Selling Direct via Online Sales: California

[HWY 101]

Is anyone familiar with where California stands today on being able to sell and ship spirits via online?

The idea follows the same business model as the wineries wine clubs; allowing visitors to browse, buy, send gifts and sign up for regular shipments right to their door long after they've returned home from vacation.

With California finally allowing distilleries to sell tastings at their tasting rooms, I'm sure we are a bit behind the curve on the "wine club" model.

Cheers!

[Mrs. Griffo Distillery]

Following! We're in northern California and wondering exactly the same thing.

[mission5]

If you are talking about direct to consumer or retailer, the answer is not allowed. I believe you could potentially ship Brandy under current law to consumers.

[dhdunbar]

Here is the best advice I can give - ask the State ABC. They are there to answer your questions. For California, first read the document "DIRECT SHIPMENTS AND INTERNET SALES OF ALCOHOLIC BEVERAGES, dated in April of 2014, on the Department of Alcoholic Beverage Control web site, at https://www.abc.ca.gov/FORMS/ABC409.pdf. Then call and ask if this is still current.

In general, states do not allow a "wine club model." When it comes to restrictions on distribution, spirits live under a dark, black cloud. This goes back to practices in the late 1800's, when distillers sold spirits to wholesalers in bulk and the wholesalers, some of whom where less than responsible citizens, rectified them with all sorts of substances, including methanol. When the federal government took the first steps to regulate foods and drugs, in the early 1900's, the issue of the "evils" of bulk spirits and rectification played a large role in the general arguments on purity - the legislation was called the Pure Food and Drug Act of 1906 - and included, by the way, the first discussion of the subject of what products should be allowed to claim that they were whiskey. Then, after repeal, the federal laws and regulations where written to prevent "the excesses" that lead to prohibition, which were attributed to tied-houses, that is, the vertical integration of the distribution system. At the state level, this became, in some instances, monopoly distribution, and in others, three tier distribution, unless ,of course, local options continued prohibition, which some still do. These schemes remain prominent, and the attitude that spirits require special provisions not necessary for beer and wine, still prevails in the way in which states regulate how spirits are distributed. Thus, although they may allow distribution of wine outside of the three tier structure, spirits are another matter.

Finally, in 2000, TTB issued a ruling stating its position on interstate shipments made in violation of state laws. You can find it at http://ttb.gov/rulings/2000-1.htm. In brief, TTB held that:

(1) the Webb-Kenyon Act is a law relating to the enforcement of the Twenty-first Amendment and is a condition of the basic permit under 27 U.S.C. § 204(d) for violations of which ATF [now TTB] may suspend or revoke the basic permit.

(2) Under these provisions of law, ATF could under appropriate circumstances take administrative action against a basic permit where a basic permittee ships alcoholic beverages into a State in violation of the laws of that State. ATF will intervene when it is determined that there is a continuing, material, adverse impact upon a State through the actions of a basic permittee located outside the boundaries of the affected State. However, while ATF is vested with authority to regulate interstate commerce in alcoholic beverages pursuant to the FAA Act, the extent of this authority does not extend to situations where an out-of-State retailer is making the shipment into the State of the consumer.

[HWY 101]

Thank you <dhdunbar> for the very complete reply! I've read through the links you've shared and certainly understand where we [CA] stand today (although I still need to make a call to CA ABC to see if any changes have been made).

Quoting from the CA ABC below, it is clear there is certainly a double-standard currently being applied to spirits vs our wine and beer brethren. I'm hopeful we too will be able to enjoy the relaxed laws before long. Just having the ability to sell direct to the consumer from our distillery would be a HUGE benefit for distillers, and by way of tax revenues to a bankrupt state!

"Under the ABC Act, only California-licensed retailers, winegrowers and beer manufacturers are authorized to

make direct sales of their packaged alcoholic beverages to adult consumers in this state. The Department has

determined as a matter of policy that it is permissible for those licensees to solicit and accept purchase orders

for their alcoholic beverage products from consumers by direct mail, telephone, or on-line computer." -California Department of Alcoholic Beverage Control

DIRECT SHIPMENTS AND INTERNET SALES OF ALCOHOLIC BEVERAGES

Additionally, I found the quote below taken from the TTB to be a bit odd...States are worried about outside alcohol being shipped in via online sales. I see this as lost tax revenue for the receiving state. But what about the lost tax revenue from being able to sell outside your borders?! I don't think one needs to be an economics specialist to see the exponential positive tax benefits for the exporting state. Place a reasonable tax on all exported alcohol.

"The States are concerned with mail order sales and shipments made directly to consumers in the State from sellers located outside the State."

Keep pushing for new legislation guys!

[gordon]

AB1233 was announced on Monday. If you are not already a member, please join the California Artisanal Distillers Guild and help us all make this a reality!

[captnKB]

What is AB1233 all about I googled it but could not find any info on how it relates to us

[Scrounge]

Retail sales out of your tasting room in CA, I believe.

[gordon]

Yes, direct sales up to 3 bottles per customer.

[gordon]

http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_1201-1250/ab_1233_bill_20150227_introduced.html

[fermental]

Pennsylvania permits Limited Distilleries to ship direct to retail customers in state so long as you use a delivery service that will verify proof of age on the receiving end.

HOWEVER, I have been inquiring about shipping services this week and - USPS will not ship alcohol, UPS is not issuing any new agreements for any alcoholic beverages other than wine, and FedEx will only allow shipment of spirits from a licensed shipper to a licensed receiver - not direct to consumers, unless, again, you are shipping wine.

So, that's a problem. I really can't understand why UPS and FedEx have special exceptions for wineries.