New York Poised to Expand DtC Shipping

Alex Koral
June 20, 2024

The New York legislature recently passed A3132A, a bill that will expand the range of products that residents of the state can have direct-to-consumer (DtC) shipped to them. The bill is now in the hands of Governor Kathy Hochul—meaning that unless she decides to exercise her veto power, producers across the country will soon be able to ship their spirits, ciders and meads into the Empire State.

Currently, New York only permits the DtC shipping of wines, excluding lower-ABV non-grape products that do not use “wine” in their branding. By extending DtC permissions to these additional product classes, New York is set to establish one of the largest potential growth areas for cideries, meaderies and—in particular—distilleries engaged in DtC shipping.

As written, A3132A follows the existing rules for wine shipping in New York, which all parties shipping alcohol DtC into the state must abide by. These rules require DtC shippers to:

  • Receive a special license issued by the New York State Liquor Authority prior to shipping.
  • Ship no more than 36 cases per person per year, with no more than 9 liters per case.
  • Only ship alcoholic beverages that they produce themselves.
  • Register for, collect and remit New York alcohol excise tax along with all applicable state and local sales taxes, as if the sales occurred in the state. New York taxes cider at $0.0379 per gallon; mead at $0.30 per gallon; and spirits at $0.67 per liter if 24% ABV or less and $1.70 per liter if above 24% ABV. New York’s state sales tax rate is 4% with local rates ranging from 0-5%.
  • Conspicuously label all packages to identify that they contain alcoholic beverages and that they may not be delivered to persons under 21 years of age.
  • Take affirmative steps to prevent any sales to minors, including using only approved common carriers that will check IDs and get signatures from package recipients at the time of delivery.

Further, only distilleries that produce less than 75,000 gallons per year will be able to engage in DtC shipping of spirits. (The rule is that for in-state spirits producers, only class A-1, B-1, C or D licensees can DtC ship, and that equivalent production caps will be imposed on out-of-state distilleries.)

As a near clone of the existing wine DtC law, the new provisions for spirits, cider and mead all contain an unfortunate carryover: reciprocity restrictions. For DtC shipping, reciprocity is the concept that a state will only permit producers in other states to DtC ship to their residents if those producers operate in states that themselves would permit the initial state’s producers to ship to their residents—effectively a “you scratch my back” situation.

While these rules were common in the early days of DtC wine shipping, New York is now the only state in the country with reciprocity written into their statutes (at least since Oregon removed its reciprocity rules for DtC beer shipping last year at the threat of litigation). As such, they are very much an anachronism, and it is unfortunate to see New York carry over these limitations to the new product types.

This is especially so for spirits, as only eight other states and D.C. permit DtC shipping of spirits, so New York consumers will be severely limited in the number of producers they will have access to, until more states step up and extend DtC spirits shipping permission. Notably, Kentucky does permit DtC shipping of spirits, so New Yorkers can tour the Bourbon Trail knowing they can join clubs and have shipments sent to their homes; Tennessee bourbon, though, will be left out. (Cider and mead are permitted to be shipped under almost every other state’s wine DtC shipping laws, so producers in only a few states will be excluded from the New York market.)

Overall, it is very heartening to see New York open to more DtC shipping availability, especially as efforts in other states have been limited in recent years. As a major market, New York is poised to demonstrate how it can support craft businesses and extend consumer choice by making the national spirits market at least that much more available. This is in stark contrast to California, which has failed to move past its “temporary” rules for DtC shipping of spirits that is (unconstitutionally) only available to in-state distilleries.

DtC shipping of spirits is popular, with a majority of regular spirits consumers and non-drinkers alike supporting changing state laws to expand its availability. Hopefully New York can spur further changes across the rest of the country.

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Interested in learning about DtC shipping laws in other states? Search wine shipping rules by state on our interactive guide page.

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Author

Alex Koral

Alex Koral is Senior Regulatory Counsel for Sovos ShipCompliant in the company’s Boulder, Colorado office. He actively researches beverage alcohol regulations and market developments to inform development of Sovos’ ShipCompliant product and help educate the industry on compliance issues. Alex has been in the beverage alcohol arena since 2015, after receiving his J.D. from the University of Colorado Law School.
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