El Dorado Hills distiller says California craft shipping program is on the brink
EL DORADO HILLS, Calif. — For customers of small California distilleries, the ability to order a bottle directly from the producer and have it delivered to the front door could soon disappear.
For Cris Steller, owner of Dry Diggings Distillery in El Dorado Hills, the issue is more than a question of convenience. It is about whether small, independent distillers can maintain a direct connection with customers in a California alcohol market dominated by established wholesalers and distributors.
Steller, who also serves as executive director of the California Distillers Association, said he has already begun scaling back the company’s direct-shipping business because he does not know whether the Legislature will preserve it.
“I don’t want to keep putting money into a program that’s going to get yanked,” Steller said.
The clock is ticking.
California’s Legislature reconvened this week after its summer recess. Under the state’s 2026 legislative calendar, Aug. 31 is the final day for each house to pass bills.
The existing direct-shipping authorization, meanwhile, is scheduled to expire Jan. 1, 2027. The California Distillers Association says it is working to extend the program.
That leaves craft distillers with a narrow window to persuade lawmakers to preserve a sales model that began as pandemic relief and has been extended repeatedly.
From pandemic emergency to permanent business model
During the COVID-19 pandemic, California temporarily loosened restrictions that had prevented craft distillers from shipping spirits directly to consumers. Subsequent legislation repeatedly extended the authorization.
The Legislature most recently addressed the issue through AB 1246, which took effect in 2026. The law established a Type 94 Distilled Spirits Direct Shipper Permit and allows qualifying California craft distillers — as well as qualifying out-of-state craft distillers — to ship spirits directly to California consumers.
The program is not an unrestricted online liquor market.
A California craft distiller generally must hold a Type 74 license, which permits production of up to 150,000 gallons of distilled spirits per fiscal year. Direct shipments are limited to the distiller’s own qualifying products, and state rules require age verification and other safeguards.
The current law limits direct shipments to the equivalent of 2.25 liters per consumer per day. The carrier must obtain the signature of a person at least 21 years old, and shipments must carry an alcohol-warning label.
Beginning in 2026, distillers also have been required to obtain the new Type 94 permit to participate in the direct-shipping program.
A fight over California’s three-tier system
At the heart of the dispute is California’s traditional three-tier alcohol system, under which manufacturers generally sell through licensed wholesalers before products reach retailers and consumers.
For large national brands, that distribution network is a critical part of the alcohol marketplace.
For a small distillery producing limited quantities, however, reaching customers through traditional distribution can be considerably more difficult.
Steller said the California Distillers Association has repeatedly tried to convince lawmakers that direct sales provide small producers with a necessary alternative.
The association’s position was presented during a 2025 Assembly Governmental Organization Committee hearing on AB 1246. Steller told lawmakers that the legislation was important to small distillers and described the El Dorado Hills operation he represents.
The debate has placed craft distillers against some of the most established interests in California’s alcohol industry.
Wholesalers and distributors say they oppose making direct-to-consumer spirits shipping permanent because they contend the pandemic-era program was intended to be temporary.
In a joint statement reported by CalMatters, the Wine & Spirits Wholesalers of America, California Beer & Beverage Distributors and California Family Beer Distributors said they oppose making direct-to-consumer spirits shipping permanent, arguing that the temporary program is expiring as designed.
They also have raised concerns about consumer protections, including safeguards intended to prevent alcohol from reaching minors.
Why wine is part of the dispute
The wine industry adds another dimension to the fight.
California wineries have long had broader direct-to-consumer shipping privileges than distillers. That distinction has become a central argument for craft spirits producers, who say similarly situated small alcohol manufacturers should have comparable access to customers.
The opposition is more complicated than simply wine versus spirits, however.
Wine-industry representatives have expressed concern about creating another category of alcohol with direct-shipping privileges while larger liquor producers remain subject to the existing distribution structure.
For craft distillers, the result is a system they say leaves them at a competitive disadvantage.
What it means in El Dorado County
The fight has a particularly local face in El Dorado County.
Dry Diggings Distillery operates in El Dorado Hills, where Steller and his family produce whiskey, brandy, vodka and gin. The company’s products include Engine 49 Bourbon.
For a small producer such as Dry Diggings, direct sales can provide something a conventional distribution network cannot: a direct relationship with the customer.
A customer who discovers a limited-production whiskey online can purchase it from the distillery rather than relying on whether a wholesaler chooses to put that bottle into a retailer’s inventory.
That matters in a county where agricultural and small-production businesses are an important part of the local economy and where producers often depend on attracting customers from outside their immediate communities.
The issue also reaches beyond El Dorado County. The California Distillers Association represents craft distilleries throughout the state, and the state defines a craft distiller by its production limits rather than by geography.
A political fight with millions at stake
The craft distillers’ political resources are considerably smaller than those of the industries opposing permanent direct shipping, according to the figures provided in the underlying reporting.
That disparity has fueled frustration among small producers.
Steller said opponents have gone directly to legislators to block proposals supported by craft distillers.
“They went directly to legislators’ offices and basically torpedoed any effort we came up with,” Steller said.
Folsom Republican Assemblymember Josh Hoover has also expressed doubts about the prospects for preserving the program. Hoover unsuccessfully sought to amend one of his bills this year to allow small distillers to continue shipping directly to consumers.
“I don’t have a lot of hope that we’re going to be able to salvage this,” Hoover said.
The political calculation comes as the broader alcohol industry faces changing consumer behavior. Americans have increasingly embraced moderation and reduced alcohol consumption, creating additional pressure on producers and distributors.
For craft distillers, that makes access to customers even more important, Steller and industry advocates argue.
The deadline is approaching
For now, California consumers can still order qualifying spirits directly from participating craft distillers, provided the distiller has the required Type 94 permit and follows state requirements.
But the legal authorization is temporary.
The current law remains in effect only until Jan. 1, 2027.
The Legislature’s immediate deadline is Aug. 31, when lawmakers must pass bills before entering their final recess.
If lawmakers do not extend the authorization, California craft distillers will once again lose the ability to ship their spirits directly to consumers.
For Steller, that prospect is already affecting business decisions at the El Dorado Hills distillery.
The question now is whether Sacramento will allow a pandemic-era experiment that became a meaningful business channel for small distillers to become permanent — or whether California’s traditional distribution system will regain exclusive control over how those bottles reach consumers.
For craft distillers in El Dorado County, the answer could determine whether the next bottle of locally produced bourbon can still arrive at a customer’s doorstep.
Sources
- California Department of Alcoholic Beverage Control — Craft Distillers Direct Shipper Permit
- California Legislature — AB 1246 bill text
- California Senate — 2026 Legislative Deadlines
- California Distillers Association — Direct-to-Consumer Shipping Information
- California ABC — AB 3203 direct-shipping extension and requirements
- California Assembly Governmental Organization Committee — AB 1246 hearing record
