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Uniform Law Commission Takes Aim At Direct-Shipping

July 19, 2022

A recent ruling by the Uniform Law Commission (ULC) is generating headlines due to its potential impact on direct-shipping of alcohol moving forward. The ULC is made up of practicing lawyers, judges, legislators, and legislative staff and law professors, who have been appointed by state governments. Its mission is to provide states with “non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law.”

Among the ULC’s most recent rulings is the Uniform Alcohol Direct-Shipping Compliance Act, which the group says “enhances an enacting state’s capability to detect and stop unlawful direct-to-consumer (“DTC”) shipments of alcoholic beverages to the state’s residents.” According to the ULC, the act “does not create new or additional authorization burdens to ship alcoholic beverages directly to a consumer. Instead, the Act creates new tools for state regulators to use to ensure that existing state laws regarding DTC shipping are obeyed. For instance, the Act provides state regulators a mechanism for distinguishing between DTC shipments originating from shippers licensed under the state’s existing law and DTC shipments originating from non-licensed shippers.”

The new act has drawn criticism from suppliers, wholesalers, and retailers within the drinks industry, with suppliers and retailers particularly taking issue with its focus on licensing of out-of-state fulfillment houses, which have facilitated the growing direct-to-consumer wine market by warehousing wines closer to the end consumer.

“This is the first time the ULC has undertaken review of an alcohol law and the exercise demonstrated the unique complexities of state alcohol laws and current limitations in extraterritorial enforcement of such laws under the 21st Amendment,” reads a statement from Wine America. “This proposed Act does nothing to address those limitations. We wryly observe that the 21st Amendment was ratified by states precisely to prevent national uniformity of laws governing the sale and transportation of alcohol across state lines.” Wine America added, “However well-intentioned this effort is, we expect the Act will become a Trojan Horse that will serve to curtail existing wine shipping privileges.”

On the other side of direct-shipping, the Wine & Spirits Wholesalers of America also criticized the move, saying they were “disappointed that the Uniform Law Commission (ULC) took up this issue. But we appreciate the efforts the ULC has taken to provide state lawmakers with model legislation to promote a compliant and fair marketplace for those states that choose to allow certain types of shipping. Many public health and safety problems exist in an interstate DTC marketplace as those shipments are essentially hidden from regulatory management. While not the most effective solution, tools such as common carrier reporting and fulfillment provider reporting help provide some transparency for regulators seeking to enforce their laws and keep citizens safe.”

With the ULC having issued its act, the fight will continue in statehouses across the country, even as the direct-shipping market continues to expand.—Daniel Marsteller

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