Summary of Cuomo’s First Alcohol Beverage Industry Working Group Meeting

Last Thursday I attended the first open meeting of Governor Cuomo’s new alcohol beverage industry working group. The group, whose main mission is to modernize New York’s alcohol beverage laws by reviewing current statutory provisions, spent the entire meeting identifying a list of issues for further discussion and/or consideration. 

The first eighteen issues, below, were initially brought up by the New York State Liquor Authority (“NYSLA”). Members of the working group were allowed to comment about whether the issues should be considered for further discussion or tabled (for a variety of reasons, with respect to this working group).

1. A general reorganization of New York’s alcohol beverage laws.
2. Consolidation of licenses—for example, eight different on premise licenses currently exist. Is there a way to consolidate the types of licenses available without taking rights away from current or potential licensees?
3. Should the 500 foot rule be incorporated in the statute? Further, what is “good cause”? Should its definition be left to case law and the Authority’s interpretations of decisions?
4. Tied house laws—while the group on Thursday agreed that the state’s tied house laws are important, many conflicting opinions existed in regard to whether the laws should be further examined by the group and potentially modernized. As a result, the Authority decided to table this particular issue, with respect to this working group.
5. Brand owners in New York—should there be a separate state license available for brand owners in New York who want to sell their alcohol beverage product to New York-licensed wholesalers? As acknowledged by the group, the state wholesale license often impractical for industry members who own one or two brands and only want to sell their product to wholesalers.
6. Primary source laws—Should New York have a primary source law? As many industry members fight back against counterfeit goods in the marketplace, does it make sense for the state to consider adapting primary source laws that are found in the laws of a handful of other states? A strong concern presented by one member was that primary source laws may drive the cost of sale up.
7. Is there a need for a solicitor’s permit (on either the manufacturer or wholesaler side, to be analyzed individually)?
8. Hours of sale—(1) Should there be a change in Sunday hours? (2) Can towns and cities be allowed to determine hours? (The latter was tabled with respect to this working group.)
9. With respect to the 200 foot rule, should the NYSLA have discretion when there is no objection (i.e., when an applicant is not within the restrictions of the rule and interested parties do not object)?
10. Family pricing—should volume discounting be allowed with respect to mixing and matching products of different sizes? (This group stated there was no point in pursuing this discussion at this time.)
11. Should there be one generic wholesale license?
12. Manufacturers—currently, several licenses, each providing the licensee with different types of rights or privileges, can be obtained for the same location. Does it make sense to have one license that will cover these rights and privileges?
13. Co-op buying—should different licensees (package stores) be allowed to take advantage of discount pricing? (I  believe this was tabled.)
14. Price posting—should there be a change in deadlines for manufacturers and/or wholesalers with respect to price posting?
15. Qualified convictions—should misdemeanors and felonies have to be disclosed when completing an application, or just felonies?
16. Certificate of relief and good conduct—how should out-of-state applicants be handled with respect to this requirement? (i.e., as discussed last week, currently out-of-state applicants cannot obtain such certificates if they are not New York residents.)
17. Should industry members be able to pay wholesalers by credit card? (This issue was also tabled by the group.)
18. Growlers—should wineries be allowed to sell growlers?

The remaining issues were brought up by working group members, as well as the large group of public attendees. Several issues were either removed or tabled because they were considered to be policy or administrative, i.e., not statutory.

1. Can the laws make parody between farm distillers, wineries, and breweries? For example, farm wineries, breweries, and cideries in New York can open up to five branch offices within the state, but farm distilleries are only allowed one.
2. Should there be legislation regarding out-of-state retailers who ship into New York without a license? Should these retailers be fined and/or subject to New York’s jurisdiction?
3. COD (electronic system notifying wholesalers of delinquent retailers)—should there be a 10-day grace period? Issue is that many retailers are accidentally placed on this list and it automatically notifies every wholesaler that they are on COD. (Tabled.)
4. Wine Product versus Wine in grocery stores—the sale of wine in groceries stores is illegal in New York. Grocery stores can only sell “wine products,” which are generally wines that do not contain more than 6% ABV and further meet NY’s definition of “wine product” (e.g., added juice, flavoring, water, citric acid, sugar and carbon dioxide). But some grocery stores advertise selling “wine” in flyers and in specific sections in the store. This causes confusion among industry and consumers. Should the brand label approval process for these products change? (Unclear where the group came out on this issues.)
5. Ancillary businesses in New York (specifically in regard to temporary wine and beer permits, e.g., beer festivals)—because New York’s law allows temporary permitees to purchase the commodity from a wholesaler, individual will still purchase a supplier’s brand and misrepresent the brand even if the brand has chosen not to participate in the festival. How should the law deal with this issue?
6. Tap handle deposit—how should this be handled?
7. Should the license fee for New York City-licensed retailers be reduced?
8. Should the marketing permit be codified within licenses?
9. Should multiple wine brands (i.e., from different wineries) be allowed to be directly shipped to consumers?
10. How should industry members’ online presence be regulated? Further, how should third party vendors, most of whom are not licensed with the NYSLA, be regulated?

The first working group meeting concentrated on identifying statutory issues for which there was a consensus to discuss at future group meetings. Although several of the above issues were identified as important and relevant, some of the issues were tabled because there were controversial opinions as to whether a further discussion was necessary. In other instances, there was a consensus that topics were not worth pursuing. That being said, many of the issues are still open for discussion, and the progress will be interesting considering the group’s aim to provide recommendations to legislature by January 2016.

For more information on New York State wine or alcohol law, or establishing a winery, brewery, or distillery in New York, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.