California has generated considerable excitement in the industry by offering a DTC permit allowing craft distillers across the country to ship their products directly to consumers in California, one of the country's largest retail markets.

Since COVID, California craft distillers have had a temporary direct shipping privilege, which ends 12/31/2025. California’s new Type 94 Direct Shipper Permit will allow spirits direct shipping for both in-state and out-of-state craft distillers. CA ABC will accept applications starting December 15, 2025, and will issue permits effective January 1, 2026.

Here's what craft distillers need to know about this new permit; those located outside of California should consider these requirements before jumping on this opportunity:

• The permit is only available to distillers producing 150,000 gallons or less per year, of which sixty-five percent (65%) must be of their own production.
• The permit will expire on 12/31/2026 and cannot be renewed unless the California legislature extends the authorization for the permit.
• Spirits containers sold to California customers must comply with California's bottle bill, which requires the distiller to label bottles appropriately and to register with CalRecycle to collect and remit deposits and other fees.
• California's Proposition 65 requires sellers of alcoholic beverages directly to consumers to give the various Proposition 65 health warnings on websites, order pages and in shipping boxes.
• Distillers must register with the California Department of Tax and Fee Administration to report and pay excise taxes on the spirits shipped. If the distiller has economic or physical nexus, sales taxes must also be collected and paid.
• Out-of-state distillers must register with the California Secretary of State, which requires payment of filing fees and appointment of an agent for service of process.
• Registration with the Secretary of State may have franchise tax implications. Applicants should consult their tax advisor for guidance.

California's one year trial authorization of this permit, if successful, may encourage other states to issue their own direct-to-consumer shipping permits for spirits.

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