Direct-to-consumer (DtC) shipping has numerous rules and regulations that shippers must adhere to in order to stay compliant. Customer aggregate volume limits (CAVL) discern how much of a certain type of alcohol a single licensee can ship in a given period of time to select individuals within a state. CAVL can seem like a fairly straightforward requirement for DtC shippers, but it is still an important one to be mindful of as it has specific local parameters.
Why do customer aggregate volume limits (CAVL) exist?
CAVL is based on how much a licensee can ship to a consumer in a certain amount of time. State regulators track by the DtC license issued. If a winery has three licenses in a state for three different locations from which to ship, each of those locations has a separate per consumer CAVL to track.
There are two main purposes for CAVL. One is to ensure that consumers are still going to go to their local stores to make alcohol purchases. Individuals cannot necessarily buy as much wine as they want, for example, from out-of-state sellers. By imposing limits on what can be shipped to them directly, consumers are likely to still frequent their local retailers.
CAVL also exists to prevent backdoor workarounds of the three-tier system of alcohol distribution. If an individual bought 100 cases of wine online, the fear of regulators is that they are planning to resell that wine and are purchasing it DtC to avoid working through the state’s three-tier system. To be clear, all DtC shipments of alcohol are for final sales to the consumer and should never be resold. A CAVL, then, acts to prevent such possible improper purchases from the get-go.
What are the CAVL requirements?
CAVL requirements vary from state to state, with limits of one or two cases per month or 12 or 24 cases per year being the most common. This then brings up the issue of what is a “case,” which can vary among product types. For wine and spirits, which are most often sold in 750 mL bottles, a case is generally deemed to be nine liters (12 bottles per case), and nine liter CAVLs are also common.
However, beer is not packaged in metric units, which makes a nine liter limit difficult to manage. As such, several states that permit DtC shipping of beer have indicated that they will deem a case of beer to be 288 ounces, which meets the industry standard of 24-12 ounce bottles. Not all such states have come out with a separate standard for beer CAVL, so DtC beer shippers should be aware of where they might be held to the nine liter limit..
For producers of alcohol, it is essential to take note of the specific CAVL requirements for each state. Review how each state defines the amount of alcohol that can be sold to a consumer, and how that may differ between beer, wine or liquor. One state may have a 288 ounce limit on beer, while another could still use the nine liter mark.
There can also be state-by-state variations on how much alcohol can be delivered to an individual versus a household. For example, if there are more than two people of legal drinking age in a household, states can vary whether each person can get the full CAVL or if the CAVL is assessed against the entire household. Similarly, if a married couple, with both individuals over the age of 21, wants to order alcohol shipped to their house it will depend on the state whether they each get one case per month, or if they need to share the case.
CAVL and compliance management software
When wineries, breweries, cideries, distilleries or other producers of alcohol have potentially thousands of orders across multiple states, it can be exceedingly difficult to to track all sales in the moment. But with automated compliance support, each individual shipment can be tracked to make sure a consumer is not receiving too much within a given timeframe. Rather than telling a customer their order must be cancelled, a business can say, for example, “We’re happy to process your order, but you will have to wait three weeks before it can be shipped.” By staying ahead of potential issues with automated compliance tracking, you’re not losing out on a sale or upsetting a customer.
Overall, states put limitations on how much an individual licensee can ship to residents of a state because they want to ensure customers go to local stores and that people are not avoiding local three-tier systems by purchasing alcohol for resale through the DtC market. The nuance comes with being aware of the specifics for each state you’re shipping into. Having a system in place that is monitoring each sale ensures everything is tracked in real time. Shippers can connect with consumers and establish a proper timeline for them to get any wine, beer, cider or spirits that they ordered.
Ready to take your DtC shipping to the next level? Find out how ShipCompliant Direct can help with your DtC compliance processes, from license management to real-time compliance checks – including customer aggregate volume limits (CAVL) – and tax determination and reporting.