NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6884A
SPONSOR: Schimminger TITLE OF BILL: An act to amend the alcoholic beverage control law, in
relation to the shipment of alcoholic beverages into the state
PURPOSE OF THE BILL: This bill would amend the Alcoholic Beverage
Control Law to ensure that alcoholic beverages distributed in this state
pass through those authorized to sell the product. This will protect
against counterfeit or "grey market" goods and would serve as an
enforcement tool in the collection of state excise taxes.
SUMMARY OF SPECIFIC PROVISIONS:
§ 1- Adds a new section 101-c to the Alcoholic Beverage Control Law to
establish a new "primary source" statute that would require the manufac-
turer of an alcoholic beverage to identify the entities that are author-
ized to distribute, at wholesale, the product in this state.
§ 2- Effective date.
JUSTIFICATION: There are substantial quantities of "grey market" alco-
holic beverages being imported into, or sold in this state. These
products are either counterfeit versions "of the genuine alcoholic
beverage produced by the manufacturer, or the genuine product that has
been obtained by a wholesaler from a person who was not authorized to
distribute the product.
Both scenarios are a cause of concern. With respect to counterfeit
products, there is no assurance that the alcoholic beverage is safe for
human consumption. The product, because of its packaging, appears to the
consumer be the genuine product. However, the consumer will have no idea
that the product may be something of lesser quality or, more important-
ly, something that may pose a serious, immediate health risk to the
consumer.
With respect to genuine products distributed by unauthorized whole-
salers, such activity undermines the "three tier system" in place in
this state. Sale of alcoholic beverages by such wholesalers can result
in unpaid excise taxes and a disruption in the orderly distribution of
alcoholic beverages, one of the stated purposes of the Alcoholic Bever-
age Control Law.
Initially, those unfamiliar with the "primary source of supply" concept
may be concerned that it is an attempt to require manufactures to have
franchise agreements with wholesalers, thus restricting the number of
wholesalers who can sell the product. The proposed statute specifically
states that manufacturers are not required to limit the number of whole-
salers that can market their products. They need only identify the
wholesalers who will be carrying their products.
EXISTING LAW: There is no current statute specifically addressing this
issue. Existing sections of the Alcoholic Beverage Control Law, with
respect to brand label registration and price posting, provide limited
means to track whether alcoholic beverages are being distributed by
authorized wholesalers.
PRIOR LEGISLATIVE HISTORY: Similar intent to A.9815/S,6691 of
2009-2010.
FISCAL IMPLICATIONS: Increased revenue from the collection of excise
taxes.
EFFECTIVE DATE: This act shall take effect on the one hundred eight-
ieth day after it shall have become a law.
STATE OF NEW YORK
________________________________________________________________________
6884--A
2011-2012 Regular Sessions
IN ASSEMBLY
April 5, 2011
___________
Introduced by M. of A. SCHIMMINGER -- read once and referred to the
Committee on Economic Development -- recommitted to the Committee on
Economic Development in accordance with Assembly Rule 3, sec. 2 --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
AN ACT to amend the alcoholic beverage control law, in relation to the
shipment of alcoholic beverages into the state
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 a
2 new section 101-c to read as follows:
3 § 101-c. Primary source of supply. 1. (a) For the purposes of this
4 section, the "primary source of supply" of an alcoholic beverage brand
5 shall mean the brand owner or an agent specifically authorized to make
6 sales to a New York licensed wholesaler by the brand owner and, in the
7 case of classified growth wines, shall include the negociant or negoci-
8 ants of such brand.
9 (b) "Classified growth wines" shall mean those still wines produced in
10 the Bordeaux region of France and certified by the Appellation D'Origine
11 Controlee and under the auspices of the Institut National des Appel-
12 lations D'Origine and as originally classified in the year eighteen
13 hundred fifty-five.
14 2. The primary source of supply shall file with the authority a list
15 identifying the licensed wholesalers designated to sell its alcoholic
16 beverage brand or brands to licensed retailers unless the primary source
17 of supply made a filing under paragraph (a) of subdivision four-a of
18 section one hundred one-b of this article listing the names, addresses
19 and license numbers of said wholesalers. The primary source of supply
20 may amend the list.
21 3. The primary source of supply shall not be required to restrict the
22 sale of any alcoholic beverage brand to certain wholesalers.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10362-05-2
A. 6884--A 2
1 4. The provisions of this section shall not apply to privately held
2 wine or liquor being sold pursuant to sections eighty-five or ninety-
3 nine-g of this chapter or to wine sold pursuant to a direct interstate
4 wine shipping license issued under section seventy-nine-c of this chap-
5 ter or an alcoholic beverage sold pursuant to a permit under section
6 ninety-nine-b of this chapter. The provisions of this section shall not
7 apply to beer, cider, or wine products, as defined in section three of
8 this chapter.
9 5. No licensed wholesaler shall sell an alcoholic beverage brand to a
10 licensed retailer unless such licensed wholesaler has purchased the
11 alcoholic beverage brand from the primary source of supply and such
12 licensed wholesaler is designated by the primary source of supply to
13 sell its alcoholic beverage brand or brands under this section.
14 6. No licensed retailer shall purchase an alcoholic beverage brand
15 other than from a licensed wholesaler or licensed manufacturer. Anything
16 herein contained to the contrary notwithstanding, licensees under
17 sections seventy-six, seventy-six-a, seventy-six-b, seventy-six-c,
18 seventy-six-e, and paragraphs two-a and two-c of section sixty-one of
19 this chapter shall continue to have privileges of purchase and sale.
20 7. Anything in this section to the contrary notwithstanding, upon a
21 written finding showing that special circumstances and good cause exist
22 not inconsistent with the purpose of this chapter and upon prior written
23 notice to the primary source of supply and/or the name of the company
24 identified on the label of an alcoholic beverage container pursuant to
25 27 C.F.R. §§ 4.35, 5.36 and 7.25, the authority may give written permis-
26 sion for a licensee to purchase and sell a brand of alcoholic beverage
27 without the authorization required under this section. The authority's
28 written authority shall be for a specific period of time not to exceed
29 the time necessary to meet the special circumstances and good cause
30 found to exist.
31 8. Nothing in this section shall be construed to affect, create or
32 extend, directly or indirectly, any contract or arrangement, written or
33 unwritten, for the distribution of an alcoholic beverage brand by a
34 licensed wholesaler.
35 9. The authority is hereby authorized to do such acts, prescribe such
36 forms and make such rules, regulations and orders as it may deem neces-
37 sary or proper to effectuate the provisions of this section.
38 10. If any part of this section is held to be unconstitutional or
39 otherwise contrary to law, then it shall be severed and the remaining
40 portions shall remain in full force and effect.
41 § 2. This act shall take effect on the one hundred eightieth day after
42 it shall have become a law.
