Avalara Inc.

10/18/2021 | News release | Distributed by Public on 10/18/2021 08:46

Ohio is open for DTC business for large wineries

Ohio has eliminated its production cap for direct wine shippers, allowing wine manufacturers or suppliers that produce 250,000 gallons or more per year to ship directly to consumers (DTC) in the Buckeye State. Permits for large producers are now available.

Previously, Ohio had just one permit for direct shippers of wine and beer - the S permit - and it wasn't available to businesses producing 250,000+ gallons of wine annually.

The S permit has now been discontinued. Starting September 30, 2021, Ohio offers an S-1 permit and an S-2 permit.

S-1 permit vs. S-2 permit

Both licenses will have the same reporting requirements and product registration requirements, but there are a few key differences between the S-1 permit and the S-2 permit.

S-1 permit

The S-1 permit is essentially the S permit of old. It's for registered beer or wine suppliers or Ohio-licensed beer or wine manufacturers producing less than 250,000 gallons of wine per year who want to ship directly to Ohio consumers. (The production cap only applies to wine; the S-1 permit is the only option for beer suppliers.)

Businesses seeking the S-1 permit must submit a one-time $100 supplier application fee, along with a $25 permit fee. The $25 permit fee is due every year thereafter, upon renewal of the permit.

S-2 permit

The S-2 permit is for registered wine suppliers or Ohio-licensed wine manufacturers producing 250,000+ gallons of wine annually who want to ship directly to Ohio consumers.

Businesses seeking the S-2 permit must submit a $100 supplier application fee, along with a $250 permit fee. A $100 renewal fee is due every year thereafter.

Two permits, one application

There's just one application for both permits. The Ohio Division of Liquor Control will determine whether each applicant needs an S-1 or S-2 permit. It advises current S permit holders to do "nothing" right now "except file your renewal application." Most businesses holding an S permit will be transitioned to an S-1 permit because they had to be under the 250,000-gallon threshold in order to obtain the S permit.

The application asks manufacturers producing 250,000+ gallons annually to indicate whether they'll use a fulfillment house to facilitate direct shipments into Ohio. If so, they must provide the name, address, and contact information of the fulfillment warehouse(s) and state whether they have a written agreement with the fulfillment warehouse(s).

All applicants must be either registered as a beer and/or wine supplier with the division or a licensed Ohio manufacturer of beer and/or wine. To be eligible for an S-1 or S-2 permit, "the registered supplier, or licensed Ohio manufacturer, must manufacture the product." Only products registered (i.e., approved) for sale in Ohio can be shipped directly to Ohio consumers.

Permits expire every year on October 1. Since the application fees are not prorated, it's advisable to apply for a permit as soon after October 1 as possible.

How long can New Jersey's production cap endure?

New Jersey is now the only state in the nation with a production cap for direct wine shipments. Out-of-state wineries producing 250,000+ gallons of wine per year cannot ship directly to consumers in the Garden State.

The production cap takes choice from consumers and revenue from the state, while opening the DTC market to midsize and large wineries would increase wine selections and generate $3 million to $4.4 million or more in taxes and fees annually for New Jersey. Recognizing this, several lawmakers in the state are working to eliminate the state's cap on DTC wine shipments with measures like Assembly Bill 1815 and Senate Bill 2683.

If you're interested in shipping DTC into Ohio, don't delay. According to the Ohio Division of Liquor Control, many staff members are teleworking to stop community spread of COVID-19. The division thanks you in advance "for your patience and understanding."

Avalara for Beverage Alcohol can help you through the application process in Ohio. Contact us for more details.