Quick Take
California craft distillers' bid to make pandemic-era direct shipping permanent faces a series of challenges, state Sen. John Laird says, including court rulings on interstate commerce and resistance from within the industry.
Santa Cruz-based Venus Spirits and other California craft distillers have called upon state Sen. John Laird to help pass legislation that would make temporary pandemic-era rules around shipping their beverages directly to consumers permanent. But the lawmaker said a host of challenges would likely make it difficult to build political support for such a bill.
During the pandemic, California’s small distillers were temporarily allowed to ship directly to consumers. After several extensions, the relaxed rules are set to expire at the end of this year. Recently, a coalition of craft distillers, including Venus Spirits, has been pressing Laird to help extend direct shipping for the long term.
However, it’s a nuanced situation, Laid said, not just a matter of introducing new legislation. He told Lookout this week that lobbyists urging the passage of permanent legislation aren’t accurately presenting all the facts.
“Direct-to-consumer (CTS) shipping was introduced as a temporary measure during the extraordinary circumstances of the global pandemic,” he wrote in a statement. But, he added, the U.S. Supreme Court has ruled that efforts to pass similar policies around direct-to-consumer alcohol sales in other states violated federal law, suggesting that such a proposal in California “is unlikely to withstand scrutiny.”
That court case is the 2005 Granholm v. Heald decision, which ruled that states couldn’t allow in-state wineries to ship directly to consumers and not allow out-of-state wineries the same right. Any permanent legislation passed in California would also need to allow distillers in other states to ship to California residents to comply with federal laws.
New York state recently enacted a law that permits out-of-state producers to sell and ship distilled spirits, cider and mead to New York state residents, but it requires reciprocity. Only producers in states that allow New York manufacturers to lawfully ship the same products to those states’ residents are permitted access to New York.
Another challenge is California’s three-tier system for alcohol sales, which is made up of producers/distillers, distributors and retailers. Historically, craft distillers were allowed to sell their beverages directly to consumers only at their licensed facilities, but exceptions were made during the pandemic to allow direct shipping to consumers.
Efforts to pass legislation that would make direct-to-consumer sales permanent in California are also complicated by disagreements among small and large distilleries and distributors, along with complexities involved in interstate imports, Laird said.
“Until an agreement is reached among all parties involved, while I want to support the craft distillers, this proposal is unlikely to gain the necessary support to move forward.”
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