Online alcohol sales are more than a trend. This market shift has grown steadily since 2020, and is projected to reach $36 billion by 2028. Smart liquor store owners are taking notice and starting to sell liquor online.
But the opportunity in alcohol e-commerce comes with risk. Regulations and restrictions are strict, and violations are expensive. Fines range from $1,000 to over $50,000 per violation, and you risk license suspension or revocation.
Here’s the good news: Compliance doesn't have to be overwhelming. This guide breaks down the federal and state requirements you need to understand to comply with alcohol e-commerce regulations. You'll learn how to protect your business, serve your customers legally, and grow your online sales.
Let’s get started.
Selling alcohol online isn’t like standard e-commerce retail.
When Prohibition ended in 1933, lawmakers created a three-tier system to prevent monopolies and maintain control over alcohol distribution. The system separates producers, distributors, and retailers into distinct tiers.
This restriction means liquor stores generally purchase products from wholesalers or distributors, rather than directly from manufacturers. Selling products online doesn’t remove this restriction.
In 2005, the Supreme Court’s Granholm decision set the stage for the alcohol e-commerce options we have today. This ruling determined that states can’t treat in-state and out-of-state wineries differently when it comes to shipping directly to consumers. While this decision primarily addresses wineries, it paved the way for more flexible e-commerce regulations across the alcohol industry.
Related Read: How To Legally Sell Alcohol: 5 Things You Need To Know
However, interstate shipping still comes with some complications. Each state has its own rules about shipping, licensing, and tax collection — what's legal in California might be prohibited in Utah. This means you need to verify regulations for every state you want to do business in.
With this baseline knowledge in mind, let’s explore the different types of alcohol e-commerce regulations you need to understand to maintain compliance and manage a profitable online liquor business.
The highest level of requirements you need to know to sell alcohol legally online are federal regulations. Meeting these standards is the foundation of any compliance program, regardless of where you or your customers are located.
The TTB oversees the production, distribution, and sale of alcohol at the federal level. As a retailer, you need to understand your federal licensing obligations, even if most of your permits are issued by state authorities.
Federal regulations govern how you label and advertise alcohol products, such as prohibiting health claims or marketing to underage consumers, too.
Through the TTB, you’re also responsible for tax reporting on your alcohol sales. The TTB maintains oversight to ensure the three-tier system stays intact and that tax obligations are met.
Related Read: 6 Alcohol Marketing Guidelines You Need To Know
Federal law sets the minimum drinking age at 21 throughout the U.S., and selling alcohol online means putting systems in place to verify customer ages.
You need to consider COPPA (Children's Online Privacy Protection Act) regulations any time you collect customer information online. This act protects the data of minors, which should be screened out during your verification process anyway.
Best practice involves multipoint verification, where you verify your customers’ age during online checkout and again at the time of delivery. Implement a point of sale (POS) solution that supports various verification methods, including ID scanning, database verification, and checks against public records.
Liquor retailers must document every alcohol sale. You have to maintain records of customer verifications, shipping manifests, and sales data to stay compliant. Federal retention schedules typically require you to keep these records for three to five years, depending on the type of document.
Pro tip: Invest in a POS system with advanced reporting and customer data management to make logging and tracking these records simpler for your business.
Each state has its own approach to alcohol sales and shipping. Before you start selling online, you need to understand the different variations, as shipping to the wrong state without proper licensing can result in hefty fines or license suspension.
Before you can ship anywhere, you need the right licenses.
Start by determining whether you need a standard retailer license, a direct shipper permit, or both. The requirements you must follow vary depending on where you’re selling.
If you plan to ship to multiple states, you need a strategy for managing licenses across different jurisdictions, each with its own application process, fees, and requirements. These licenses also require annual renewals, so be sure to establish a process for regularly applying for renewals.
Shipping laws fall into four distinct categories that determine where you can and cannot send your products:
To verify current regulations, check your state's ABC (Alcoholic Beverage Control) website or consult industry associations, such as the Wine Institute or Beer Institute, as laws are subject to frequent changes.
Another consideration at the state level is tax collection. You're responsible for collecting sales tax based on the location of your customer, not where your store is located.
Each state has different excise tax rates on alcohol products, and these tax rates can vary widely depending on the type of alcohol you’re selling and the state you’re selling to.
Some states also impose use taxes on products purchased out of state, and you need to understand your nexus (tax obligation connection) in each state where you do business. We recommend working with a tax professional experienced in multistate alcohol sales to get you up and running the right way.
Let’s break down the best way to maintain compliance with online alcohol sales into three simple steps.
Your checkout process needs multiple verification checkpoints. Start with online verification methods that check customer age before accepting payment. At the point of purchase, verify each customer’s:
Or some combination of the three.
Have clear protocols for what happens when verification fails. Deny the sale, document the attempt, and don't allow workarounds. Keep records that prove you’ve verified every customer and keep a paper trail through screenshot confirmations and verification reports.
Modern POS systems, like Bottle POS, automate age verification at checkout, ensuring every customer is checked at the point of purchase and creating the necessary documentation for compliance automatically.
FedEx and UPS have specific regulations for shipping alcohol, so be sure to review and follow these requirements carefully. Both delivery services require identification checks and signatures at the point of delivery.
Delivery platforms like DoorDash handle much of the compliance burden themselves. These platforms have systems in place for age verification and compliance reporting, so if you choose to partner with one of these platforms, you can limit your own manual tracking requirements.
Be sure to review all orders for dry counties, tribal lands, or other restricted locations. You also want to check volume and frequency limits by state, as some states cap monthly shipments per customer.
Finally, use labeling as a final safeguard against noncompliance. Label every box with bold text: "Contains Alcohol – Adult Signature Required." This way, carriers and recipients know what's inside and what's expected at delivery.
Related Read: 10 Critical Liquor Store KPIs and How To Track Them
Every sale in alcohol e-commerce requires a paper trail. Capture customer information, verification records, order details, payment information, and shipping confirmation at the point of sale.
Store copies of ID scans, database verification results, and delivery signatures for future reference. Keep shipping manifests that show what went where and delivery confirmations proving the carrier obtained an appropriate signature upon delivery.
You want to track your inventory carefully, too. Reconcile what you shipped against the products left in your stock, as inspectors want to see that your physical inventory matches your records.
The right POS system simplifies all these processes, creating automatic paper trails that satisfy inspections without requiring manual data entry or tracking. Look for a solution like Bottle POS with built-in reporting and alcohol e-commerce features.
Compliance with alcohol e-commerce regulations isn’t a one-time setup. To maintain compliance, you must make an ongoing commitment to building and maintaining the necessary systems to prevent violations of state or federal requirements.
Related Read: The 4 Most Important Liquor POS Security Features
Here are some tips to get started on the right foot:
The best way to maintain compliance with alcohol e-commerce regulations is to work with a technology partner who can help you stay on top of regulations and maintain your records without manual work.
Alcohol e-commerce regulations are complex — but with the right systems in place, they’re far from unmanageable. The trick is to invest in the compliance infrastructure and technology upfront and prevent expensive violations down the road.
The most important tool in your e-commerce compliance toolbox is your point of sale and inventory management solution. A modern solution like Bottle POS streamlines alcohol e-commerce compliance, allowing you to focus on growing your business.
Our system provides automated age verification at every transaction, built-in compliance reporting, and state-specific quantity limit tracking. You'll also benefit from real-time inventory reconciliation and centralized record-keeping that keeps you on top of regulatory compliance without breaking a sweat.
Ready to make compliance easier? Schedule a demo of Bottle POS today to see how we can help.