Matthew Mann
February 12, 2015 | Compliance | Matthew Mann

South Dakota to Join the (DTC) Free World

I’ll be the first to admit the news that the South Dakota state legislature has passed a direct-to-consumer wine shipping bill, which is now sitting on the governor’s desk and expected to be signed into law, is not going to make or break anybody’s financial picture for the fiscal year, but it is nonetheless a cause for celebration.

The “Mount Rushmore State”, as it is appropriately known, becomes the most recent addition to the number of states to free their residents to purchase wine directly from U.S. wineries and have it shipped directly to their home.  Its well-considered decision leaves just a handful of states where direct shipments are either forbidden completely or just available in very limited circumstances.

The law doesn’t take effect until January 1, 2016 so you don’t need to rush right out and apply today, but here are some high-level details: 

  • Wineries must get a direct shipper license for $100 per year, expiring each December 31st
  • Brand registration is required annually, also expiring December 31st
    • $25 first brand, $17.50 each brand thereafter
  • Photo ID or age verification service is required.
  • Must ship using a Wine Carrier license holder.
  • Ship up to 12 9-liter cases per person per calendar year.
  • Adult Shipping Label/Adult Signature Required.
  • Collect and remit state and local sales and use tax.
  • Quarterly shipping report and alcoholic beverage taxes:
    • Alcoholic beverage occupational tax between $0.93 - $2.07 per gallon
    • Tax of 2% on the purchase price
  • All reports and taxes are e-file/e-pay only; due by the 15th of the month following the period.

This is all pretty consistent with other state direct shipping laws, with a few peculiarities specific to the state, but in my mind it’s not the details that are significant about the state’s conversion.  What’s significant is the very fact that it happened at all.

The new law was fostered in large part by a consumer group of wine drinkers, South Dakota for Better Wine Laws, and is the result of continued advocacy by such groups against powerful entrenched industry lobbying concerns.  It reflects the growing direct shipping experience built since Granholm and the updating of antiquated distribution laws to embrace modern technology and commercial markets.  It is an arrow to the heart of Chicken Little fears the sky would fall if direct shipments were permitted.

Each year more efficient technological systems of distribution and accountability are created, more evidence piles up demonstrating these systems work, and more states slowly free their own adult citizens to purchase wine directly from producers.  The addition of South Dakota is a weather vane pointing the direction of the DTC movement is blowing.  In that regard, its meaning is considerably greater than its immediate impact on the bottom line.


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