NYS ABC Law Modification Update of May 2016

Tuesday, May 31, 2016

As you may know, New York State Governor Andrew Cuomo recently proposed modifications to the State's Alcoholic Beverage Control Law (the "ABC Law"). The Governor's press release touted that the proposed legislation would "overhaul [the] State's Blue Laws, consolidate licensing and ease regulatory requirements for wineries, breweries, distilleries and cideries in New York State". Participants in the Governor's task force charged with modernizing the ABC Law hailed that the changes will "…reimagine the way New York's beverage industry does business" and "…make common sense changes to modernize the state's liquor laws."

On initial review, the proposed legislation would make a few changes to the ABC Law that this writer sees as relevant to the craft beverage industry. Most notably, the proposed legislation would create a new class of license for craft (farm or micro manufacturers) beverage businesses under which those businesses would only need to obtain one (1) license in order to operate winery, cidery, distillery and/or brewery businesses under a single roof. This new "craft license" class would, purportedly, eliminate redundant paperwork, thereby making it easier for craft beverage producers to operate in New York State.

Why is this relevant now? The proposed legislation would amend a number of sections of the State ABC Law pertaining to craft beverage businesses and their compliance obligations. These changes, according to the Governor, are expected to create greater operational efficiencies for alcoholic beverage producers by simplifying their compliance obligations.

How else am I affected? As a result of the legislation, and assuming it is ultimately enacted into law, alcoholic beverage producers will need to review their current and planned operations to determine what, if any, changes they need to make. Manufacturers holding more than one craft beverage manufacturing license may want to consider the proposed "craft license" as it would eliminate the need to carry more than one  manufacturer's/wholesaler's license. It should be noted, however, that the proposed "craft license" would not create substantial savings with respect to license fees as the legislation specifically provides that the fee for the "craft license" would be equal to the fees for all of the sub-licenses. In other words, a manufacturer operating a winery and a brewery will pay the same fee for a "craft license" that it would pay for separate winery and brewery licenses. The only savings would be the elimination of one of the filing fees (which is typically between $100 and $200).

What should I do now? We feel it is appropriate and important for manufacturers and wholesalers to thoroughly examine the proposed legislation and, if appropriate, contact your local State representatives to discuss deficiencies. While the proposed legislation includes some interesting and potentially helpful changes to the ABC Law, it utterly fails to address many of the long-standing ABC Law provisions that continue to impose operational restrictions on manufacturers and wholesalers. For example, the proposed legislation does nothing with regard to the "tied house" rules included in ABC Law §101. Those rules continue to place substantial restrictions on manufacturers and wholesalers that limit their ability to generate much needed capital investment from outside sources.

Similarly to the "tied house" rules, the proposed legislation fails to take Federal requirements into consideration. While the "craft license" might streamline New York licensing requirements, the legislation wholly ignores the fact that the Alcohol and Tobacco Tax and Trade Bureau will continue to mandate separate licensing for the various classes of alcoholic beverages. This writer feels the legislation would be more beneficial had the Governor's task force engaged TTB representatives to address the continuing difficulties imposed on manufacturers due to Federal agency inefficiencies.

We feel that if the State is going to take the time to make changes to the ABC Law, it should address the more pressing (and oppressive) provisions. Therefore, it is imperative that clients contact their local representatives to address these concerns before the legislation is enacted.

If you have any questions or would like to discuss this further, please contact Zachary R. Benjamin, (315) 422-1152.

Costello, Cooney & Fearon, PLLC has provided expert and diverse legal services to Syracuse and surrounding communities for more than 100 years.