The Empire Strikes Ahead – Recommended Changes to New York’s Alcohol Laws

Daniel Kostrzewa
April 19, 2016

On April 13th, Governor Andrew Cuomo of New York announced the final report of the Alcohol Beverage Control Law Working Group, which had been convened to review and recommend changes to New York’s existing Alcohol Beverage Control Law (ABCL).

The final report (available here) notes fifteen areas of the ABCL where the Working Group found updates to be necessary or beneficial to the alcohol beverage industry in New York. The ABCL dates back 80 years to the end of Prohibition, and many of the original rules remain unchanged since then. The Working Group’s mission, then, was to suggest way to modernize the ABCL. This is apparent in some of the suggestions, including expansion of Sunday sales and easing regulations on craft manufacturers.

The next step will be to determine which of these recommended changes to act on, and then actually draft them into bills for the New York legislature to vote on. So while the Working Group’s activity has signalled that New York is looking to change its ABCLs, no one should get the impression that any change is imminent or even necessarily going to occur.

Some of the more notable recommendations the Working Group put forward are:

  • Reorganization of the ABCL:
    The ABCL is described by the Working Group as a “patchwork,” largely organized around product types instead of license types. In order for a licensee to find all the rules relevant to them, they must scour a scattershot of statutes. For instance, there are three different statutes on retailer operations, one each for beer, wine, and spirits, instead of a single one for retail rules in general. At best, this is merely confusing. The Working Group recommends the ABCL be reorganized to reflect the needs of a party examining New York’s rules. A copy of the recommended reorganization plan is available in the final report.
  • New licenses types and rules:
    • A new Importer License. Currently, to bring alcoholic beverages into New York from out of state, a licensee needs an expensive wholesaler’s license – even if he only sells to other wholesalers, not retailers. The recommended new license would be a low-cost alternative, for bringing in products to New York to sell to other wholesalers. If implemented, this new license could make it easier for out-of-state manufacturers to find a New York distributor.
    • Amending the Solicitor’s Permit. Selling to or soliciting orders from New York licensees requires a Solicitor’s Permit. Though tied to the solicitor herself, it is the responsibility of her employer to apply and pay for these licenses – a prohibitive barrier to many craft producers. The Working Group recommends drastically reducing the cost of this license, extending its term, and removing the bond requirement, which all could make it more available to small-scale producers.
    • Combine current craft manufacturing licenses. Currently, there are three different license types for craft manufacturers: one each for brewers, vintners, and distillers. But a single entity can hold each of these licenses for a single location. Having to maintain each license separately, is expensive and time consuming. The Working Group recommends that the SLA be permitted to issue a single license to craft manufacturers engaging in each type of production.
    • Amend former felony rules. While the Working Group notes that licensees must “possess the character and fitness” to comply with the ABLC, it finds many of the current rules overly restrictive. To relieve this burden, the Working Group recommends that the SLA be permitted to accept certificates from out-of-state officials regarding the applicant’s rehabilitation. Further, the Working Group recommended removing all misdemeanors from the list of disqualifying convictions, and making only convictions from within five years of applying disqualifying.
  • Wine Growlers:
    The Working Group recommends removing the restriction that wineries can only sell wine for off-site consumption in sealed containers. That is, it recommends New York consumers should be able to fill their wine growlers at local wineries. This follows a nation-wide trend toward permitting wine growlers.
  • Changes to the SLA:
    • Allow interim appointments. The Working Group noted that under the current ABCL, there are times when the SLA board lacks a quorum due to unexpected absences by board Members, resulting in delays and inaction. Thus, the Working Group recommends permitting the governor to make interim appointments to fill in board vacancies, and changes to the board’s voting and quorum rules to reduce the ill-effects of such absences.
    • Grant the SLA general rulemaking ability. As the chief regulatory agency for alcoholic beverages in New York, it is the responsibility of the SLA to conduct rulemaking clarifying and explicating the ABCL. However, in the ABCL, the SLA has rulemaking ability in only certain situations. The Working Group recommends that the SLA be granted general rulemaking ability, so that it can conduct rulemaking and interpret the ABCL generally. This would make the SLA a more responsive and capable regulator.

These recommendations signal that New York is concerned with the current state of its beverage alcohol industry, particularly the developing craft industry, and wants to make sure its rules make sense as the industry grows. They are still only recommendations, and now face the long and tenuous path of enacting legislation. As New York moves ahead with this lawmaking process, we’ll be sure to keep you updated.

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Daniel Kostrzewa

Daniel Kostrzewa is a Regulatory Counsel at Sovos. Within Sovos’ Regulatory Analysis function, Daniel focuses on domestic sales tax issues. Prior to joining Sovos in 2018, he worked as an attorney in Boston. Daniel received his B.A. in Economics from Boston College and J.D. from Boston College Law School. He is a member of the Massachusetts Bar.
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