Senate Passes Bill Authorizing Direct Wine Shipments

James L. Seward

July 26, 2005

The New York State Senate approved legislation (S.5731) on Friday sponsored by Senator George H. Winner, Jr. (R-C, Elmira) to authorize the direct shipment of wine into and out of New York State. The bill reflects a three way agreement between the senate, the governor, and the assembly.

"This new law will begin to embrace the modern economy in New York State’s grape-and-wine industry," said Senator Winner, who represents the state’s largest wine-producing region in the Finger Lakes. "We have one of the best opportunities we’ve ever had to strengthen an important state industry. While I would prefer not to limit the ability of our wineries to cultivate these long-awaited economic markets, it’s important to act sooner rather than later. The arrival of a law authorizing New York State’s wineries to accommodate out-of-state customers is long overdue. This legislation provides guidelines and safeguards to clear the way for Finger Lakes wineries and winemakers statewide to begin strengthening their industry by making direct-to-customers sales."

"New York State is home to some of the finest wineries in the nation," said Senate Majority Leader Joseph L. Bruno. "Millions of people from all over the country tour New York’s wineries each year. This landmark legislation provides the opportunity to boost and protect New York’s wine industry, which will in turn benefit the economy throughout the state. I applaud Senator Winner for his leadership in getting this legislation enacted into law."

The legislation will put in place the necessary regulatory, reporting and revenue-collecting systems to ensure an effective and responsible transition to a new system of marketing and selling wine in New York.

The legislation will:
> continue to allow New York State wineries and farm wineries to make shipments to in-state customers, but limit those shipments to 36 cases annually. In-state wine shipments have never been prohibited in New York;

> establish reciprocal wine shipping privileges between New York and other states. This would enable wine manufactured by licensed New York wineries and farm wineries to be shipped to individual customers in other states that have reciprocal direct shipping statutes. These out-of-state wineries would then be authorized to ship wine directly to customers in New York State. The legislation imposes a limit on the amount of wine that can be shipped to any individual customer to 36 cases-per-year;

> require out-of-state shippers to obtain a license from the New York State Liquor Authority and adhere to strict reporting requirements and regulations when carrying and delivering wine into New York. Direct shipments could only be made to individual adult consumers in New York, for personal use only. Proposed regulations would require carriers to obtain the signature of a person over 21 years old at the delivery address; and

> subject all wine shipped from New York to the payment of all New York alcoholic beverage taxes. Wine shipped into New York would be subject to the payment of all state and local sales taxes and excise taxes.

Legislative action on the issue comes following a landmark U.S. Supreme Court ruling last month, which struck down a New York law that barred out-of-state wineries from directly shipping their wine to New York residents. It also recognizes the constraints that the state's law has placed on New York's wineries ability to conduct business in other states.

New York is the third-largest wine producing state in America, with 218 wineries statewide. The industry employs 18,000 workers and annually generates more than $500 million in gross sales, together with $85 million in state and local tax revenue. Over three million people visit the state’s wineries every year, with one-third of them coming from out of state. Many New York winery owners, particularly those who operate smaller wineries, have argued that current state law prevents them from accommodating thousands upon thousands of these out-of-state visitors once they leave New York and return home.

It’s been estimated that authorizing direct shipments would raise as much as $3.8 million a year in increased revenues for New York State.

The bill was sent to the assembly.