New York reciprocal shipping privileges and quantity limits

Sovos | March 30, 2006

As if keeping track of over 7,500 direct shipping rules wasn’t hard enough already!

Let’s start with a little background on the issue of New York reciprocal privileges. Even though they published their advisory in August of 2005 (after the Granholm decision), the New York regulations included the following language about reciprocity.

The newly enacted ABCL 79-c indicates that the holder of a Direct Shipper’s License may ship up to (“no more than”) 36 cases of wine (no more than 9 liters each case) per year directly to a New York resident of legal age, “provided *** that the state in which such out-of-state winery is located affords to New York State winery and farm winery licensees reciprocal shipping privileges, meaning shipping privileges that are substantially similar to the requirements of this section” (emphasis added).

Language in the Bill Summary of S.5925 provides guidance with regard to the manner in which the Legislature intended the “reciprocal shipping privileges” requirement to be construed (emphasis added): “[I]f a winery is located in a state that has limitations on wine that can be shipped to that state, such winery shall be subject to the same limitations; providing that such limitation does not exceed the limitations set forth in the state of New York”.

An out-of-state winery applying for a New York State Out-of-State Direct Shipper’s License is required — at Questions 37-38 of the application — to provide advice regarding the quantity limits imposed by the applicant’s state upon New York State wine manufacturers seeking to directly sell and ship wine to resident customers of the applicant’s state.

An out-of-state wine manufacturer may not be issued a New York State Out-of-State Direct Shipper’s License unless such out-ofstate wine manufacturer agrees to limit the quantity of his wine shipments into New York to the maximum number of cases per month and per year that the applicant’s state allows New York wine manufacturers to directly sell and ship to a resident customer of the applicant’s state. (Question 39)

Basically, this is merely a more complicated version of the original interstate reciprocity arrangements. Prohibited states can not ship directly to New York. Limited states can ship what they allow NY wineries to ship into their state. States without a limit (California) can ship up to 36 cases per year to New York.

Does this sound like a violation of the Granholm ruling? I think so too.

Complicating things further, we heard an interesting twist from one of our clients yesterday. This California winery began the permit application process in December. Knowing that the California laws would change on January 1st, this winery did not put a limit on Questions 37 or 38 of the NY Out-of-State Direct Shipper’s License application. But when the NY ABC reviewed the application in January, they asked this winery to change their application to read 2 cases per month and 24 cases per year to reflect California’s pre-January limits. The winery obliged, and thought their limit was then set at 2 cases per month.

I called New York this morning for clarification because we knew that they were accepting new applications at 36 cases per year from California. We wanted to know if the winery could re-apply for their license under new terms. According to the ABC, this is not necessary. All California applications that originally read 2 cases per month were amended to read 36 cases per year and this winery is now safe to ship up to 36 cases to any NY resident each year.