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Kentucky DTC Shipping Bill Expected To Become Law This Week

April 12, 2018

A Kentucky bill allowing limited direct-to-consumer spirits and wine shipments is expected to be signed into law this week. Fueled by rising Bourbon tourism, HB 400 would permit visitors to the state’s distilleries and wineries to purchase bottles and have them shipped home, as well as join subscription clubs. The measure was approved by the state’s House last month and passed by the Senate on April 2. Kentucky Governor Matt Bevin has until Friday to either veto or sign the bill, at which time the legislation will automatically become law if no action is taken.

“This bill has received wide support and passed by, quite frankly, historic margins for an alcohol bill,” says Kentucky Distillers’ Association (KDA) president Eric Gregory. “It’s understood that tourism is one of our biggest economic engines here in Kentucky, and Bourbon tourism is leading the way.” The KDA estimates that more than 1.2 million visitors made stops at distilleries on the Kentucky Bourbon Trail and Kentucky Bourbon Trail Craft Tour last year, with roughly 70% coming from out of state.

Under HB 400, visitors to Kentucky distilleries would be able to purchase 4.5 liters—or six 750-ml. bottles—per person per day for shipment, as well as receive shipments of up to one 9-liter case of spirits annually as part of a club membership. Wineries, meanwhile, are limited to selling four cases of wine per person per day for shipment, with club shipments limited to 12 cases per year. Retailers are also included in the bill and would be exempt from the in-person purchase requirement, permitted to sell and ship 4.5 liters of spirits per person per day and four cases of wine per person per day.

The bill also includes an emergency clause allowing it to go into effect immediately. “Most legislation in Kentucky takes effect 90 days after the governor signs it, but we wanted the ability to ship bottles before the Kentucky Derby in May and Kentucky Bourbon Affair in June,” Gregory notes.

Even if HB 400 becomes law, however, Kentucky distilleries would still have a limited shipping reach, with just eight reciprocal markets—Arizona, Washington D.C., Hawaii, Nebraska, Nevada, New Hampshire, North Dakota, and Rhode Island—allowing for interstate spirits shipments. In an effort to push for more direct-shipping freedom, the KDA has launched a “Bourbon Without Borders” campaign, which Gregory likens to the wine industry’s “Free The Grapes” platform. Interstate winery shipments are permitted in 44 states.

Still, Kentucky’s Bourbon distillers see the bill as a major move forward, with small players likely to benefit most. “With the number of distilleries we have today, this is really going to help our craft distilleries, because distribution is the biggest problem for them,” says Gregory. “You may not be able to get these craft brands in states like Arizona, so the fact that somebody can come here and then ship bottles home really increases their market awareness.” —Christina Jelski

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