The New York legislature passed, and Governor Hochul signed a series of new laws that permit limited direct to consumer shipping of spirits, cider, mead and braggot.
A part of the new law applies to the holder of a class A-1, B-1, C or D distiller license. These licenses have a limited allowable production of 75,000 gallons per year. The holder of such a license is permitted to ship each year no more than thirty-six cases, each containing no more than nine liters per case of liquor produced by the licensee, directly to New York residents.
The holder of a Distillery license in a sister state which is “equivalent in class and production capacity per year may apply for and obtain an out-of-state direct shipper’s license which will authorize it to ship directly to New York residents, provided its state offers New York distillers reciprocal privileges.
A person licensed in New York to manufacture cider, mead and/or braggot also is now authorized to deliver up to thirty-six cases of not more than nine liters each of the alcoholic beverages it manufactures, to New York residents. Similarly, the holder of a license to manufacture cider, mead and/or braggot in a sister state may obtain an out-of-state shipping permit which will allow it to ship up to thirty-six cases of not more than nine liters each, to New York residents if their home state offers reciprocal privileges to New York manufactures.
Holders of multiple licenses may ship within the same package any and all alcoholic beverages it lawfully produces and sells in accordance with its in state or out-of-state shipping privileges.
Out-of-state shippers must agree to comply with New York tax laws and deliver using a common carrier with a proper permit. The sale may only be made to a person over the age of twenty-one years. The shipping container must notify the shipper that the package contains alcoholic beverages, and the common carrier must see proof that the person to whom the package is delivered is also over twenty-one years of age.
Each section relating to out-of-state shipping requires the Liquor Authority and the attorney general of the state of New York to report violations of the respective section to the TTB, for administrative action to suspend or revoke the federal basic permit. This is interesting because the TTB cannot suspend or revoke a federal basic permit for such a violation. The appropriate remedy would be for the attorney general to bring an action in federal court seeking an injunction under The 21st Amendment Enforcement Act. Also, it is worth noting that the provisions of the statutes which require sister states to offer reciprocal rights to New York manufacturers likely violate the dormant commerce clause of the U.S. Constitution. In Granholm v Heald (544 U.S. 460 ) the Supreme Court of the United States said, “The perceived necessity for reciprocal sale privileges risks generating the trade rivalries and animosities, the alliances and exclusivity, that the Constitution and, in particular, the Commerce Clause were designed to avoid.”
Keven Danow is an attorney representing members of all three tiers of the Beverage Alcohol Industry and member of The Danow Group, 275 Madison Ave, NY, NY. 10022. (212 3703744). Website: thedanowgroup.com; email:kd@thedanowgroup.com
This article is not intended to give specific legal advice. Before taking any action, the reader should consult with an attorney familiar with the relevant facts and circumstances.
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