Texas Alcoholic Beverage Commission Finds Severe Non-Compliance Within Direct-to-Consumer Wine Market

Mar 11, 2024


Executive Director of the Texas Alcoholic Beverage Commission (TABC) Thomas Graham presented data at a gathering of the National Conference of State Liquor Administrators (NCSLA) showcasing the significant issues Texas is encountering within its direct-to-consumer shipping marketplace. 


Texas' regulations surrounding the practice are standard among states allowing for wine to be shipped directly to the consumer, including permitting requirements, limits on amount shipped to an individual and reporting requirements meant to ensure compliance. However, the TABC's findings show that no matter how clear the regulations, bad actors continue to circumvent the standards used to ensure a fair and safe marketplace.


The data presented found a clear and grim picture of the current state of the wine shipment market in Texas. It was revealed that of over 500,000 wine shipments into the state, more than half of these shipments were not reported to the state and therefore illegal. 


The impact of these unreported and illegal shipments is multifaceted. First, and most alarming, is the potential impact on public safety. Unreported shipments are often not marked as containing alcohol and therefore are also not subject to age verification standards upon delivery. 


Second, unreported shipments are not collecting the appropriate excise or sales tax. TABC estimates that the total loss of tax revenue ranges from $15-20 million per year.


These issues present several clear disadvantages to the state as well as its beverage alcohol retailers, producers, and compliant shippers. The state must reckon with a sizable loss in tax revenue at a time of ever-tightening bottom lines as well as increasing enforcement efforts to mitigate increased risks to public safety. Additionally, producers, retailers, and compliant shippers now must find a way to compete with non-compliant competition, who represent over half of the total wine shipment market and are willing to cut costs by breaking the law.


Thankfully, this problem will not be worsening in Texas. While some states  consider allowing an already flawed system to spread to spirits-based alcohol, Texas's alcohol market stakeholders, The Texas Package Stores Association (TPSA), Beer Alliance of Texas (BAT), Wine & Spirits Wholesalers of Texas (WSWT), and Texas Distilled Spirits Association (TDSA), have acknowledged the current issues within the wine shipping market and have agreed to put the expansion of direct to consumer shipping of spirits on hold in future legislative sessions for the next 10 years. 


"By jointly opposing future DTC spirits and beer legislation, we are creating an environment where Texas small businesses can thrive without being overshadowed by large, out-of-state players,” said Executive Director of Wine & Spirits Wholesalers of Texas, Ricky Knox.


The data presented by TABC and the agreement by market stakeholders highlights ongoing problems within the current framework of the wine DTC marketplace and illustrates the dangers of expanding that marketplace to include spirits. 


“The bottom line is that DTC alcohol shipment endangers public health, is costly to the state,” said Wine & Spirit Wholesalers of America Vice President of State Affairs Chelsea Crucitti. “Moreover, the wine DTC marketplace is not an acceptable standard to base an expanded DTC spirts shipping model off of – it is very clearly broken. Bad actors continue to skirt state regulations in the effort to gain an unfair advantage with in-state businesses and, in doing so, rob the taxpayer, endanger public safety, and cost the local economy.”