Direct-to-consumer (DtC) shipping has increased in popularity over the years, and has been very successful in the wine industry. Unfortunately for retailers shipping DtC, they have not been able to enjoy the same level of success due to a much more limited map. But as DtC shipping continues to grow in popularity retailers are trying to take more advantage of this channel and reach new customers, despite some of the added regulatory rules to comply with. Below are five facts for retailers exploring out-of-state DtC alcohol shipping.
1. 15 states and the District of Columbia permit out-of-state retailers to sell directly to their residents through common carriers.
- Ten of these states require the retailer to receive a license.
- Three operate under a “reciprocal” process.
- Two states, Alaska and Florida, don’t require a specific license.
2. The types of alcohol permitted to ship varies.
- Wyoming, Louisiana, Alaska, Connecticut, Florida and West Virginia only permit the DtC sale of wine for retailers.
- Nebraska, Nevada, North Dakota, D.C. and New Hampshire permit the DtC sale of all types of beverage alcohol.
- Virginia and Oregon permit the DtC sale of beer and wine.
3. There are plenty of state-specific requirements to be aware of for retailers shipping DtC.
- Alaska, West Virginia and New Hampshire have “dry” communities where it is illegal to sell alcohol in any manner, including DtC.
- West Virginia and Virginia will require a DtC seller to indicate to the alcohol control boards which labels will be sold via DtC.
- Virginia requires a retailer to post that they have permission from the manufacturer to resell their products through DtC.
4. Sales tax rates can vary by state.
- Sales tax rates vary by state, some have a single state-wide rate while others have a combination of state, county, city, and special district rates.
- State filing varies as well, some states require paper format, others solely electronically, and some a combination of both.
5. Excise tax for retailers shipping DtC represents a unique tax burden.
- Most states that allow DtC shipping of alcohol require the shipper to remit to the state the excise tax on that product that would have been levied had the product been sold through a distributor. This requirement is extended to retailers when they are permitted to ship alcohol DtC into a state. Unlike sales tax, retailers would otherwise not have any excise tax burdens, so this requirement can present a unique and new challenge for retailers to manage.
Want more in-depth information about retailers shipping DtC? Read our free white paper, How and Where Retailers Can Ship Alcohol DtC.