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Can we ship bottles to customers?

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We always thought that it was illegal for us to ship bottles of our spirits to our customers, regardless of where they live. I just noticed a distillery with a page on their website from which you can order bottles (unless you live in one of the 13 or so states that it is illegal to ship to). Can anyone tell me definitively whether we can ship or not?

Thank you SO much to anyone who can clear this up for us!

 

 

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I'm fairly certain that shipping direct to customers varies state to state, and the majority of states do not allow it. I know with certainty that it is NOT permissible in Colorado to ship bottles out of state. There are still a few Colorado distilleries that are doing it anyway.

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As the others have said, its state-dependent and might depend on your actual license.  Once you determine if its legal to ship, then you can decide if you need to pay state tax for the purchasing state, your state, or neither. 

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Be aware that your federal basic permit is conditioned on compliance with state laws. TTB has spoken on the issue of shipping in violation of state laws.  Here is what it has said:

The Liquor Law Repeal and Enforcement Act, also referred to as the Webb-Kenyon Act, which the Alcohol and Tobacco Tax and Trade Bureau (TTB) administers, prohibits shipments of alcohol beverages from one State into another State in violation of any law of the receiving State. 27 U.S.C.§122.

The Federal Alcohol Administration Act (FAA Act) at 27 U.S.C.§203, requires a basic permit in order to engage in the business of importing distilled spirits, wine or malt beverages for non-industrial use into the United States. Likewise, a basic permit is required to engage in the business of distilling, rectifying, blending, bottling or warehousing and bottling distilled spirits or producing or blending wine for non-industrial use. Finally, a basic permit is required for persons who engage in the business of purchasing for resale at wholesale distilled spirits, wine, or malt beverages for non-industrial use. Retailers are not required to obtain basic permits under the FAA Act. The FAA Act also provides that basic permits are conditioned upon, among other things, compliance with the Twenty-first Amendment and Federal laws relating to its enforcement as well as all other Federal laws related to distilled spirits, wine, and malt beverages. 27 U.S.C.§204(d). Thus, TTB could, in appropriate circumstances, take administrative action against a basic permit holder for violations of the Webb-Kenyon Act.

In 2000, our predecessor agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), issued ATF Ruling 2000-1 to announce its enforcement policy relating to violations of State law that result from shipments of alcohol made directly to consumers in one State from sellers located outside that State. This ruling remains in effect and reflects the policy of TTB today.

Also in 2000, Congress enacted the 21st Amendment Enforcement Act that provided the States with a specific tool to address interstate shipments and transportation of alcohol beverages in violation of State law. Thus, contemporaneous with our enforcement policy pronouncement, Congress indicated its support for States to act in this enforcement area because they likely are in a better position to interpret and defend their own laws.

In Granholm v. Heald, the U.S. Supreme Court (May 16, 2005 decision) declared unconstitutional State laws that prohibited direct shipment of wine to consumers within the State from out-of-state businesses but permitted direct shipment to those consumers from in-state businesses. This decision has led to the reexamination of laws in several States.

Many States are reviewing and amending their alcohol beverage rules in light of the decision, and litigation continues as suits have been brought by retailers and consumers in several States. As a result, the regulatory schemes in place in many States are in some degree of flux.

We want to remind industry members who engage in direct shipping that they are responsible for remaining in compliance with current State rules. Furthermore, industry members should remember that their Federal basic permits could be at risk if they fail to comply with State rules.

For up to date information on the rules in a given state, contact the appropriate State alcohol regulatory authority.

I added the emphasis.  The information was last reviewed, the web site says, in 2012.  See 

https://www.ttb.gov/publications/direct_shipping.shtml

 

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Not to mention you must convince one of the standard carriers to authorize you to ship alcohol.  We've been unsuccessful so far.

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Put bluntly - you don't want to play this game.  It is fraught with dangers, not the least of which is the dreaded "what you don't know you don't know (and i don't either)."  

If you can find one person who does it, consider why you don't find many more.  There has to be a strong temptation among small distilleries to emulate wineries that have "club" programs and can ship cases to out of state customers who visit, but that is not a viable option for distillers, craft or otherwise.  You need to find a different business model.

If you intend to ship into any state, do so through a person licensed by that state to import spirits into the state from outside of the state.  Unless you, or someone with whom you contract, hold such a license, do nothing.  

I have to add that this is not legal advice and I am not an attorney, so if you have a question about it, ask an attorney.  I predict doing so would gobble up any potential profits,  

To that, I will append that the reluctance of carriers (as noted above) to take shipments reflects the uncertainty with which the carriers, who undoubtedly have attorneys on staff to answer such questions, approach state laws on the issue.  The carriers would love your business, but don't want to run afoul of the local constable and end up with a truck seized because it is hauling contraband.

  

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FedEx can and will ship alcohol in an approved package.   

You don't find a lot of companies doing it regardless of industry because it's a PITA.  We offer shipping for certain states and thankfully Im not the one to fulfill the orders.  Set up distribution in New York or Illinois and use Binny's, DrinkUpNY, and the half dozen new-comers to ship alcohol.  Let them deal with age verification and distribution.  Do what you're good at - putting booze in bottles :)

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http://www.fedex.com/us/freight/rulestariff/prohibited_articles.html

FedEx will only ship spirits to another licensed facility (wholesaler, distributor, dsp, etc). Only wine can be shipped directly to consumer.

I know there are lots of distilleries doing it, and supposedly some are doing it on the up and up. But every conversation we've had with the carriers has been a dead end.

On 10/6/2016 at 5:35 PM, nabtastic said:

FedEx can and will ship alcohol in an approved package.   

 

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fstmatt does what should be done.  He goes to a source document that clearly states the policy of Fed Ex.  I'll do the same for TTB.

https://ttb.gov/publications/direct_shipping.shtml

The bottom line- because it appears at the bottom of the page -  is clear and unambiguous:

  • We want to remind industry members who engage in direct shipping that they are responsible for remaining in compliance with current State rules. Furthermore, industry members should remember that their Federal basic permits could be at risk if they fail to comply with State rules.
  • For up to date information on the rules in a given state, contact the appropriate State alcohol regulatory authority.

For a more complete statement of policy, see:

https://ttb.gov/rulings/2000-1.htm

I said it before and I'll say it again.  You do not want to follow others down this rabbit hole. 

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The Distilled Spirits Council covered this in their annual conference. They had a guest speaker from Shipcompliant and the reality is there are only 6 states that allow spirits to be shipped in. You might wonder how all these online stores are doing it then? They are simply taking the risk- believing a far flung state is unlikely to bother prosecuting someone in another state. In most cases they are right- at least so far. In the case of my business, we have product placement at a few stores that ship- we let them take the risk.

Incidentally, the Distilled Spirits Council (and more importantly their large members) seem to be in favor of getting these laws changed that would allow producers to direct ship to consumers. I recommend joining them if you'd like to help get laws changed- they have been a great ally for us in Wisconsin and with hope we all get a reduced excise soon. 

It's obvious distributors see the inevitable and don't want to be cut out, so the Wine and Spirits Wholesalers of America have invested heavily in Drizly- http://www.wsj.com/articles/liquor-distributors-invest-in-tech-firm-to-boost-e-commerce-in-alcohol-1431461864

Guy

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Sorry to revive this ancient thread - but does anyone know how Napa Valley Distillery's bar club works legally? They ship a box of small spirits bottles and mixers once a quarter. Charbay, also in California, will direct ship. These places are high enough profile that they would have been shut down if it were illegal, right?

 

 

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8 minutes ago, jo-el-eo said:

Sorry to revive this ancient thread - but does anyone know how Napa Valley Distillery's bar club works legally? They ship a box of small spirits bottles and mixers once a quarter. Charbay, also in California, will direct ship. These places are high enough profile that they would have been shut down if it were illegal, right?

 

 

If that needed to be true, Jefferson's wouldn't have an "Ocean Aged" whiskey. 

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we've visited this in detail before.  hedgebird provided a link to the website of the National conference of State Legislatures, which includes a complete list of all state laws (http://www.ncsl.org/research/financial-services-and-commerce/direct-shipment-of-alcohol-state-statutes.aspx.)  I've cited  TTB's positon (https://ttb.gov/rulings/2000-1.htm and  https://ttb.gov/publications/direct_shipping.shtml)  fssmatt  cited Fed Ex rules (http://www.fedex.com/us/freight/rulestariff/prohibited_articles.html).  So you've got the state's public statements, TTB's public statements, and Fed Ex's public statements.  I'll tell you now, no alcohol may be shipped via the US Post Office.  TTB and TTB alone has that privilege.  There is nothing new to report.   

I've not put it this bluntly before, but "What is your tolerance for risk?"  

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FedEx. Mark it containing alcohol. 

 

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On 8/24/2017 at 7:35 PM, nabtastic said:

FedEx. Mark it containing alcohol. 

 

You need to establish an alcohol capability in your FedEx account in order to ship alcohol. You use special marking labels from FedEx, you list it as an alcohol shipment when you generate the shipping label. You can only do this if you establish an alcohol capable account. Contact your FedEx representative to do this.

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Well yes, tell your FedEx rep what you want to do and follow the rules/their obstructions (I thought that was implied, my bad). 

FedEx is your only option unless you ship freight.  

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In a January 2016 document (I doubt much has changed since then) the National Association of State Legislatures stated (http://www.ncsl.org/research/financial-services-and-commerce/direct-shipment-of-alcohol-state-statutes.aspx)::

The majority of states have statutory provisions that allow for out-of-state manufacturers to ship alcoholic beverages directly to consumers. The majority of states restrict the direct shipments to wine.

 Hedgebird provided a link to that web page previously in this thread.  The question has evolved.  It is now, "Can anyone who regularly submits products for competition, or an out-of-state industry event, a reviewer, or analysis tell us how they are shipping?"  

The NASL does not provide answers to that question.  Its answers involve shipment made directly to consumers.  Exceptions to the general prohibitions must be determined on a state by state, case by case basis.  I don't know those rules and even if I did, I would not advise you on what you should do. The NASL provides some very good advice.  It states, in bold letters in the original, "Please note the summaries should be used for general informational purposes and are not intended as a legal reference. NCSL is unable to provide assistance, give advice or answer questions regarding individual cases. If you have questions regarding the direct shipment of alcoholic beverages to consumers, please contact an attorney in your state or your state attorney general.

This forum provides a great service when it discusses questions within the expertise of the persons who respond, e.g. "Why is my gin cloudy?" but when it comes to matters as legally complex as the interstate shipment of distilled spirits, we are in over our collective heads.   Here is how I would approach the problem.   If I wanted to send to a lab, or reviewer, or competition, I would ask the person to whom I propose to ship, for some citation, in the laws of the state in which they are located, that gives me permission to ship to them.  Then I would verify it with the state.

Importantly, FedEx is not, in applying its internal rules, the keeper of state regulation.  If you register, etc, with FedEx, and they subsequently take a shipment from you, and it is not legal for you to make the delivery to the recipient named, FedEx is in trouble with the state, but so are you.  "FedEx let me do it" is no defense.  

I suspect that there is not much danger in shipping to a laboratory.  Reviewers and competitions are probably tricker.  I asked previously, "What is your tolerance for risk?"  I guarantee that the first question a state will ask you, if they discover what you are doing and take exception to it, is "Why didn't you first ask us?'  Then comes, "Ignorance of the law is no excuse."  

 

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Jo-el-Lo, Napa Valley and others who make grape based spirits, Brandy, in California, as far as I can tell are allowed to ship as it is treated as a wine by state law.  That's a very coarse breakdown of the law, I would definitely read up on the law before using this knowledge.

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You've got to know two laws - the law of the state from which you are shipping AND the law of the state into which you are shipping.  Because it is a big wine state, California makes special dispensations for brandy.  It does not follow that Iowa will do the same.  

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