California is about to make it a lot easier for small distilleries outside the state to get their bottles into local hands. Under AB 1246, qualifying out-of-state craft distillers will, for the first time, be able to ship directly to California consumers through a new permit program scheduled to launch with the 2026 calendar year. The law also bumps up tasting-room daily sales limits and layers on new reporting, labeling and age-verification rules that regulators say are meant to keep the public safe. For distillers, the law promises fresh customers, along with a fresh stack of license applications, tax forms and compliance checks before any box of spirits crosses the state line.
According to the chaptered bill text, the Legislature passed AB 1246 and the governor signed it on October 3, 2025, creating a Distilled Spirits Direct Shipper Permit and amending several sections of the Business and Professions Code to allow regulated direct shipments. LegiScan notes that the measure is Chapter 295 of the Statutes of 2025 and that January 1, 2026 is the effective date for the law's central provisions.
As laid out by the California Department of Alcoholic Beverage Control, distillers that want to ship into California must hold the new Type 94 distilled spirits direct shipper permit and meet the state's craft distiller criteria. That includes producing no more than 150,000 gallons a year and manufacturing at least 65 percent of the volume sold at their own premises. The ABC says it will start taking Type 94 applications on December 15, 2025, will require signature-upon-delivery age verification, will cap shipments at the equivalent of 2.25 liters per consumer per day, and will treat shipments without a valid permit as a misdemeanor that can also put a license at risk.
Tax and regulatory chores are baked into the deal as well. The California Department of Tax and Fee Administration notes that shippers must register for state tax accounts and pay the applicable excise and sales taxes, and state guidance also increases the per-person onsite sales cap at a craft distiller's premises to the equivalent of 4.5 liters per day starting January 1, 2026. The CDTFA is telling distillers to get ready for reporting and filing rules tied to any shipments into California.
What This Means For Craft Distillers
For many small producers, this is not a minor tweak, it is a potential lifeline. Napa Valley Distilling co-owner Arthur Hartunian told The Press Democrat that “99% of his company's sales depend on direct-to-consumer channels.” The paper also quotes Alex Villicana of the California Artisanal Distillers Guild saying that 20–30% of guild members' sales already move through DTC channels, while Jenni Karakasevic of Charbay said her distillery would not meet the 65% in-house production test and so would not qualify under the state's craft criteria.
Could California Set A National Example?
Industry research suggests there is plenty of untapped demand waiting on the other side of these rules. The 2025 Direct-to-Consumer Spirits Shipping Report from Sovos ShipCompliant and the American Craft Spirits Association found that roughly four in five regular craft spirits drinkers want expanded DtC shipping and that only nine states plus Washington, D.C. currently allow any kind of interstate spirits direct shipping. Sovos ShipCompliant argues that California's market size, combined with the law's pilot structure, could nudge other state legislatures to follow suit or speed up similar bills that are already in the pipeline.
Legal And Market Headwinds
No one in Sacramento is operating in a legal vacuum. The U.S. Supreme Court's 2005 decision in Granholm v. Heald struck down state rules that gave in-state wineries a significant edge over out-of-state competitors, a ruling that limits how far states can go in favoring their own producers. The interaction of Granholm v. Heald with AB 1246's one-year authorization for out-of-state permits, a temporary window that closes on January 1, 2027, means California's rulemaking will have to be crafted to survive both constitutional scrutiny and marketplace criticism, according to the chaptered bill text cited by LegiScan.
How Out-Of-State Shippers Will Be Tested
Even for distillers that clearly qualify as “craft” under California's definition, getting into the program will not be as simple as printing shipping labels. Out-of-state producers will have to apply for the Type 94 permit, register for state tax accounts and line up carriers that are willing and able to verify a recipient's age at delivery. Legal and compliance specialists point out that these steps, from juggling licenses in multiple states to keeping up with excise tax filings, can be expensive and time-consuming, which could eat into the financial upside. Practical guides and legal explainers from industry counsel, along with reporting by Clark Hill PLC and The Press Democrat, track how those requirements are likely to play out.
Next Steps And What To Watch
The next big date on the calendar is December 15, 2025, when the ABC is scheduled to open the Type 94 application window for distillers that want in on the program. The law's main provisions then kick in on January 1, 2026, with the out-of-state permission set to sunset on January 1, 2027. Industry analysts and policy watchers say this one-year pilot will be under a microscope, both for what it does to California's spirits market and for whether it becomes a playbook for other states, a dynamic closely followed by Sovos ShipCompliant.
