While Kentucky is largely shut down during the COVID-19 crisis, its government has made life easier for the state's homebound fans of wine, Bourbon and beer. On April 8, the state's legislature passed House Bill 415 and Gov. Andy Beshear allowed it to become law, legalizing direct shipping by wineries, distilleries and breweries beginning this summer.
Until now, Kentucky was effectively a "no ship" state, meaning residents couldn't receive alcohol shipments from out-of-state producers. While small wineries—those producing less than 100,000 gallons a year—were allowed to ship to Kentucky if a state resident purchased wine at the winery or joined a "subscription" wine club, state law made it a felony offense to ship into any dry county. (Kentucky still has 15 completely dry counties.) Because of that, no common carrier, including FedEx and UPS, would ship to the Bluegrass State. Shipments within the state were also heavily restricted.
With some limits, the new bill has quashed these restrictions, also easing alcohol shipments from Kentucky to other states. "We started developing [the bill] nearly a year ago," state Rep. Adam Koenig, the bill's lead sponsor, told Wine Spectator. "I can't even begin to tell you how many drafts we had." Koenig indicated that the law will take effect in mid-July.
Direct shipping advocates are feeling elated. "A big win for wine lovers," said Jeremy Benson, executive director of Free the Grapes. "Now we're down to only [a few] states that prohibit all winery-to-consumer shipments."
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HB 415 allows distilleries, wineries and breweries in or outside Kentucky to apply for a license to ship directly to customers. It does not apply to retailers or distributors. It limits shipments to 10 liters of distilled spirits, 10 cases of wine and 10 cases of malt beverages per month. Consumers will have to show ID when they sign for delivery, and the penalty for ordering a shipment to a dry county now rests on the consumer.
One of the bill's sponsors, Rep. Chad McCoy, sees the bill as a win for Bourbon producers, since it allows them to ship more. "The No. 1 way that this bill will help the commonwealth and its citizens is through the continued expansion of our signature Bourbon industry," he told Wine Spectator via email. "Industry awareness will skyrocket."
Winemaker Charles A. Smith of Kentucky's Smith-Berry Winery, while supportive of the bill, also thinks the Bourbon industry might be the main beneficiary. "Honestly it was more in tune to the distilleries, because we really had the option to direct ship." Nonetheless, Smith noted that the bill could benefit his winery. "We ship a lot of wine. Maybe this will be even more."
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Koenig noted that some state residents had previously ordered wine and spirits to addresses in Ohio and Indiana, or through illegal channels, removing Kentucky's tax gains on purchases. He hopes the bill will correct this. "It provides [people] more options of alcohol to choose from. And it's going to provide state revenue that we've been missing all these years."
HB 415 has also faced some potent criticism. Neither retailers nor wholesalers supported the measure. "'Parity' doesn't really exist in Kentucky since the handcuffs are still on grocers prohibiting them from selling wine and spirits," said the Kentucky Retail Federation in a statement. "In addition, there isn't a level playing field because producers can dramatically undercut the price of retailers who must use a wholesaler."
The Wine & Spirits Wholesalers of America, never friends of direct shipping, also objected. "The recent enactment of Kentucky House Bill 415 that allows expanded direct shipment of beer, wine and spirits to Kentucky consumers threatens the integrity of a smartly regulated marketplace for alcohol that has protected consumers for generations," read their statement.
But, as McCoy observed, the bill should bring Kentucky closer to the national market. "I actually own a vineyard and am a wine nut. So selfishly, my wife and I are thrilled that we can now legally order in our favorite wines from Napa, Paso and Washington state. This is a great bill for wine lovers."