Yesterday, we received feedback that the information previously provided in this post concerning the ‘violations’ in Arizona was a bit misleading. After digging a little deeper, we’ve updated this post to provide some clarity around what’s happening in the state.
The most important thing to note is that Direct-to-Consumer regulations have not changed in Arizona. The recent letters sent to wineries from the Department of Liquor Licenses and Control (DLLC) are generally not resulting in fines, and we’ve heard reports that most fines are being refunded.
Wineries can only make off-site shipments with a 2W Farm Winery License. This License requires wineries to file production reports to show that they produce no more than 20,000 gallons per calendar year. The report is due 30 days after the end of each calendar year using the DLLC’s online filing system. Rather than cracking down on direct shipping, the recent letters from the Arizona DLLC are intended to prompt wineries to file overdue production reports. There is no cause for concern for wineries who have been following current Arizona rules and submitting production reports. Please read on to review the direct shipping regulations in Arizona.
Who can ship and how?
Arizona limits off-site DtC sales to only wineries that produce within strict yearly gallonage limits. Only wineries that produce between 200 and 20,000 gallons annually can conduct off-site DtC sales. These wineries are required to get a “2W Farm Winery License,” (more info here) and must absolutely restrict their production to below 20,000 gallons a year. However, once it meets these requirements, such a winery can both receive orders by phone, mail, fax, catalogue, or internet at any time from an Arizona resident and ship those orders directly to the Arizona home or business. Again, only wineries that produce less than 20,000 gallons and have a valid 2W permit can both receive and fulfill off-site orders. A winery that produces even 20,001 gallons a year may not receive off-site orders and fulfill them DtC.
However, these restrictions are only for off-site DtC sales–when an Arizonan wants to order through the Internet and receive a DtC shipment. Arizona does allow shipping directly to the Arizona consumer when the Arizona consumer is physically present at the winery’s property. Under ARS 4-203.4(J), when seven conditions are met, any size winery can ship wine directly to an Arizona residence or business. Notably, these conditions do not include licensing requirements; so a non-Arizona winery that conducts no business inside of Arizona except for occasional onsite sales to Arizona residents does not require a license.
The onsite rules require absolutely that the Arizona resident be physically present at the winery when the order is made, the shipment properly indicates it contains alcohol, the consumer was of proper age, and limits the winery to shipping only two cases to the consumer per calendar year. When physically present at the winery, an Arizona resident can set up future deliveries for that year (for instance, by signing up for a wine club service), but she must put in the order and make payment when physically present. It is important to note that even if an Arizonan had visited a winery in the year, she cannot later on make off-site orders to the winery if the shipments.
You can get involved.
Arizona is one of the last states to segregate between wineries based on their production levels, but there is a concerted effort in the works to change Arizona rules. Originally, Arizona only opened up to DtC shipments after grassroots actions by concerned Arizona citizens a decade ago. So if you are an Arizona resident who wants more access to the wines you love, consider writing in to your state representatives. The organization Free the Grapes is on the forefront of liberalizing direct shipment rules, and provides a ready means to mailing your representative. We at ShipCompliant will stay up on Arizona’s rules, and make sure to report on developments as they occur.