Out-of-State Suppliers: Check Requirements of 3 Destination State Agencies
Before selling alcoholic beverages in another state–whether directly to consumers (where permitted) or through an in-state distributor–a supplier must know what preliminary compliance is required in that state. In most cases, an out-of-state supplier is required to obtain permission from one or more government agencies of the destination state.
While each state’s requirements are different, an out-of-state supplier is required to register with or receive a permit or license from the destination state’s (1) alcoholic control agency, (2) business companies agency, and/or (3) revenue agency.
1. Licensing by the Destination State’s Alcohol Control Agency
Most states require out-of-state alcoholic beverage suppliers (sometimes called out-of-state shippers) to be licensed by the destination state’s alcohol control agency. This is true whether the supplier is permitted to send alcoholic beverage products directly to consumers in the destination state–as is often the case for wineries–or the supplier is contracting to sell and cause delivery to licensed distributor or wholesaler in the destination state.
Out-of-state brokers and importers, who may not ever take possession of alcoholic beverage products, must often be licensed as out-of-state suppliers before arranging deliveries to an in-state distributor.
A prime example of the licensure required for out-of-state suppliers exists in Georgia. Before a brewery, winery, or distillery, or an alcoholic beverage broker cause products to be delivered to a Georgia wholesaler, it must obtain an Out-of-State Supplier license issued by the Georgia Alcohol & Tobacco Division. Georgia’s Out-of-State Supplier licensing process requires submitting personnel statements, citizenship affidavits, and a tax liability bond. Georgia, like many other states, also requires the out-of-state supplier to identify the in-state licensed wholesaler it has appointed and identify the brands that will be sold in the state. And, of course, the Georgia Alcohol & Tobacco Division charges a licensure fee.
2. Qualification to Do Business by the Destination State’s Business Companies Agency
Prior to being licensed as an out-of-state supplier in many states, the supplier is required to be qualified to do business in the destination in state. Qualifying or registering to do business in a state does not apply solely in the context of alcoholic beverage, it is a general requirement for any foreign business company that will be doing more than a little business in a state.
Qualifying to do business in a state generally requires registration with the state’s business companies agency, which is often part of the Secretary of State’s office. For example, out-of-state suppliers who want to make sales in Wyoming must first register through the Wyoming Secretary of State (see reference in this Wyoming Liquor Division Licensing Guide). The registration process involves providing basic information about the company, designating an in-state Registered Agent, and paying an annual registration fee.
The requirement of an in-state Registered Agent can provide a challenge for out-of-state companies. Several companies provide Registered Agent services for every state, for an annual fee. An internet search for “registered agent services” provides a number of options.
3. Register with the Destination State’s Revenue Agency
Even in situations where an out-of-state supplier is not required to be licensed by the destination state’s alcoholic beverage agency, it might be required to register with the state’s revenue agency. This is most often the case where the state separates alcoholic beverage regulation and alcoholic beverage excise tax collection between two agencies: an alcoholic beverage agency and state revenue agency.
For example, in New York, out-of-state suppliers are treated as “distributors” for alcoholic beverage excise taxes. They are required to register with the New York Department and Finance.
Do you have any questions about selling alcoholic beverages outside your home state? Contact us at email@example.com to schedule a consultation with a beverage attorney.
Because we’re attorneys: Disclaimer.