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Governor Hochul continues to take action to prioritize the New York craft beverage industry. She recently signed legislation allowing NY-based producers of mead (a fermented beverage made with honey, water and yeast, often called “Honey Wine”), cider, and spirits to ship directly to consumers within and outside of New York State. 

This new legislation, along with the recent enactment of to-go alcohol sales, is another legalization by Governor Hochul of temporary measures which were originally introduced as part of then Governor Cuomo’s COVID-era executive orders, which lapsed and were not renewed. Producers argued that their success in engaging in direct-to-consumer shipping during the pandemic showed that it could be done safely. Moreover, much like to-go alcohol, it provided a vital lifeline to many businesses that otherwise might have closed.  

The goal of the legislation, championed by the New York State Distillers Guild and New York State Cider Association, is to increase the exposure of smaller, New York-based producers both within the state and beyond. Many of these New York-based labels, however, have extremely limited distribution and consumer brand recognition, even within their immediate vicinities, and are competing for sales with larger, national and international brands, which boast a much wider distribution base. New York has the most craft cideries in the nation and the second highest number of distilleries, so the ability to increase their exposure beyond state lines is vitally important, both to the producers themselves, and to the state economy.

For nearly two decades, New York has allowed its in-state wineries to ship directly to consumers. With respect to mead, cider, and spirits, however, the law in New York provided that in-state producers could only sell their products to customers directly from their premises. Producers were thus limited to in-person sales and were not permitted to sell via the internet or to ship products directly to consumers even within the state. They were permitted to have their products sold in liquor stores; however, many liquor stores reserve the majority of their shelf space for more well-known, larger brands. Accordingly, many in-state labels do not have largescale product placement in liquor stores even within New York State, let alone in other states, making this legislation even more potentially impactful.

Direct-to-consumer shipping will make it easier for producers to sell their products to out-of-town or out-of-state visitors who may not want to or be able to purchase bottles and have to travel with them. The new law will allow customers to not only order products to be shipped to their homes while they are at the producer’s premises, but it will also allow them to order more products once they return home. It also opens up opportunities for brands to work to build broader connections with consumers, including through social media, both within and outside of the state. 

Opposition to this legislation came primarily from in-state liquor store owners, who believed that it would take away from their business. As with the legalization of to-go alcohol, the opposition also cited safety-related concerns, including the idea that it would lead to an increase in underage access to alcohol. 

When the legislation becomes effective in November, customers will be able to receive mead, cider, and spirits by mail. The legislation includes a number of consumer-safety related provisions, including a requirement that packaging clearly identify the contents, along with mandatory adult signature and identification check by the driver upon delivery, to guard against underage sales.  The national common carriers already have systems in place to facilitate compliance with the new legislation, as well as with existing laws governing shipment of alcohol.

The new legislation contains the same reciprocity provisions that control direct-to-consumer shipping of wine. This means that a state will only permit producers in other states to ship products directly to their residents if those producers operate in states that themselves would permit the initial state’s producers to ship to their residents. Unfortunately, the majority of states do not allow out-of-state distillers to ship directly to consumers/retailers within the state, but eight states, including New Hampshire, as well as Washington D.C. do allow it. Accordingly, the out-of-state market for New York producers still remains fairly limited unless and until more states opt to allow direct-to-consumer shipping. 

Also, as a result of these same reciprocity provisions, New York customers are fairly limited in the number of states they can order products from. Notably, Kentucky is one of the states that does permit direct-to-consumer shipping of spirits, so having Kentucky bourbon delivered directly from the Bourbon Trail is an option, though products from just across the border in Tennessee are not allowed. 

Hopefully this legislation serves as a catalyst for other states to expand their direct-to-consumer shipping laws. In the meantime, it will give New Yorkers a reason to be even more excited when the mail arrives. 

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.