ONLINE ALCOHOL SALES
                                 

      
 


















On January 26, 2001 the Twenty-First Amendment Enforcement Act went into effect, giving states the right to crack down on out-of-state merchants shipping alcohol into the state.  The Act gave states jurisdiction beyond their own borders as well as power to seek federal court injunctions against those who ship alcohol into the state in violation of a state law. 

Lori Enos, “Battle Intensifies Over Net Alchol Sales”, E-Commerce Times, March 16, 2005. 



CURRENT STATE REGULATION

As a result of this new authority, many states have considered and passed alcohol shipment bills.  States have taken several approaches to the regulation of interstate alcohol shipments including permitting direct shipment only from states that reciprocate by allowing similar shipment into such state, permitting shipment under limited circumstances, and prohibiting direct shipment entirely.  The following are samples of each regulatory approach.  


1. Reciprocal State Legislation

California

Any adult resident of California may apply to the Department of Alcoholic Beverage Control and be issued a permit to receive a wine shipment from any state of the United States that allows adult residents of that state to receive shipments of no less than nine liters of wine per month from California.  A California resident may receive a maximum of nine liters of wine per month.  A common carrier is only authorized to deliver the wine shipment to the person named in the permit upon presentation of the permit.  The package must be clearly labeled to indicate that the package cannot be delivered to a minor or to an intoxicated person.  Delivery of the shipment does not constitute a sale in California.
Cal. Bus. & Prof. Code § 23661.2

2. Limited State Legislation


North Carolina


A winery may apply for a North Carolina wine shipper permit that authorizes the shipment of brands of wines identified in the application.  A wine shipper may ship no more than two cases of wine per month to any person in North Carolina.  A case of wine may not contain more than nine liters of wine.  All sales and shipments must be for personal use and not for resale.  If a wine shipper ships more than 1,000 cases of wine to North Carolina in a year, the shipper must appoint a wholesaler in North Carolina to sell the products listed on the wine shipper permit.  The common carrier delivering the wine must also apply for a North Carolina wine shipper permit.  Upon delivery of the wine, the carrier must request a form of identification proving the recipient is at least 21 years old.  If the recipient appears to be under 21 and refuses to present valid identification, the carrier must refuse the delivery.  The carrier must also obtain the recipient’s signature upon delivery.  The shipper must clearly label the wine package stating ‘Contains Alcoholic Beverages: Signature of Person Aged 21 Years or Older Required for Delivery’.  Delivery of wine to a person under 21 is a felony.  2003 N.C. Sess. Laws 402.

3. Prohibited State Legislation


Florida

The direct shipment of alcoholic beverages to residents of Florida is a felony.  The Florida Legislature asserts that the direct shipment of alcoholic beverages to Florida residents poses a serious threat to the public health, safety, and welfare, to state revenue collections, and to the Florida economy.  The prohibition and penalties apply to both sellers and carriers.  Any person found to be violating the prohibition is issued a notice by certified mail.  Any person who violates the prohibition within two years after receiving a cease and desist order is charged with a third degree felony.  Florida provides an exception authorizing religious organizations to receive direct shipment of sacramental alcoholic beverages.   Fla. Stat. ch. 561.545.


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LOBBYING EFFORTS

As these legislative debates heat up there are several lobbying groups attempting to influence the outcome. On one side are groups representing the growers who want to encourage Internet alcohol sales by limiting direct shipment regulation. On the other side are those who support the wholesalers who want to maintain their profit margin by encouraging direct shipment regulation. Finally, there are citizens and legislators who express concerns about tax revenues and protecting minors. The following are two major lobbying groups involved in the debate:

Wholesalers group

The orderly marketing of alcohol through the chain of distribution (most states mandate a licensed, three-tier system of distribution - supplier to wholesaler to retailer to prevent illegal trafficking, and market manipulation)

The efficient collection of applicable state and local excise taxes (in most states, wholesalers collect and remit such taxes)

Controlled access to prevent minors from obtaining alcohol (retailers engaged in face-to-face transactions are better able ensure minors do not purchase alcohol).

Illegal direct shippers bypass state alcohol control systems and the three-tier system to evade state and local excise taxes, and avoid regulatory scrutiny. In so doing, they deny states and localities excise and sales tax revenue, and provide minors with a new avenue for circumventing the law and illegally obtaining alcohol.

Wineries group:

Wineries’ Arguments

Consumers are driving changes in how consumer products are bought and sold-- they want and expect to be able to purchase the wines they want in the manner of their choosing (e.g., via telephone, catalog and Internet).

Free the Grapes! supports augmenting, not replacing, the three-tier system with the controls and regulations necessary to respect local laws, to avoid underage access and to provide provisions to make tax payments. We think it's wrong that the distributors are telling consumers which wines they can and cannot enjoy.

Distributors are restricting consumer access and threatening winemakers because of greed.

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Disclaimer.
This website was built  by third year law students Tracy Kimbrell and Heather Hammond for Professor Laura N. Gasaway's Cyberspace Law Seminar at the University of North Carolina School of Law.  While we hope you will find this website useful, it is intended for educational purposes only.  It does not purport to offer legal advice, and we cannot guarantee regular updates.  Back to top