With the passage of SB 1381 in March, 2016, Arizona effectively expanded DTC shipping privileges to any U.S. winery holding a federal basic permit. Previously, only small wineries producing less than 20,000 gallons annually were eligible for the direct shipper license. That restriction will be removed completely, so the production size of the winery will no longer be an issue to getting the license. The new law also eliminates the old “onsite” visitation requirement that permitted a shipment without a shipper license of up to 2 cases when a purchaser visited the winery tasting room. The law requires the AZ LLC to begin issuing licenses by January 1, 2017.
The new law creates an interesting staggered volume limitation on shipments of 9-liter cases to purchasers, increasing each of the first three years from 6 cases in 2017; to 9 cases in 2018; to 12 cases in 2019 and beyond.
Arizona’s change to its DTC law is welcome and beneficial for everyone. Large wineries may ship to Arizona consumers without a visit by the consumer; and of course that means large winery wines are now available to Arizona consumers. The new volume limitations are generous enough that most Arizona consumers should be able to satisfy their desire for a particular favorite winery’s wines without overshooting the limit. The state LLC and Department of Revenue should reap the accountability and tax benefits of providing a reasonable and rational direct shipment process that encourages producers to ship legally, and remit sales and excise taxes on those shipments. This change is an excellent example of well-considered legislation designed for everyone’s best interests.