By Alex Koral
Direct-to-consumer (DtC) alcohol shipping compliance is a complex network of moving parts, many of which are, by design, hidden from the public. As part of this network, fulfillment houses are a key piece of the process that have historically operated in the background but have recently become a topic of debate.
Thanks to Americans’ increased need for remote sales during COVID-19 lockdown, DtC shipping experienced unprecedented growth in 2020. For instance, DtC wine shipments grew by 27%, the largest ever year-over-year increase. However, the increase in sales has also drawn the attention of state regulators, with a notable focus on fulfillment houses and scrutiny of their role in the alcohol shipping process.
Though fulfillment houses only operate under the explicit direction of a licensed shipper, they often appear to regulators as unlicensed entities in the DtC market, which brings up legitimate fears of possible sales to minors or lost tax revenue to the states. For legislators, who may not fully understand the shipping process but are stoked by these fears, fulfillment houses present a ripe target for additional, but unnecessary, regulation. For example, this year we’ve seen headlines like “Tennessee Legislators Aim to Limit Winery Direct Shipping Sales” and “States Grapple With How to Regulate Fulfillment Houses.” The increased legislative activity has thrust fulfillment houses into the industry spotlight, while the…