New York Gov. Andrew Cuomo has vetoed a bill that would have restricted state regulators' ability to crack down on retailers who sell and ship wine to customers in states whose laws prohibit such direct shipping. The veto leaves wine store owners, some of whom do a substantial business selling wine to customers online, worried that they could be punished.
"I am fully committed to advancing and promoting New York's alcoholic beverage industry," said Cuomo in a statement. "However, signing this bill would jeopardize the state's achievements by sending a clear signal that New York is a haven for entities intent on breaking other states' laws, avoiding other states' legitimately imposed taxes and regulations and selling to minors with impunity."
The bill was proposed and passed by the state legislature after the New York State Liquor Authority (NYSLA) charged Albany wine retailer Empire Wine with 16 counts of improperly shipping wine to out-of-state customers. Empire's owners have filed a lawsuit, arguing that the NYSLA has no jurisdiction over out-of-state wine sales, the charges violate the U.S. Constitution’s Commerce Clause and the NYSLA rule that Empire is purported to have violated is "unconstitutionally vague."
If Cuomo had signed the bill into law, it would have limited "the authority of the state liquor authority to penalize licensees based on perceived violations of the laws of other states, unless the conduct in question amounts to an independent violation of the alcoholic beverage control law or has resulted in a criminal conviction in another state.” One of Empire's complaints is that it has not seen any evidence other states have complained about its activities.
“While we are deeply disappointed, we will continue to fight the blatant overreach by the NYSLA to regulate interstate sales to the detriment of New York businesses," said Empire owner Brad Junco in a statement. "Its attempt to arbitrarily enforce the laws of other states against successful New Yorkers sends a chilling message to anyone doing business here."
Cuomo did call for the NYSLA to hold a series of roundtables in 2016 to discuss ways to update state alcohol laws to better reflect modern sales practices, potentially leading to new legislation.
Across the country, state and federal authorities have for the most part turned a blind eye to interstate wine sales. While legislators, wholesalers, wineries, retailers and consumers have battled over the legality of interstate direct wine sales in the courts and legislatures, actual enforcement of these laws has until recently been relatively nonexistent. Now, actions by the NYSLA and other state's agencies have retailers worried.
Empire's lawsuit against the NYSLA is still pending. "We believe that meeting customers’ demand for the online sale of wine is not only in the best interest of the consumer and New York's economy but is also protected marketplace activity under the Commerce Clause of the Constitution," said Junco.
This report was first published on Shanken News Daily.