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Direct Shipping: Glossary of Terms


Dana Nigro
Posted: October 21, 2002

DIRECT SHIPPING: The sending of wine and other alcoholic beverages from a producer directly to consumers without going through a wholesaler. Also includes shipments from retailers (shops, catalog companies, Web sites) to customers' homes. Interstate direct shipments are currently a subject of much debate in state and federal legislatures, as well as in the courts.

FELONY STATE: The toughest approach to restricting direct shipping. Breaking the directing shipping laws in a felony state can result in stiff fines and even jail time. Penalties usually apply only to those in the business of selling alcoholic beverages, but some states also include the package carrier. Wineries convicted of a felony can lose their federal permit to make wine. (Current laws prevent felons from holding a license to make wine.)

LIMITED SHIPPING STATE: Allows consumers to order limited amounts of alcoholic beverages from out of state and have them delivered. State restrictions vary widely for the quantities of wine permitted, the payment of state taxes, the requirements for package labeling and other procedures.

RECIPROCITY STATE: Allows residents of the state to receive direct shipments of alcoholic beverages, but only from other states that grant their residents similar privileges.

THREE-TIER SYSTEM: The process by which wine and other alcoholic beverages are currently sold in most states. A winery must sell its products to a wholesaler or distributor who then sells multiple brands to retailers before the wines can pass into the hands of consumers.

21st AMENDMENT: Gives states the power to regulate the sale of alcoholic beverages within their borders. This repealed the 18th Amendment, passed January 16, 1920, which prohibited the importing, exporting, transporting, selling and manufacturing of all intoxicating liquor. The ratification of the 21st Amendment in 1933 marked the end of Prohibition.

WEBB-KENYON ACT: The Act of March 1, 1913 was adopted into the Constitution of the United States to control the interstate transportation and shipment of alcohol beverages. The text follows:

"The shipment or transportation, in any manner or by any means whatsoever, of any spirituous, vinous, malted, fermented, or other intoxicating liquor of any kind, from one State, Territory, or District of the United States, or place noncontiguous to but subject to the jurisdiction thereof, into any other State, Territory, or District of the United States, or place noncontiguous to but subject to the jurisdiction thereof, or from any foreign country into any State, Territory, or District of the United States, or place noncontiguous to but subject to the jurisdiction thereof, which said spirituous, vinous, malted, fermented, or other intoxicating liquor is intended, by any person interested therein, to be received, possessed, sold, or in any manner used, either in the original package or otherwise, in violation of any law of such State, Territory, or District of the United States, or place noncontiguous to but subject to the jurisdiction thereof, is hereby prohibited."

... Or, in other words, it gave each state the broad right to control the sale and distribution of alcoholic beverages within its boundaries.

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