NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3844
SPONSOR: Gunther
 
TITLE OF BILL:
An act to amend the alcoholic beverage control law, in relation to
authorizing the direct intrastate and interstate shipment of liquor
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to allow direct to consumer interstate ship-
ping of distilled spirits from New York distillers direct to consumers
of legal drinking age outside of NY State to States with reciprocal
agreements.
 
JUSTIFICATION:
The outbreak of COVID-19 has not only harmed the health of New Yorkers
but has fractured our nation's economy and exposed weaknesses in our
critical supply chains. During this time of crisis, New York distillers
have pivoted from their core business of making beverage spirits to
producing and providing critically needed alcohol-based hand sanitizers
using local supply chains.
However, our New York craft spirits sector has been hit incredibly hard
economically. Most of our craft distillers rely entirely on direct to
consumer sales driven by tourism in their tasting rooms and farmers
markets. Many do not have distribution in New York State. Almost all
tasting rooms are now and for the foreseeable future crippled by neces-
sary social distancing measures. More established distillers, who have a
more balanced amount of sales between tasting rooms and traditional
distribution channels have also been devastated as restaurants and bars
have been closed. Sales outside of New York State have diminished as
Covid is impacting all states. Unfortunately, unlike New York wine
producers, spirits producers are not allowed to ship their product
directly to consumers via third party carriers outside of New York
State. There is a clear and simple solution to this problem that has
proven to be safe and effective - as wine producers have demonstrated
for a number of years: direct to consumer sales outside of New York
State fulfilled through third party providers.
Providing for direct to consumer sales for craft spirit producers would
simultaneously solve many timely and compelling issues: by minimizing
person to person contact and exercising social distancing, it maximizes
the public health and safety benefit; by allowing producers to exercise
their right to sell to consumers without an in-person visit we can stim-
ulate the economic recovery within the craft spirits sector; by utiliz-
ing third party fulfillment companies we increase economic activity in
the broader economy and ensure age verification and control; and direct
to consumer sales outside of New York State will allow smaller brands to
reach consumers organically and help to grow their brands. Recent execu-
tive orders New York State have provided temporary regulatory relief
that has allowed for consumers to order online with orders being
fulfilled through third party carriers. Many of our craft distillers are
reporting critical sales that have allowed them to keep their businesses
open as a result of direct to consumer shipment.
The passing of direct to consumer shipping outside of NY State will
allow distillers to begin to revive their core businesses in the safest
way possible, while still contributing to the health, welfare, and econ-
omy of our states and communities.
 
PRIOR LEGISLATIVE HISTORY:
2021-22: A3275 referred to Economic Development/S4245A referred to
Economic Development
2020: A10448 referred to Economic Development/S8572 referred to Rules
 
FISCAL IMPLICATIONS:
Potential increased tax revenue
 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.
STATE OF NEW YORK
________________________________________________________________________
3844
2023-2024 Regular Sessions
IN ASSEMBLY
February 8, 2023
___________
Introduced by M. of A. GUNTHER, BUTTENSCHON, JONES, SANTABARBARA, WOER-
NER, JACOBSON, BARRETT, LUPARDO, STERN, STIRPE, HAWLEY, BRABENEC,
SILLITTI, THIELE, DAVILA, PALMESANO, KELLES, GALLAHAN, DICKENS,
BURDICK, SIMPSON, PAULIN, GALLAGHER -- read once and referred to the
Committee on Economic Development
AN ACT to amend the alcoholic beverage control law, in relation to
authorizing the direct intrastate and interstate shipment of liquor
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The alcoholic beverage control law is amended by adding two
2 new sections 64-f and 64-g to read as follows:
3 § 64-f. Direct intrastate liquor shipments. Any person having applied
4 for and received a license as a distillery or farm distillery pursuant
5 to the provisions of section sixty-one of this article may ship no more
6 than thirty-six cases (no more than nine liters per case) of liquor
7 produced by such distillery or farm distillery per year directly to a
8 New York state resident who is at least twenty-one years of age, for
9 such resident's personal use and not for resale.
10 1. Licensee's shipping responsibilities. Notwithstanding any provision
11 to the contrary contained in this chapter, any above referred licensee
12 shall:
13 (a) in the case of a distillery or farm distillery licensee, ship no
14 more than thirty-six cases (no more than nine liters per case) per year
15 of liquor produced by such license holder directly to a New York state
16 resident who is at least twenty-one years of age, for such resident's
17 personal use and not for resale;
18 (b) ensure that the outside of each shipping container used to ship
19 liquor directly to a New York state resident is conspicuously labeled
20 with the words: "CONTAINS LIQUOR - SIGNATURE OF PERSON AGE 21 OR OLDER
21 REQUIRED FOR DELIVERY," or with other language specifically approved by
22 the New York state liquor authority;
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06483-01-3
A. 3844 2
1 (c) maintain records in such manner and form as the authority may
2 direct showing the total amount of liquor shipped in the state each
3 calendar year, the names and addresses of the purchasers to whom the
4 liquor was shipped, the date purchased, the name of the common carrier
5 used to deliver the liquor, and the quantity and value of each shipment.
6 Such records shall be kept for three years and, upon written request, be
7 provided to the authority or the department of taxation and finance;
8 (d) in connection with the acceptance of an order for a delivery of
9 liquor to a New York resident, require the prospective customer to
10 represent that he or she has attained the age of twenty-one years or
11 more and that the liquor being purchased will not be resold or intro-
12 duced into commerce; and
13 (e) require common carriers to:
14 (i) require a recipient, at the delivery address, upon delivery, to
15 demonstrate that the recipient is at least twenty-one years of age by
16 providing a valid form of photographic identification authorized by
17 section sixty-five-b of this article;
18 (ii) require a recipient to sign an electronic or paper form or other
19 acknowledgment of receipt as approved by the authority; and
20 (iii) refuse delivery when the proposed recipient appears to be under
21 twenty-one years of age and refuses to present valid identification as
22 required by paragraph (a) of this subdivision.
23 2. Violations. In any action brought under this section, the common
24 carrier and the licensee shall only be held liable for their independent
25 acts.
26 § 64-g. Direct interstate liquor shipments. 1. Authorization.
27 Notwithstanding any provision of law, rule or regulation to the contra-
28 ry, any holder of a license to manufacture liquor in any other state,
29 who obtains an out-of-state direct shipper's license, as provided in
30 this section, may ship no more than thirty-six cases (no more than nine
31 liters each case) of liquor produced by such license holder per year
32 directly to a resident of New York who is at least twenty-one years of
33 age, for such resident's personal use and not for resale, provided the
34 state in which such person is so licensed affords lawful means for ship-
35 ments of liquor to be received by a resident thereof who is at least
36 twenty-one years of age, for such resident's personal use and not for
37 resale, from a person licensed in this state as a manufacturer and,
38 provided further, that the state in which such out-of-state distillery
39 is located affords to New York state distillery and farm distillery
40 licensees reciprocal shipping privileges, meaning shipping privileges
41 that are substantially similar to the requirements in this section. No
42 person shall place an order for shipment of liquor unless they are twen-
43 ty-one years of age or older. Any common carrier with a permit issued
44 pursuant to this chapter to whom such out-of-state shipper's license is
45 presented is authorized to make delivery of shipments provided for here-
46 under in this state in compliance with this section.
47 2. License. Before sending any shipment hereunder to a resident in
48 this state, the out-of-state shipper shall first obtain a license from
49 the authority under procedures prescribed by rules and regulations of
50 the authority and after providing the authority with a true copy of its
51 current license to manufacture liquor in the applicant's state of domi-
52 cile along with a copy of the applicant's federal basic permit after
53 payment of an annual fee of one hundred twenty-five dollars. Notwith-
54 standing the provisions of section one hundred ten of this chapter, the
55 authority in its discretion, may excuse an out-of-state distillery from
56 the submission of such information.
A. 3844 3
1 3. Licensee's responsibilities. The holder of an out-of-state direct
2 shipper's license shall:
3 (a) ship no more than thirty-six cases (no more than nine liters each
4 case) per year of liquor produced by such license holder directly to a
5 New York state resident who is at least twenty-one years of age, for
6 such resident's personal use and not for resale;
7 (b) ensure that the outside of each shipping container used to ship
8 liquor directly to a New York resident is conspicuously labeled with the
9 words: "CONTAINS LIQUOR - SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED
10 FOR DELIVERY - NOT FOR RESALE," or with other language specifically
11 approved by the New York state liquor authority;
12 (c) maintain records in such manner and form as the authority may
13 direct, showing the total amount of liquor shipped into the state each
14 calendar year; the names and addresses of the purchasers to whom the
15 liquor was shipped, the date purchased, the name of the common carrier
16 used to deliver the liquor, and the quantity and value of each shipment;
17 (d) in connection with the acceptance of an order for a delivery of
18 liquor to a New York resident, require the prospective customer to
19 represent that he or she has attained the age of twenty-one years or
20 more and that the liquor being purchased will not be resold or intro-
21 duced into commerce;
22 (e) require common carriers to:
23 (i) require a recipient, at the delivery address, upon delivery, to
24 demonstrate that the recipient is at least twenty-one years of age by
25 providing a valid form of photographic identification authorized by
26 section sixty-five-b of this article;
27 (ii) require a recipient to sign an electronic or paper form or other
28 acknowledgement of receipt as approved by the authority; and
29 (iii) refuse delivery when the proposed recipient appears to be under
30 twenty-one years of age and refuses to present valid identification as
31 required by subparagraph (i) of this paragraph;
32 (f) file returns with and pay to the New York state department of
33 taxation and finance all state and local sales taxes and excise taxes
34 due on sales into this state in accordance with the applicable
35 provisions of the tax law relating to such taxes, the amount of such
36 taxes to be determined on the basis that each sale in this state was at
37 the location where delivery is made;
38 (g) keep all records required by this section for three years and
39 provide copies of such records, upon written request, to the authority
40 or the department of taxation and finance;
41 (h) permit the authority or the department of taxation and finance to
42 perform an audit of such out-of-state shipper upon request;
43 (i) execute a written consent to the jurisdiction of this state, its
44 agencies and instrumentalities and the courts of this state concerning
45 enforcement of this section and any related laws, rules, or regulations,
46 including tax laws, rules or regulations; and
47 (j) prior to obtaining an out-of-state direct shipper's license,
48 obtain a certificate of authority pursuant to section eleven hundred
49 thirty-four of the tax law and a registration as a distributor pursuant
50 to sections four hundred twenty-one and four hundred twenty-two of the
51 tax law.
52 4. Situs. Delivery of a shipment in this state by the holder of an
53 out-of-state direct shipper's license shall be deemed to constitute a
54 sale in this state at the place of delivery and shall be subject to all
55 excise taxes levied pursuant to section four hundred twenty-four of the
A. 3844 4
1 tax law and all sales taxes levied pursuant to articles twenty-eight and
2 twenty-nine of such law.
3 5. Renewal. The out-of-state shipper may annually renew its license
4 with the authority by paying a one hundred twenty-five dollar renewal
5 fee, providing the authority with a true copy of its current license in
6 such other state as an alcoholic beverage manufacturer and by complying
7 with such other procedures as are prescribed by rule of the authority.
8 6. Rules and regulations. The authority and the department of taxation
9 and finance may promulgate rules and regulations to effectuate the
10 purposes of this section.
11 7. Enforcement. The authority may enforce the requirements of this
12 section including the requirements imposed on the common carrier, by
13 administrative proceedings to suspend or revoke an out-of-state ship-
14 per's license and the authority may accept payment of an administrative
15 fine in lieu of suspension, such payments to be determined by rules or
16 regulations promulgated by the authority. In addition, the authority or
17 the attorney general of the state of New York shall report violations of
18 this section, where appropriate, to the United States department of
19 treasury, tax and trade bureau, for administrative action to suspend or
20 revoke the federal basic permit.
21 8. Violations. In any action brought under this section, the common
22 carrier and the licensee shall only be held liable for their independent
23 acts.
24 § 2. This act shall take effect on the ninetieth day after it shall
25 have become a law. Effective immediately, the addition, amendment
26 and/or repeal of any rule or regulation necessary for the implementation
27 of this act on its effective date are authorized to be made and
28 completed on or before such effective date.