, New Mexico, and Idaho — allow retailers to ship on a reciprocal agreement, meaning that if another state allows this state’s retailers to ship DTC, they will do the same. That leaves just 13 states that permit retailers to ship out of state.
(The New York Times lists one additional state, Missouri, but, according to Koral, Missouri repealed permission for out-of-state retailers to apply for DTC shipping licenses in August.)
Will Digital Retailers Be Affected?
Retailers like Wine.com and national retail chains like Total Wine & More are not typically affected by DTC shipping restrictions because they have considerable resources. Total Wine & More, for instance, has brick-and-mortar stores across the U.S., all of which have in-state sales licenses with which they can ship wine orders. Online retailers without physical locations may have the ability to be present in states that do not allow DTC retailer shipping to get around these barriers, through local warehouses or retail partners.
“We are licensed and pay sales and excise taxes in the states where we need to,” Rich Bergsund, CEO of Wine.com, says. “This includes operating our own local warehouses – which carry retail licenses just like a store – in states where that is necessary.” Bergsund stresses that these changes will not effect Wine.com consumers.
Unfortunately, smaller, specialty retailers (many of which source rare and interesting bottles) typically cannot afford to operate local warehouses to get wines across state lines.
Other wine sales sites, like Vivino’s Marketplace, merely act as an intermediary between consumers and local retailers, so consumers shouldn’t have an issue using these types of sites. However, wine lovers should pay attention to the retailers to which they are directed; even if a wine shop in New Jersey is just a few miles away, a Manhattan-dweller is not explicitly allowed to purchase wine and ship it into New York.
Will Estate Wine Clubs Go Out of Business?
Probably not. Because laws make it much easier for wineries to obtain DTC shipping licenses, consumers in most states shouldn’t have issues with participating in winery-run wine clubs or purchasing wine to be shipped directly from a winery, both online and in person.
However, wineries typically have to apply and pay for licenses in each state to which they would like to ship, so Koral cautions that not all wineries may want to go through the effort of getting licensed in all 42 DTC states.
What About Independent Wine Clubs?
Wine clubs that are not run by wineries, such as the Wall Street Journal Wine Club, Wine Awesomeness, and International Wine of the Month Club, will be affected differently based on how they operate.
Wine clubs that source juice from producers and then bottle it under their own labels can technically apply for a winery shipping license. Alternatively, wine clubs might partner with local retailers or operate local warehouses to fulfill orders, rather than shipping them across state lines.
While there are legal ways for independent wine clubs to operate, these businesses are far more likely to be affected by stricter shipping regulations.
“Wine clubs must understand the requirements – which are constantly changing – otherwise, they risk acting in non-compliance without even knowing until they are caught,” Koral says. “Though we cannot condone it, there are always some out there that do understand and are still willing to risk violating laws.”
Of the wine clubs that VinePair reached out to, Logan Lee, CEO of Wine Awesomeness, noted that its members will not be affected, while Wine Access declined to comment.
Bottom line: The Safest Bet Is to Buy Wine From Within Your State.
Given the intricacies of DTC wine shipping, buying bottles across state lines is an exceedingly complicated mission. It’s hard for consumers to know whether any winery or retailer holds the requisite licenses. (After all, retailers have apparently been shipping wine to consumers illegally for years.) While it’s rare for a consumer to receive a fine for illegal wine shipping, increasing pressure from regulators might lead to more penalties as well. Technically, you could be fined for personally carrying a bottle of wine into a state that does not allow out-of-state shipping.
Participating in a wine club or purchasing wine directly through a winery is a fairly safe bet, as is purchasing wine from a large retailer that holds a retail license in your state.
The only truly safe way to purchase wine for shipment is to buy from an in-state retailer or winery. Ninety-nine percent of the time, simply by holding a retail or winery sales license, these entities are automatically allowed to ship wine to consumers in-state. If this playing-it-safe mentality just isn’t your style, you can certainly continue to attempt out-of-state purchases; retailers probably aren’t going to quit interstate shipping overnight. But you might want to consider contacting your local state legislators directly, or supporting an organization like Free the Grapes, which campaigns to change state alcohol legislation.
