The ability to shop online and have purchases shipped directly to our homes has become a normal part of everyday life. Online shopping has empowered consumers to have access to more product variety, locate specific products often not available locally, drive competition between retailers, and help consumers determine a fair price. However, shipping bourbon (or any liquor) directly to consumers remains problematic due to confusing laws, resulting in a consumer experience that hasn’t kept up with modern times.
While we wholeheartedly endorse the support of local retailers, and a case could be made by some supporting the benefits of keeping bourbon sales restricted to local-only, it would seem that the ability to buy bourbon via an online marketplace is not only inevitable, it would likely benefit the majority of consumers much like any other type of product sold online today.
While some would be correct in saying liquor can be purchased online right now, the legalities are unclear and the online shopping experience might actually be getting worse as a result. Recent announcements that shipping of liquor would be ceased from a number of retailers, including the retail giant Binny’s, provide a clear indication that this far from an open and shut case. Retailers and shipping carriers are functioning in a cloud of uncertainty and consumers are no better off as a result. Are third-party marketing companies and secondary market sales the answer, or will the liquor industry find a way to take a significant step forward as the wine industry has already accomplished?
A web of confusing laws, recent enforcement of carrier shipping policies, and retailer caution are what appear to be driving change in retailers’ shipping policies. To understand the issues with shipping liquor, wine and beer must be included in the discussion as well. Different types of alcohol are often categorized and controlled differently, and shipping rules pertaining to them are no exception.
In order to work within the shipping “rules,” laws and carrier policies must be adhered to. Since liquor sales to consumers are handled primarily by the individual states, this means the ship-from state must allow it by law (as evidenced by court cases and with respect to in-state shipping), the ship-to state must allow it by law, and the carrier must allow it by policy.
U.S. Postal Service
Carrier Policy: -U.S. Postal ServiceShipping RestrictionsShipment of alcohol is strictly prohibited under any circumstance as part of a Prohibition-era ban. A proposed bill called the Postal Innovation Act of 2015 (H.R. 3319) seeks to change that.
Carrier Policy: -UPS Terms of Service-UPS Wine Shipping PolicyPackages containing alcoholic beverages (wine, beer, or spirits) are accepted for transportation only as a contractual service and only from account shippers who are licensed and authorized under applicable laws to ship alcoholic beverages. “Spirits” refers to alcoholic beverages that are distilled rather than fermented (e.g. vodka, whiskey, tequila, gin, etc.).
Carrier Policy: -FedEx Service Guide-FedEx Alcohol Shipping-FedEx Wine Shipping State Pairing Guide-FedEx Prohibited ArticlesFedEx will accept shipments of beer, wine and spirits when both the shipper and recipient are licensed as wholesalers, dealers, distributors, manufacturers or importers. Wine shipments from licensed parties to consumers are permitted in certain instances as well.
Alcohol sales are regulated at the federal, state, and sometimes local government levels. The government's power with respect to alcohol is significant, and the rules can vary quite a bit from state to state. With that in mind, the individual states are the gatekeepers with respect to alcohol shipping laws. Though some states would appear to allow direct shipment of liquor to consumers in-state, clearly stated rules, especially with respect to interstate shipping, are hard to find.
Is shipping liquor directly to consumers illegal?
That depends on an interpretation of the laws, with “interpretation” being the operative word as the issue is laden with lawsuits. The shipment of wine to consumers both in-state and across state lines (within certain limitations and subject to all applicable laws), is legal, common, and has been ruled as such by the Supreme Court.
"Is shipping liquor directly to consumers illegal? That depends on an interpretation of the laws, with “interpretation” being the operative word as the issue is laden with lawsuits."Why is shipment of wine directly to consumers clearly legal in many states while laws related to shipping liquor (and beer) are different or unclear?
In 2005 the Supreme Court ruled in favor of shipping wine directly to consumers across state lines in the case of Granholm v. Heald (Legal & Wikipedia). A consolidation of two court cases, this was the conclusion of an eight-year fight by wineries against state shipping laws in New York and Michigan. Plaintiffs claimed it was unconstitutional to allow in-state shipments of wine directly to consumers but not allow the receipt of shipments from out-of-state wineries. The court ruled in favor of the plaintiffs, holding that both states’ laws discriminate against interstate commerce in violation of the Commerce Clause, and that discrimination is neither authorized nor permitted by the Twenty-first Amendment.
Though this ruling was specific to wineries shipping directly to out-of-state consumers, and applied specifically to New York and Michigan, it set a precedent for other states and the shipment of wine in general. Other states reacted, with modifications of their laws in order to accommodate the ruling. Unfortunately, the states that allow wine shipments directly to consumers generally do not seem to have interpreted the Supreme Court’s ruling to apply to liquor or beer, consistently utilizing the term “wine” within their rules.
Whether you argue that a correct interpretation of the Granholm v. Heald ruling would apply to liquor and beer in addition to wine, or that the states are within their rights, but simply being unfair by allowing wine to be shipped directly to consumers while restricting liquor and beer, the conclusion is the same:
There is no common sense explanation that would justify the discrimination of the treatment of one type of alcohol versus another when it comes to shipping directly to consumers.
The Federal government employs two separate agencies to carry out very specific tasks with respect alcohol regulation. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) which is a federal law enforcement organization within the United States Department of Justice; and the U.S. Department of the Treasury, Alcohol and Tobacco Tax & Trade Bureau (TTB). Per the ATF website these agencies are tasked as follows:
The goal of ATF's Alcohol and Tobacco Enforcement Programs in order to target, identify, and dismantle criminal enterprises with ties to violent crime, that traffic illicit liquor or contraband tobacco in interstate commerce; seize and deny their access to assets and funds; and prevent their encroachment into the legitimate alcohol or tobacco industry. As of January 24, 2003, the TTB, is responsible for all inquiries in regards to the manufacture, wholesale and importation of alcohol and tobacco, regulating the alcohol and tobacco industries and Special Occupational Tax (SOT) and the collection of Alcohol, Tobacco, Firearms and Ammunition Excise Taxes imposed on manufacturers and importers of these products.
The TTB has not publicized an assessment on the matter besides advising licensees to follow the states’ rules. Furthermore, the agency holds a good deal of power when it comes to regulating disagreements between a state and certain out-of-state businesses who might engage in shipping directly to consumers. The TTB administers The Liquor Law Repeal and Enforcement Act (also known as the Webb-Kenyon Act), prohibiting shipments of alcoholic beverages from one state into another state if it is a violation of the laws of the receiving state.
While the state laws are complex and vary from state to state, the carrier policies are more straightforward. As stated in their publicized policies, the carriers’ do not allow for the shipment of liquor or beer directly to consumers.
But there are exceptions.
One in particular is a specific UPS exception within the state of Pennsylvania, where liquor is sold and shipped to in-state consumers by the state’s government-run liquor authority, the Pennsylvania Liquor Control Board (PLCB). Notably, the exact details of this exception are driven by state laws, not the carrier’s policy. As stated in the PLCB’s UPS shipping contract:
"UPS is authorized by the Commonwealth of Pennsylvania, Department of General Services to transport alcoholic beverages on behalf of the Pennsylvania Liquor Control Board (PLCB). This authority is granted by the Commonwealth of Pennsylvania, Department of General Services for the transportation of alcoholic beverages (a) from warehouse to the Pennsylvania Wine and Spirit store locations; (b) from one Pennsylvania Wine and Spirit store location to another; and (c) with adult signature required, from Pennsylvania Wine and Spirit store locations to consumers’ residences and from warehouse to consumers’ residences."
If the states clarified their laws to clearly allow the shipping of liquor, it’s evident from this example that carriers would have no problem shipping liquor directly to consumers.
Despite confusing laws and carrier policies that generally don’t allow it, retailers ship to consumers anyway, and the secondary market is flourishing with individuals shipping to one another directly. Outside of what may be only a few written exceptions, there appears to be a combination of “don’t ask, don’t tell” mentality and simple misunderstanding of carrier policies with the shipment of liquor and beer taking place under wine contracts.
"Outside of what may be only a few written exceptions, there appears to be a combination of “don’t ask, don’t tell” mentality and simple misunderstanding of carrier policies with the shipment of liquor and beer taking place under wine contracts."In more recent years, third-party companies have developed creative workarounds to deliver consumers with the online shopping experience they desire by navigating the legal complexities of liquor sales. Caskers is one example of this. Though the company provides the market with what it demands - an easy online shopping experience for purchasing liquor - this comes at a possible added cost to consumers and what whiskey blogger SKU has called a “fourth tier” of liquor sales. Caskers operates in what could be considered a grey area, working around complex liquor laws by not selling, handling, or shipping any liquor themselves. They act purely in a marketing capacity, essentially creating consumer offers to purchase spirits which are fulfilled by a network of vendors. As Caskers states in their terms:
"We rely upon a network of independent vendors, retailers, manufacturers and other licensed parties (collectively, “Vendors”) who sell the products and services available on Caskers. Each product or service listed on Caskers is not an offer to purchase such product or service but an invitation to make an offer. You acknowledge and agree that Caskers does not sell, offer to sell, invite to sell, or solicit any offers. IN ALL INSTANCES, ALL SALES ARE ADVERTISED, SOLICITED, OFFERED, ACCEPTED, MADE AND DELIVERED BY VENDORS WHO RECEIVE ALL ORDERS...."
The shipping liability rests entirely with the individual vendors or retailers. If a retailer loses their carrier shipping contract, is faced with fines, or loses their license as a result of violating state shipping laws, a new one can take their place and plug back into the Caskers “Vendors” network. This effectively creates the opportunity for third-party marketing companies to provide consumers the online shopping experience they’re demanding, while bypassing the legal risk associated with direct shipment of liquor to consumers by passing it on to the individual vendors.
By backing the free market into a corner with archaic and confusing laws, the state governments may be hurting the very people they claim to protect; the consumers. Though retailers are required to understand all of the rules that pertain to them, the lack of clear liquor shipping laws along with inconsistent or complete lack of enforcement by the states creates a “somewhat” commonly accepted practice of shipping liquor within the industry.
Those retailers able to accept the risk gain an advantage over those who cannot, creating artificial imbalance within the marketplace. Third-party marketing companies who can offer the “experience” of buying liquor online without technically selling liquor, gain a clear advantage over traditional retailers within the internet space, while also adding an additional layer of complexity and possible additional cost for consumers. Furthermore, the increased complexity of the shipping laws and limited retailers within the online space will continue to fuel the secondary market, forcing sales to occur outside of a regulated environment where willing buyers are simply connecting directly with willing sellers.
Until retailers are given a clear go-ahead from the states with respect to shipping liquor directly to consumers as is the case with wine, a grey area within the laws will continue to exist and online liquor sales will continue to chug along. Unfortunately, consumers might be worse off as a result, facing added cost and fewer buying options.
There is no reason why liquor (or beer) should be treated any differently than wine when it comes to shipping directly to consumers. With industry support in recognition and execution of this conclusion, getting liquor onto a level playing field with wine should serve to benefit the majority of consumers, bringing us one step closer to a more ideal bourbon buying experience.
Written By Nick