The New York legislature passed legislation, AB 3132, that would allow the interstate shipping of cider and spirits into the state subject to restrictions.

Specifically, this legislation would limit shipping to distillers producing below 75,000 gallons.

Under the terms of the legislation, an out-of-state distiller can ship up to thirty-six cases of liquor to a resident of New York.

The distiller would need to get licensed under procedures prescribed by rules and regulations of the authority. There is no specific language of a deadline for when the authority is required to issue rules or regulations.

Further, the distiller would need to obtain a New York Certificate of Authority and register as a distributor pursuant to “sections four hundred twenty-one and four hundred twenty-two of the tax law”.

Additionally, the distiller needs to follow reporting, record, and packaging requirements.

Cider rules

Cider manufacturers are subject to the same terms as distillers when it comes to shipping limits, licensure, reporting, record, and packaging requirements. However, there does not seem to be the production limits for cider manufacturers as there are for distillers.

Major caveats

Although this legislation is positive there are two major concerns, will the governor sign the legislation and is it constitutional?

There is no word whether the Governor will sign, but with an almost unanimous vote, she would be hard pressed not to sign.

The other issue is if this becomes law, can it withstand constitutional scrutiny. In the Granholm v. Heald, case, which found New York’s discriminatory shipping law unconstitutional, the Court held that laws which require reciprocity as a condition for shipping into a market are deemed unconstitutional.

Under this legislation for both cider and spirits, as a condition for obtaining a license for interstate shipping, the manufacturer must be licensed in a state that allows New York craft distillers and cider manufacturers to ship. If New York manufacturers don’t enjoy this right, the distiller from that state is shut out of the New York shipping market. So, Kentucky craft distillers can access the New York shipping market, while the Illinois craft distillers cannot.

The legislation has constitutional problems, the conditioning the license on reciprocity would violate the constitution and make a potential law prone to challenge.

Does New York fix the problem, does it leave the constitution hole, or is this an excuse for the governor to not approve the legislation? In remains to be seen, and although the initial victory is great, the game is not over until this becomes resolved!