NY State Senate Bill 2021-S703

Senate Bill S703

2021-2022 Legislative Session

Relates to establishing a primary American source of supply for liquor and wine sold in this state

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Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to investigations and government operations
Jan 06, 2021	referred to investigations and government operations

co-Sponsors

2021-S703 (ACTIVE) - Details

See Assembly Version of this Bill:: A901
Current Committee:: Senate Investigations And Government Operations
Law Section:: Alcoholic Beverage Control Law
Laws Affected:: Amd §3, add §116-a, ABC L
Versions Introduced in 2019-2020 Legislative Session:: S3881, A5756

2021-S703 (ACTIVE) - Summary

Requires that all wine and liquor sold in the state be received from a primary American source of supply; such a source shall be the manufacturer or its exclusive agent, when the wine or liquor can be secured from the manufacturer or its exclusive agent by a wholesaler in the United States; provides that primary American sources of supply shall register with the state liquor authority.

2021-S703 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S703

SPONSOR: KAPLAN
 
TITLE OF BILL:

An act to amend the alcoholic beverage control law, in relation to
establishing a primary American source of supply for liquor and wine
sold in this state

 
PURPOSE:

This bill would require that all wine and liquor sold in the state be
received from a primary American source of supply.

 
SUMMARY OF PROVISIONS:

Section one defines the terms "Primary American source of
supply,"private collection," "negociant," and "wholesaler"

Section two amends the alcoholic beverage control law by adding a new
section 116-a. Subdivision one of the new section requires that the

primary American source of supply shall file a registration application
with the authority and that for wines purchased through a negociant, the
primary American source of supply shall file a separate form provided by
the authority.

Subdivision two establishes that the authority shall only allow one
primary American source of supply to register any brand of liquor or
wine, with the exception of wines purchased through a negociant.

Subdivision three establishes that a primary American source of supply
shall file with the authority the names of authorized wholesalers for
each brand of liquor or wine sold in this state. If the primary American
source of supply is a wholesaler, it may list itself and other whole-
salers as an authorized wholesaler of the brand. If the primary American
source of supply does not list any authorized wholesalers, any licensed
wholesaler may purchase the liquor or wine from the primary American
source of supply and sell the brand in this state.

Subdivision four states that except as set forth in subdivisions seven
and eight of this section or shipments of wine or liquor from a private
collection made directly to a New York State resident for personal use,
no one shall ship or caused to be shipped into this state, nor shall any
wholesaler or retailer in this state receive, any liquor or wine unless
the primary American source of supply has registered such brand with the
authority, the registration is approved, and the brand is purchased from
the primary American source of supply.

Subdivision five states a wholesaler in the state shall not purchase,
receive or be in possession of liquor or wine unless the wholesaler
obtained it directly from a registered primary American source of
supply, a designated representative if the primary American source of
supply is outside this state, an authorized wholesaler, or a negociant.

Subdivision six states that nothing in this section shall be deemed to
prohibit subsequent intrastate sales transfer, and invoicing of a brand
of liquor or wine between authorized wholesalers of that brand subse-
quent to the purchase in this state from the primary American source of
supply.
Subdivision seven states that a wholesaler may bring liquor or wine into
the state if the wholesaler certifies to the satisfaction of the author-
ity that the brand of liquor or wine comes from a manufacturer or bott-
ler that cannot, or has not and will not appoint a primary American
source of supply.

Subdivision eight states the section will not apply to a brand of liquor
or wine owned exclusively by one retailer and sold exclusively by such
retailer within this state, or a product purchased by a wholesaler or
retailer from a private collection

Subdivision nine authorizes the authority to perform acts, prescribe
forms and make rules and regulations as it deems necessary including but
not limited to establishing a format for recording the primary American
source of supply and its designees.

Section three establishes the effective date.

 
JUSTIFICATION:

The proposed legislation would amend several provisions of the Alcoholic
Beverage Control ("ABC") law to create a "primary American source of
supply" of liquor and wine for distribution and sale of alcoholic bever-
ages in New York State. The legislation would direct the manufacturer or
owner of a liquor or wine to designate the primary American source of
supply and to file a registration application with the authority. The
enactment of a primary source law would provide greater accountability
for all wine and liquor distributed and sold in New York State.

Under a primary American source statute, wholesalers may only buy wine
and liquor directly from the brand owner or manufacturer. The primary
source is the manufacturer of liquor or wine, or the source closest to
the manufacturer in the channel of commerce from whom the product can be
secured by New York wholesalers. Under New York State's current statuto-
ry framework, there is no restriction on wholesalers seeking sources of
wine and liquor other than from the direct primary source. These non-
primary sources encompass importers from other nations. This proposed
primary source legislation would make it unlawful for any wholesale
licensee to purchase wine or liquor from other than the primary source
of supply in the United States. The legislation requires brand owners,
distributors, owners, and retainers to keep and complete accurate
records of the sales chain, the size, and brand of products. These
provisions would also increase tax collections and ensure the integrity
of the products.

According to the New York State Law Revision Commission-the oldest
continuous agency in the common law world committed to law reform
through legislation-primary source laws give a state precise excise tax
assessment and collection. A study conducted by American Economics Group
estimated approximately $39.3 million additional tax collections annual-
ly. The New York State Law Revision Commission also asserts that a
primary source law, which would identify all wholesalers able to
distribute a manufacturer's brands, would decrease the potential for
lost revenues from inaccurate reporting.  Moreover, according to the
Commission, "By far the most compelling reason to impose a primary
source law or system involves the protection of the public's health and
safety." Both brand owners and industry professionals have voiced

concern that without a primary source law, a brand owner would not be
able to assure the purity and integrity of the product.

 
LEGISLATIVE HISTORY:

S. 3881C/A. 5756D; Referred to Senate Committee on Investigations and
Government Operations

2018: A10737/S5437

 
FISCAL IMPLICATIONS:

Increase in tax revenue for the State.

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law; provided, however, that effective immediately, the addi-
tion, amendment and/or repeal of any rule or regulation necessary for
the implementation of this act on its effective date are authorized and
directed to be made and completed on or before such effective date.

2021-S703 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    703
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 6, 2021
                                ___________
 
 Introduced  by  Sens.  KAPLAN,  GAUGHRAN,  HARCKHAM, MAY, THOMAS -- read
   twice and ordered printed, and when printed to  be  committed  to  the
   Committee on Investigations and Government Operations
 
 AN  ACT  to  amend  the  alcoholic  beverage control law, in relation to
   establishing a primary American source of supply for liquor  and  wine
   sold in this state
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1.   Subdivision 35 of section 3  of  the  alcoholic  beverage
 control  law  is  amended and three new subdivisions 23-a, 23-b and 23-c
 are added to read as follows:
   23-A. "PRIMARY AMERICAN SOURCE OF SUPPLY" MEANS (A) A MANUFACTURER  OF
 LIQUOR  OR  WINE  OR  ITS  EXCLUSIVE  AGENT IN THE UNITED STATES IF SUCH
 LIQUOR OR WINE CAN BE SECURED DIRECTLY  FROM  THE  MANUFACTURER  OR  ITS
 EXCLUSIVE  AGENT  BY  A  WHOLESALER  IN THE UNITED STATES; OR (B) IF THE
 LIQUOR OR WINE CANNOT BE SECURED DIRECTLY FROM SUCH MANUFACTURER OR  ITS
 EXCLUSIVE  AGENT,  THE SOURCE CLOSEST TO SUCH MANUFACTURER IN THE UNITED
 STATES WHEN THE BRAND ENTERS THE STREAM OF COMMERCE SHALL BE THE PRIMARY
 AMERICAN SOURCE OF SUPPLY IN THE UNITED STATES.
   23-B. "PRIVATE  COLLECTION"  MEANS  (A)  BOTTLED  WINE  THAT  (I)  WAS
 PURCHASED  AT  RETAIL OR AUCTION, (II) IS AT MINIMUM A VINTAGE TEN YEARS
 OLD AT THE TIME OF SALE, OR IF SPARKLING WINE, IS A MINIMUM  VINTAGE  OF
 FIFTEEN  YEARS OLD AT THE TIME OF SALE, AND (III) WAS OWNED BY A NON-LI-
 CENSED PERSON WITH PROOF OF PURCHASE, OR (IV) IS NOT PRICE POSTED IN NEW
 YORK AT THE TIME OF SALE; OR (B) A BOTTLED LIQUOR THAT IS EITHER (I) NOT
 PRICE POSTED IN NEW YORK AT THE TIME OF  SALE,  (II)  IS  NO  LONGER  IN
 PRODUCTION, OR (III) IS CONTAINED IN ITS ORIGINAL CERAMIC, LEAD, CRYSTAL
 OR  SIMILAR  COLLECTIBLE  SPECIALTY  CONTAINER  WHICH IS NO LONGER BEING
 OFFERED FOR SALE, OR (IV) WAS BOTTLED TEN YEARS PRIOR  TO  THE  DATE  OF
 SALE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                       [ ] is old law to be omitted.
                                                            LBD00949-01-1

 S. 703                              2
 
   23-C. "NEGOCIANT" MEANS THIRD-PARTY WINE MERCHANTS BASED IN FRANCE WHO
 PURCHASE STOCK DIRECTLY FROM THE PRODUCER WITH THE AUTHORIZATION TO MASS
 DISTRIBUTE  AROUND  THE WORLD ON A NON-EXCLUSIVE BASIS TO ANY AUTHORIZED
 WHOLESALER TO ALLOW THE RESALE OF THE WINES  INTO  AS  MANY  MARKETS  AS
 POSSIBLE.
   35.  "Wholesaler" means any person who sells at wholesale any beverage
 for the sale of which a license is required under the provisions of this
 chapter. AN "AUTHORIZED WHOLESALER" IS  A  WHOLESALER  AUTHORIZED  BY  A
 PRIMARY AMERICAN SOURCE OF SUPPLY TO CARRY A SPECIFIC BRAND OF LIQUOR OR
 WINE IN THIS STATE.
   §  2.  The  alcoholic  beverage control law is amended by adding a new
 section 116-a to read as follows:
   § 116-A. PRIMARY AMERICAN SOURCE OF SUPPLY. 1. (A) THE PRIMARY  AMERI-
 CAN SOURCE OF SUPPLY AT THE TIME THE WINE OR LIQUOR BECOMES SUITABLE FOR
 WHOLESALE OR RETAIL SALE IN NEW YORK OR A WHOLESALER LICENSED UNDER THIS
 CHAPTER  WHO  HAS  BEEN  APPOINTED ITS EXCLUSIVE AGENT FOR SUCH PURPOSE,
 SHALL FILE A FORM PROVIDED BY THE AUTHORITY. EACH BRAND OF  SUCH  LIQUOR
 OR WINE SHALL BE INDIVIDUALLY LISTED ON SUCH REGISTRATION.
   (B)  FOR  WINES  PURCHASED  THROUGH  A NEGOCIANT, THE PRIMARY AMERICAN
 SOURCE OF SUPPLY IS ANY WHOLESALER LICENSED UNDER THIS CHAPTER WHO SHALL
 FILE A FORM PROVIDED BY THE AUTHORITY.
   2.  WITH THE EXCEPTION OF WINES PURCHASED  THROUGH  A  NEGOCIANT,  THE
 AUTHORITY  SHALL  ALLOW  ONLY  ONE  PRIMARY AMERICAN SOURCE OF SUPPLY TO
 REGISTER ANY BRAND OF LIQUOR OR WINE. THE  PRIMARY  AMERICAN  SOURCE  OF
 SUPPLY  MAY  CHANGE  THE EXCLUSIVE AGENT ACTING AND CANCEL ANY AUTHORITY
 GRANTED TO A PRIOR AGENT BY FILING A NEW AUTHORIZATION WITH THE AUTHORI-
 TY NOT LESS THAN FORTY DAYS BEFORE THE NEW AUTHORIZATION BECOMES  EFFEC-
 TIVE.
   3.  A  PRIMARY  AMERICAN SOURCE OF SUPPLY OR ITS EXCLUSIVE AGENT SHALL
 FILE WITH THE AUTHORITY THE NAMES OF EACH AUTHORIZED WHOLESALER  PERMIT-
 TED  TO  SELL  EACH  BRAND  OF LIQUOR OR WINE SOLD IN THIS STATE. IF THE
 PRIMARY AMERICAN SOURCE OF SUPPLY IS A WHOLESALER, IT  MAY  LIST  ITSELF
 AND  OTHER WHOLESALERS AS A WHOLESALER AUTHORIZED TO SELL THE BRAND. THE
 FILING OF A WHOLESALE PRICE POSTING,  IN  ACCORDANCE  WITH  SECTION  ONE
 HUNDRED  ONE-B  OF  THIS  ARTICLE,  LISTING  THE NAMES OF THE AUTHORIZED
 WHOLESALERS SHALL  BE  DEEMED  COMPLIANCE  WITH  THIS  REQUIREMENT.  THE
 AUTHORIZED  WHOLESALERS  MAY  BE  CHANGED AT ANY TIME AT OR PRIOR TO THE
 TIME A WHOLESALE PRICE POSTING IS TO BE FILED PURSUANT TO SUCH  SECTION.
 IF  THE  PRIMARY  AMERICAN SOURCE OF SUPPLY DOES NOT LIST ANY AUTHORIZED
 WHOLESALERS, ANY LICENSED WHOLESALER MAY PURCHASE  THE  LIQUOR  OR  WINE
 FROM  THE  PRIMARY  AMERICAN SOURCE OF SUPPLY AND SELL THE BRAND IN THIS
 STATE.
   4. EXCEPT AS SET FORTH IN SUBDIVISIONS SEVEN AND EIGHT OF THIS SECTION
 OR SHIPMENTS OF WINE OR LIQUOR FROM A PRIVATE COLLECTION  MADE  DIRECTLY
 TO A RESIDENT OF NEW YORK, NO ONE SHALL SHIP OR CAUSE TO BE SHIPPED INTO
 THIS  STATE, NOR SHALL ANY WHOLESALER OR RETAILER IN THIS STATE RECEIVE,
 ANY LIQUOR OR WINE UNLESS THE PRIMARY AMERICAN SOURCE OF SUPPLY FOR SUCH
 LIQUOR OR WINE (I) HAS REGISTERED SUCH BRAND WITH  THE  AUTHORITY,  (II)
 SUCH  REGISTRATION  HAS  BEEN  APPROVED  BY THE AUTHORITY, AND (III) THE
 BRAND IS PURCHASED FROM THE PRIMARY AMERICAN  SOURCE  OF  SUPPLY  OR  AN
 AUTHORIZED WHOLESALER.
   5.  EXCEPT  AS  SET  FORTH  IN  SUBDIVISIONS  SEVEN  AND EIGHT OF THIS
 SECTION, A WHOLESALER IN THIS STATE SHALL NOT PURCHASE, RECEIVE OR BE IN
 POSSESSION OF ANY LIQUOR OR WINE  UNLESS  THE  WHOLESALER  OBTAINED  THE
 LIQUOR OR WINE DIRECTLY FROM (I) A REGISTERED PRIMARY AMERICAN SOURCE OF
 SUPPLY,  (II) A DESIGNATED REPRESENTATIVE OF THE PRIMARY AMERICAN SOURCE

 S. 703                              3
 
 OF SUPPLY IF THE PRIMARY AMERICAN  SOURCE  OF  SUPPLY  IS  OUTSIDE  THIS
 STATE, (III) AN AUTHORIZED WHOLESALER OR (IV) A NEGOCIANT.
   6.  NOTHING  IN  THIS  SECTION  SHALL BE DEEMED TO PROHIBIT SUBSEQUENT
 INTRASTATE SALES, TRANSFER, AND INVOICING OF A BRAND OF LIQUOR  OR  WINE
 BETWEEN  AUTHORIZED WHOLESALERS OF THAT BRAND SUBSEQUENT TO THE PURCHASE
 IN THIS STATE FROM THE PRIMARY AMERICAN SOURCE OF SUPPLY.
   7. THE AUTHORITY SHALL ALLOW A WHOLESALER TO BRING LIQUOR OR WINE INTO
 THIS STATE IF THE  WHOLESALER  CERTIFIES  TO  THE  SATISFACTION  OF  THE
 AUTHORITY  THAT THE BRAND OF LIQUOR OR WINE COMES FROM A MANUFACTURER OR
 BOTTLER THAT CANNOT, OR HAS NOT AND WILL NOT APPOINT A PRIMARY  AMERICAN
 SOURCE OF SUPPLY.
   8. THIS SECTION SHALL NOT APPLY TO (I) A BRAND OF LIQUOR OR WINE OWNED
 EXCLUSIVELY  BY ONE RETAILER AND SOLD AT RETAIL WITHIN THIS STATE EXCLU-
 SIVELY BY SUCH RETAILER; OR (II) A PRODUCT PURCHASED BY A WHOLESALER  OR
 RETAILER  FROM  A PRIVATE COLLECTION IN ACCORDANCE WITH SECTIONS EIGHTY-
 FIVE AND NINETY-NINE-G OF THIS CHAPTER CONSISTENT WITH THE RULES,  REGU-
 LATIONS, ORDERS AND ADVISORIES ESTABLISHED BY THE AUTHORITY.
   9.  THE AUTHORITY IS AUTHORIZED TO PERFORM SUCH ACTS, PRESCRIBE FORMS,
 AND MAKE RULES, REGULATIONS, ORDERS AND ADVISORIES AS IT MAY DEEM NECES-
 SARY OR PROPER TO  FULLY  EFFECTUATE  THE  PROVISIONS  OF  THIS  SECTION
 INCLUDING,  BUT  NOT LIMITED TO, ESTABLISHING A FORMAT FOR RECORDING THE
 PRIMARY AMERICAN SOURCE OF SUPPLY AND ITS DESIGNEES.
   § 3. This act shall take effect on the ninetieth day  after  it  shall
 have become a law. Effective immediately, the addition, amendment and/or
 repeal  of  any  rule  or regulation necessary for the implementation of
 this act on its effective date are authorized to be made  and  completed
 on or before such effective date.

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Senate Bill S703

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Sponsored By

Anna M. Kaplan

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

co-Sponsors

James Gaughran

Pete Harckham

Rachel May

Kevin Thomas

2021-S703 (ACTIVE) - Details

2021-S703 (ACTIVE) - Summary

2021-S703 (ACTIVE) - Sponsor Memo

2021-S703 (ACTIVE) - Bill Text download pdf

Comments