Legislation Authorizing Direct Wine Shipments Signed Into Law

Elmira, N.Y.-- Legislation sponsored this year by State Senator George H. Winner, Jr. (R-C, Elmira) to authorize the direct shipment of wine into and out of New York State, has been signed into law by Governor George E. Pataki.

"It’s been a long time coming, but we’re finally beginning a new, modern economic era for New York State’s grape-and-wine industry," said Winner, who represents the state’s largest wine-producing region in the Finger Lakes. "It promises exciting economic opportunities for our wineries, and it’s a vital contribution to the overall economic future of the Finger Lakes region." 

The governor conducted a bill signing ceremony yesterday afternoon at the Lamoreaux Wine Cellar in Lodi, Seneca County.

Winner said that the new law, which takes effect on August 12th, 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 new law provides guidelines and safeguards to clear the way for Finger Lakes wineries and winemakers statewide to strengthen their industry by making direct-to-customers sales," Winner said.

Authorizing the direct shipment of wine has been one of the Capitol’s most hotly contested issues since the early 1990’s. Legislative action this year gained momentum following a mid-May decision by the United States Supreme Court that ruled as unconstitutional New York’s Prohibition-era ban on interstate wine sales. The state’s ban on these interstate sales is discriminatory and anticompetitive, the Supreme Court ruled on Monday, May 16th. In a 5-4 decision, the court struck down laws in New York and other states that allow in-state wineries, but not out-of-state businesses, to ship directly to consumers.

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. One-third of them come from out of state. Many New York winery owners, particularly those who operate smaller wineries, have long argued that state law prevents them from accommodating thousands upon thousands of these out-of-state visitors once they leave New York and return home.

Winner said that granting New York’s wineries the ability to ship wine directly to out-of-state customers will represent a significant and important market expansion, and facilitate new and important economic opportunities for many Finger Lakes wineries. A 2005 study by VinQuest, a national wine industry consulting firm, found that the average New York small winery could expect to see a 20% increase in sales as a result of being allowed direct access to consumers in other states.

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 new law 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 per year, per customer;

> 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 out-of-state customers to 36 cases per year, per customer;

> 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;

> 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.