Purpose

Permits direct-to-consumer shipments of limited amounts of wine by out-of-state producers.

Background

Arizona is one of 33 states that licenses all aspects of production, distribution and sales of alcoholic beverages and utilizes the three-tiered system (manufacturer-wholesaler-retailer). Arizona law prohibits the direct shipment of liquor to a customer. Currently, all liquor that is shipped into this state must be distributed through a licensed wholesaler and retailer before it reaches an individual for personal consumption.

Currently, out-of-state producers who ship spirituous liquors into this state are subject to a three-tiered shipping process defined for out-of-state producers. Pursuant to A.R.S. 4-203.04, a resident in Arizona who is 21 years or older can place, for personal use, a spirituous liquor order in person or by telephone, mail, catalog or the Internet with an out-of-state producer who has obtained a direct shipment license. The direct shipment licensee is required to deliver the spirituous liquor to a wholesaler licensed in this state. The wholesaler is then required to pay all luxury taxes and deliver the liquor to a retailer with off-sale privileges who is licensed in this state. Finally, the retailer is required to pay all transaction privilege taxes and ensure that the delivery occurs during hours when liquor is legally sold in this state to a person 21 years of age who exhibits proper identification. The law also requires the retailer to keep a record of the time, date, address, delivery type and amount, name, signature and identification number of the consumer and holds the direct shipment licensee liable for any violation of liquor statutes.

Some Arizonans and wine connoisseurs, however, have expressed their desire to be able to ship wine directly home from out-of-state winery visits without having to go through the required three-tiered system for out-of-state spirituous liquor shipping. The strike-everything amendment to S.B. 1073 allows for direct-to-consumer shipments of limited amounts of wine by out-of-state producers without having to obtain a direct shipment license.

There may be an impact to the state general fund due to the loss of revenues collected from luxury and retail taxes, but the impact is unknown.

Provisions

1. Allows an out-of-state producer of wine, without having to obtain a direct shipment license, to ship to consumers in this state on the following conditions:

a) the out-of-state producer is authorized to sell to consumers at retail in the producer’s home state.

b) the out-of-state producer ships only as a convenience to consumers who order and pay for the wine while being physically present at the producer’s retail location in the producer’s home state.

c) the out-of-state producer collects and pays all applicable taxes of the jurisdiction where the consumer places the order.

d) the out-of-state producer ships only wine.

e) the out-of-state producer ships no more than one case of wine per year to any one consumer.

f) the out-of-state producer ships to the consumer’s residence address and not to any business address.

2. Makes technical and conforming changes.

3. Provides for a general effective date.

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