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The New York State Legislature this week approved a bill which, if signed into law by Governor Hochul, would allow on-premises licensees to purchase limited quantities of wine and liquor directly from liquor stores. 

Currently, on-premises licensees (bars, restaurants, hotels, etc.) must purchase all of their alcohol through licensed wholesalers. While wholesalers are generally able to fulfill orders reasonably quickly, the lead time is at least 24-48 hours. Therefore, if a restaurant has an unexpectedly busy Friday night, they may run out of products and not be able to restock them until the following week. Moreover, if the retailer is only needing to restock a few bottles, it may not be worth it to place an order with the wholesaler, because there are often delivery fees and upcharges for split cases. Accordingly, most retailers only place orders one or two times per month and order large quantities at a time to cut down on these costs. 

Under existing law, on-premises licensees are prohibited from purchasing even a single bottle of wine or liquor for their business from a liquor store. Doing so is a fairly common practice, in reality; however, if a retail licensee is found to have purchased any product from a liquor store, that is a violation of their license punishable by a fine. The proposed bill would allow any retail on-premises licensee to purchase up to six bottles per week from licensed liquor stores. This low threshold effectively eliminates any concern by wholesalers that it would substantially cut into their business, as the permitted quantity is so low that retailers will still need to purchase the vast majority of their products through the wholesalers. The proposed legislation is not an attempt to cut out or even limit the business of wholesalers, rather it is an attempt to create a reasonable solution for licensees who may periodically need a stopgap for certain products to make it until their next scheduled wholesale delivery. 

One of the questions with this bill, if approved, will be how the parties- both the liquor stores selling the products and the on-premises licensees buying the products- keep track of these sales. Currently, liquor stores are prohibited from selling products to anyone they reasonably know, or suspect is buying to resell. Liquor stores are subject to charges and fines if they are found to have sold in violation of this rule. Typically, the quantity has to be of a scale that a reasonable person would know that was not meant for personal consumption, and/or the purchaser is known to hold an on-premises license. 

Under the new structure, it is unclear whether there is any requirement that the on-premises licensee notify the liquor store at the time of purchase whether the bottles at issue are for resale. More likely, the onus will be on the on-premises licensee to keep records to prove the origin of specific bottles, so that if the Liquor Authority were to conduct an audit, they could provide proof of when and from where the bottles at issue were acquired. 

This legislation, which would take effect 90 days after being signed into law, is the only alcohol-related bill to make it out of committee in either the Senate or the Assembly this year. There were several bills seeking to legalize the sale of wine in grocery stores (“WIGS”). This concept is revisited almost every session in some form or another, but has never been approved, despite the fact that New York is now one of only ten states to not allow it. This session the push was even stronger than usual with a coalition of grocery stores actively promoting an informational campaign to their customers. Liquor stores always lobby strongly against WIGS, arguing that it would effectively put them out of business. 

One of the WIGS bills which did not pass this year was a more limited proposal by Senator George Borrello to allow only New York produced wines to be sold in grocery stores. The rationale being that it would substantially boost the New York wine industry without having a hugely negative impact on wine and liquor stores, for whom New York wines typically represent a small portion of their product offerings and revenue. A number of WIGS bills also have components aimed at broadening the types of products liquor stores are allowed to carry, in order to help offset any potential loss. By way of example, currently liquor stores are extremely limited in the products they are permitted to sell, which, aside from alcohol, are generally restricted to  ice, wine glasses, wine openers, and other related items. No food items are permitted, nor are non-alcoholic mixers other than water. Several of the WIGS proposals would allow liquor stores to sell, at a minimum, cheese, crackers, cured meats, and other items which typically accompany wine. 

Given the renewed push for WIGS, we can reasonably expect a myriad of new proposals in the next session. Until then, consumers can take comfort in knowing that if their favorite restaurant runs out of Aperol, their next spritz may soon be just a short trip to the liquor store away.

Contact Whiteman Osterman & Hanna Today

If you have questions regarding the operation of your existing New York licensed business or are contemplating applying for a new license, don’t hesitate to get in touch with Alexandra Becker by e-mail (abecker@woh.com)  or phone (518.487.7725) to see how the Alcoholic Beverage Team at Whiteman Osterman & Hanna may be able to assist.