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At A Glance: Arizona Direct Wine Shipments – Why Size Does Matter in the Grand Canyon State


Permit Required

  Producers Retailers

Complexity: Hard

Summary Wineries that possess a Domestic Farm Winery License and produce less than 20,000 gallons per year are permitted to ship off-site and on-site direct shipments, with no volume restrictions; privilege and excise tax are required. If a winery does not possess a license or produces more than 20,000 gallons per year, they will be limited to sales made to consumers physically visiting the winery only; volume limits apply.
Approved & Active Carriers FedEx and UPS both ship to this state.
Shipping Rules Tax:  Wineries holding a Domestic Farm Winery License are required to pay local privilege and excise tax. Privilege tax rates, similar to sales tax, range from 6.6% – 11.725%, depending on the shipping destination. An excise tax of $0.84/gallon must be paid monthly. Non-licensed wineries shipping on-site orders only are not responsible for paying tax on wine shipments.
  Permit:  Wineries that produce less than 20,000 gallons a year and possess a Domestic Farm Winery License may make unlimited direct shipments to Arizona residents. Wineries that produce more than 20,000 gallons or do not hold a Domestic Farm Winery License are not permitted to make off-site shipments in Arizona. Wineries which fall into the latter category (non-licensed, over 20,000 gallons) however, may make on-site shipments to consumers, and may make subsequent shipments within a calendar year of the the on-site visit, as long as the wine was purchased while the purchaser was physically present at the winery.
  Customer Volume Limit:  Licensed wineries may make unlimited shipments to Arizona Consumers. Orders placed at a non-licensed winery are limited to two cases per individual per calendar year.
License Requirements To be eligible to make unlimited off-site and on-site shipments, wineries that produce less than 20,000 gallons a year must first obtain an Out-of-State Domestic Farm Winery License at the cost of $300 ($100 initial application fee plus $200 for the license). Licenses are good for one year from date of issue; half-year licenses are also available for a reduced price. To ship limited on-site shipments only, no license is required.
History Arizona officially opened to on-site direct shipping in 1999. In 2002-2003, the state passed SB 1073 allowing Arizona residents visiting a winery, either in-state or out-of-state, to ship one case of wine per year to their homes. In 2003, volume limits were increased to 2 cases per year. After the Granholm v. Heald decision in 2005, Arizona modified its direct shipping laws to address concerns that out-of-state and in-state producers were not being treated equally. Governor Janet Napolitano signed into law SB 1276 in 2006, which opened the state to limited direct shipping and self-distribution.
Litigation / Legislation In 2008, an Arizona federal district court ruled that the required visitation to a winery without a license did not violate the Granholm decision of 2005. In Blackstar Farms v. Oliver, Blackstar Farms presented the argument that the on-site visitation rule was a limitation that favored in-state producers, based on the argument that an Arizona resident was more likely to visit an in-state winery than to travel out of state to order wine products. The courts ruled in favor of Oliver (the state’s Liquor Licenses and Control director at the time) using the “accident of geography theory,” meaning, simply because it is less likely that an Arizona resident will visit a California winery, does not mean out-of-state producers are being discriminated against. In another case filed by Blackstar Farms in 2006 (Blackstar Farms v. Morrison), Blackstar Farms challenged the existing 20,000 gallon volume cap for farm wineries. The courts ruled in favor of Morrison, the states LLC director, and the volume cap was left in place; the 9th U.S. Circuit of Appeals rejected Blackstar Farms’ appeal in April, 2010, leaving the cap in place.

Side Note: For suppliers interested in selling to retailers (self-distribution), Arizona law permits holders of a Domestic Farm Winery License that produce less than 20,000 gallons per year, unlimited shipments to Arizona retailers.


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