When most people think of Louisiana and alcohol, they likely get visions of a Mardi Gras parade down Bourbon Street. Being steeped in the world of alcohol compliance, however, our thoughts tend more towards what are the unique regulations that affect beverage alcohol suppliers looking to sell there. And Louisiana has some pretty unique rules.
Actually, when it comes to standard three-tier distributions and sales (supplier sells to distributor sells to retailers sell to consumers), Louisiana is mostly normal. Sure there are somethings about the Pelican State that stand out — such as the famous/notorious open container laws that make those Mardi Gras parades so notable, or a bill proposed earlier this year that would have allowed people under 21 to purchase alcohol in certain situations (it was defeated in the legislature) — but for the most part, the rules regarding licensing, product registration, taxes, and trade practice restrictions are in line with most other states’ rules.
Where Louisiana gets unique — and complex — is in its regulations of direct-to-consumer (DtC) sales of wine, where a Louisiana resident makes an order that is then delivered by the seller to the resident through a common carrier. Since this is a tricky subject, we figured it would make sense to outline what are the rules, restrictions, and compliance issues that can trip up DtC sellers in Louisiana.
Selling DtC in Louisiana: Who, What, and How
The Who: Louisiana, like most other states, only permits the DtC sale of wine. Unlike most other states, however, Louisiana also permits out-of-state retailers to make DtC sales, not just wine producers. (Currently, only 13 states grant out-of-state retailers DtC permission).
In order to become a DtC seller, the winery or retailer must get two separate permits from the state. First, they must apply to the Louisiana Department of Revenue (DOR) for an Authority to Make Direct Shipment of Wine to Louisiana Residents (Authority). The Authority costs $150 ($1000 for retailers), and must be renewed annually by June 30th.
With the Authority in hand, the winery or retailer can then apply to the Alcohol and Tobacco Commission (ATC) for a Direct Wine Shipper Permit (DWSP). This permit costs an additional $250 ($1000 for retailers), and must be renewed annually by December 31st.
While it’s near universal for a state to require DtC sellers to register with the local DOR in order to pay taxes, Louisiana is fairly unique in turning that process into a whole separate license specifically for DtC sellers. This is the result of a 2016 rule change, in which the state determined to give the ATC greater authority over DtC sellers by granting it licensing power, but also decided to not have this new permit replace the previous DOR permit.
Anyone looking to enter the Louisiana DtC market should be aware of these required licenses.
The What: Like many other states, Louisiana requires wineries to register the brand labels of wines being sold into the state (each unique COLA attached to products that will be sold must be registered). However, under Louisiana’s DtC rules, how the brand label is registered can affect how it can be sold.
The rule is that a wine producer may not sell any wines DtC that it has already assigned for distribution through a Louisiana wholesaler. This means that wine producers must make a decision for each and every separate brand label they want to sell in Louisiana whether to do so through the state’s three-tier system or by DtC.
There is an added risk, then, for wineries who sell a lot of mixed packs of wines DtC: they must ensure that, when it comes to selling into Louisiana, each brand label in the mixed pack is not already being distributed through wholesalers in the state.
Notably, this rule does not apply to out-of-state retailers selling DtC, nor to any wines sold onsite by a wine producer (i.e. at the winery’s tasting room for delivery back to Louisiana).
For phone or internet orders, or wine club packages, this rule is very much in effect and wineries must be aware of the limit so they do not inadvertently sell a wine DtC that is also being distributed wholesale in Louisiana. This rule is mostly unique to Louisiana (Indiana prohibits DtC sellers from having any concurrent relationship with an Indiana wholesaler, and Wyoming bans the DtC sale of any wine listed with the state’s control board), and can easily catch up a wine producer with a cavalier attitude towards compliance.
The How: Once a winery or retailer is set up to begin making DtC sales to Louisiana residents (that is, they’re licensed and their wine labels have been properly registered with the state), there are further rules to follow. These rules, though, should be more familiar to wineries selling DtC in other states.
There is an annual volume limit on how much a DtC seller can ship to Louisiana residents. As written, the limit is 12 cases of 750 mL bottles per adult person per household per year. While these volume limits are fairly common, the way Louisiana structured this provision can be confusing. In practice this comes down to there being a limit of 108 liters (i.e. 12 cases of 750 mL bottles) that an individual can receive in a calendar year. Despite the “per household” phrase, each person in a household can separately purchase an amount of wine up to the annual 108 liter limit.
When making the delivery, DtC sellers must ensure they use only licensed transporters (both UPS and FedEx are properly certified by the state) who will ensure that someone over 21 years of age personally receives any package containing alcohol and presents an ID proving they are of age.
Any package containing alcohol must also be labeled to state that it contains alcohol and that someone over the age of 21 must receive it. In 2017, Louisiana changed a DtC provision to no longer require the package label to list the DtC seller’s license numbers. The DtC seller’s license numbers must still appear on the invoice included in the package, but it does not need to appear on the exterior of the package.
DtC sellers must also follow up with their DtC sales by monthly remitting both excise and sales taxes. With their excise tax filing (on the R-5696-L form), the DtC seller must include a detailed summary of each DtC order in the previous month, including the amount shipped, the brands included in each shipment, and the sizes of bottles shipped.
In addition, DtC sellers are required as a condition of their licenses to collect and remit state sales and use tax for all of their sales in Louisiana. DtC sellers with nexus in Louisiana (that is, if they have “physical presence” in the state, such as owning property or having Louisiana-based employees) will also need to collect local sales tax. (Louisiana can be a difficult state for sales tax — read this piece from ShipCompliant’s sister service, Taxify, on generally applicable sales tax regulations in Louisiana).
As in pretty much every other state that allows DtC sales, there are a number of hurdles that Louisiana requires DtC sellers to follow. Many of these are fairly standard — such as paying taxes and getting licensed. But Louisiana does also present some unique challenges, mostly when it comes to which products a wine producer can actually sell DtC.
Understanding the state’s rules can be tricky enough; having to actually comply with them can make the prospect of making DtC sales there extra daunting. If you’re facing this challenge, ask us how ShipCompliant by Sovos can help you succeed in the DtC market by staying compliant.