As part of his $99.8 billion budget proposal for 2004-2005, New York Gov. George Pataki has supported allowing out-of-state wineries to ship wine directly to New York residents. Until now, the state has allowed direct-to-consumer shipments only from New York wineries.
Under Pataki's budget proposal, unveiled today, adults 21 or older would be allowed to have up to two cases (18 liters) of wine per month delivered to their homes for personal use. Wineries in other states would have to pay $125 for a license to ship into New York. They would also have to pay all state excise and sales taxes and report the shipment quantities to the state.
The New York Division of the Budget estimates that this measure would raise about $2 million in licensing fees and taxes in 2004-2005 (though that number is expected to increase in following years) -- only a drop in the state's projected budget gap of $5.1 billion for that period.
However, it would be a boon for wine consumers and producers alike. New York is one of the largest wine markets in the country, as well as one of the largest wine-producing states.
Pataki has proposed what is known as a "reciprocal" system. Direct-to-consumer shipments would only be permitted from wineries in states that would in turn allow their residents to receive shipments from New York wineries. This would give New York producers, particularly small ones that have trouble finding distributors, an opportunity to expand their markets into other states.
Currently, 13 states have a reciprocal system for dealing with direct-to-consumer wine shipments. In recent years, numerous states across the country have begun to relax their wine-shipping restrictions. About half of the states now allow limited shipments from out-of-state producers under certain conditions; the rest still prohibit such shipments.
The shipping proposal would have to be approved by the state legislature, which has failed to pass similar measures in the past, and is subject to revision. However, as part of the budget package, the bill would have extra strength, as lawmakers would be forced to find another source of revenue for the $2 million if they choose to reject the plan.
New York state is currently being sued by consumers and wineries seeking to overturn its ban on interstate direct shipments. That case is being considered by a federal appeals court, which heard arguments last September. A U.S. district judge had earlier overturned New York's shipping ban, saying it discriminated against out-of-state businesses and therefore was unconstitutional. But the state liquor authority, supported by alcoholic-beverage wholesalers who oppose direct shipping, decided to appeal the case. If New York passes new shipping legislation, that could render the lawsuit moot.
Read recent news about New York shipping laws:
For a complete overview and past news on the issue of wine shipments, check out our package on The Direct Shipping Battle.