The Liquor Law Repeal and Enforcement Act, also referred to as the Webb-Kenyon Act, which the Alcohol and Tobacco Tax and Trade Bureau (TTB) administers, prohibits shipments of alcohol beverages from one State into another State in violation of any law of the receiving State. 27 U.S.C.§122.
The Federal Alcohol Administration Act (FAA Act) at 27 U.S.C.§203, requires a basic permit in order to engage in the business of importing distilled spirits, wine or malt beverages for non-industrial use into the United States. Likewise, a basic permit is required to engage in the business of distilling, rectifying, blending, bottling or warehousing and bottling distilled spirits or producing or blending wine for non-industrial use. Finally, a basic permit is required for persons who engage in the business of purchasing for resale at wholesale distilled spirits, wine, or malt beverages for non-industrial use. Retailers are not required to obtain basic permits under the FAA Act. The FAA Act also provides that basic permits are conditioned upon, among other things, compliance with the Twenty-first Amendment and Federal laws relating to its enforcement as well as all other Federal laws related to distilled spirits, wine, and malt beverages. 27 U.S.C.§204(d). Thus, TTB could, in appropriate circumstances, take administrative action against a basic permit holder for violations of the Webb-Kenyon Act.
In 2000, our predecessor agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), issued ATF Ruling 2000-1 to announce its enforcement policy relating to violations of State law that result from shipments of alcohol made directly to consumers in one State from sellers located outside that State. This ruling remains in effect and reflects the policy of TTB today.
Also in 2000, Congress enacted the 21st Amendment Enforcement Act that provided the States with a specific tool to address interstate shipments and transportation of alcohol beverages in violation of State law. Thus, contemporaneous with our enforcement policy pronouncement, Congress indicated its support for States to act in this enforcement area because they likely are in a better position to interpret and defend their own laws.
In Granholm v. Heald, the U.S. Supreme Court (May 16, 2005 decision) declared unconstitutional State laws that prohibited direct shipment of wine to consumers within the State from out-of-state businesses but permitted direct shipment to those consumers from in-state businesses. This decision has led to the reexamination of laws in several States.
Many States are reviewing and amending their alcohol beverage rules in light of the decision, and litigation continues as suits have been brought by retailers and consumers in several States. As a result, the regulatory schemes in place in many States are in some degree of flux.
We want to remind industry members who engage in direct shipping that they are responsible for remaining in compliance with current State rules. Furthermore, industry members should remember that their Federal basic permits could be at risk if they fail to comply with State rules.
For up to date information on the rules in a given state, contact the appropriate State alcohol regulatory authority.