North Carolina to Allow Direct Shipping of Wine

State responds to court ruling that its laws were unconstitutional; consumers can soon order two cases of wine per month.

Dana Nigro
Posted: July 21, 2003

As of Oct. 1, North Carolina will join the growing list of states where consumers can call or e-mail an out-of-state winery and have wines delivered directly to their homes.

The new regulations, which were ratified by the North Carolina General Assembly on July 17, are a result of a recent federal court ruling that said the state's laws on winery-to-consumer shipments were unconstitutional.

The state had allowed North Carolina wineries to ship directly to residents, but banned out-of-state producers from doing the same. (It even made it a felony for wine retailers to ship into the state.) A federal appeals court found that that system amounted to economic discrimination and violated the Commerce Clause of the Constitution. However, the court decided that the state could solve the problem by taking away local wineries' right to ship -- not the result for which the consumers who filed the lawsuit were hoping.

"The alternatives were to not allow anyone to ship or to set up mechanisms to allow out-of-state wineries to ship," said bill sponsor Sen. Stephen Metcalf, whose district includes Biltmore Estate in Asheville, a heavily visited tourist attraction that produces wine.

"[Wine] is a growing industry for us here," Metcalf added. "I did hear from a number of wineries that [the court ruling] would have had a negative impact on their ability to promote their own wine in addition to their direct sales."

Senate Bill 668, which is awaiting Gov. Michael Easley's signature, sets up a permit system to control wine shipments in the state. Local or out-of-state wineries that pay a license fee of $100 will be allowed to ship up to two cases per month to an individual consumer and up to 1,000 cases a year to the state overall. (Out-of-state retailers are not eligible for the permit.) Shippers must label the packages as containing alcohol, and the package-delivery company must obtain the signature of someone over 21 upon delivery.

Shipping wineries must file quarterly reports and pay state excise and sales taxes, and there are some restrictions to address the concerns of North Carolina wholesalers. If a winery has a distributor in the state, it must notify them in writing that it plans to ship certain brands directly. And any winery that ships more than 1,000 cases a year to North Carolina must appoint a wholesaler, if any company expresses interest in distributing its brands.

In addition, North Carolina residents may purchase wines on site at wineries while traveling and have them shipped home, even if the producers do not have North Carolina shipping permits. Those shipments don't count toward the 1,000-case total.

North Carolina's neighbors have already gone in similar directions. In Virginia, a direct-shipping law took effect on July 1, passed in reaction to a 2002 U.S. District Court ruling that its ban on interstate wine shipping was unconstitutional. Although the state was appealing the decision, legislators did not wait for a court-imposed solution. And South Carolina, where lawmakers were keeping a close eye on the lawsuits, passed a direct-shipping measure in June. In doing so both opened up new markets for their local wineries.

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