NY State’s Regulatory Overreach is Very Bad News for California Wineries

rosen copyCalifornia Wineries beware: It is now the policy of New York that it can fine you if you ship to Texas or Oregon or Washington State without a permit to ship from that state. Sound ridiculous? It is.

This new policy by the New York State Liquor Authority (NYSLA) is without doubt one of the most egregious and blatant examples of regulatory overreach we’ve ever seen in the wine industry.

Here’s how it works and here’s what you need to be aware of.

Recently, as Robert Taylor of  The Wine Spectator reported, the NYSLA issued a $100,000 fine to Empire Wine, a retailer in Albany, New York. It issued this fine by claiming that Empire engaged in “improper conduct” for a New York State Licensee by allegedly breaking the law of another state by shipping wine into that state without a permit from that state. Put simply, a NY alcohol licensee was fined by NY for an alleged violation of another state’s law.

So, California wineries…if you have a permit issued by the state of New York to ship direct to consumers in New York, the NYSLA now claims it may fine you (because you are a NY State Licensee) if they discover you may have shipped wine from CA to another state (not necessarily to NY) without a permit. And here’s the catch. That other state NY discovered you shipped to? It doesn’t even have to have issued you a “cease and desist” order, contacted you in any way, let alone have an admission of wrong doing from you. The NYSLA claims it can fine you nonetheless based on nothing but the Chairman’s belief you operated improperly in another state.

In New York, Empire Wine is suing the state, rather than submitting to the NYSLA Chairman’s egregious overstepping of his authority. Why would the Chairman choose to do this? Some say it is due to his vindictive nature and simply not liking Empire Wine for some reason. However, we take him at his word. We believe that NYSLA Chairman Dennis Rosen is every bit as anti-business and anti-consumer as this action makes him out to be.

If you are wondering what Chairman Rosen’s reaction to the push back he has been getting consider this quote:

“If someone thinks we’re wrong, the proper route is to comply with the law and mobilize to seek legislation to change it, and that hasn’t happened in New York.”

Yes, and pay the $100, 000 fine too. I don’t think so and either does Empire who, as I mentioned, is suing the State of New York and Chairman Rosen. Finally, consider that after trying to extort $100,000 from Empire, Chairman Rosen had this to say:

“[Empire Wine] has been calling politicians and trying to exert political influence on this office, and that won’t work with me. I didn’t come here to do anything less than the right thing.”

You’d think that a state official that has the cojones to try to enforce the laws of another state could do better than whining like a little girl with a skinned knee when faced with a little bit of push back.


9 Responses

  1. Matt Rinkerman - September 23, 2014

    It just shows the constant battle that will exist between states and the federal government. No wonder why many foreign wineries would rather sell to China or India then here.

  2. mort hochstein - September 24, 2014

    tom well done. give ’em hell when they deserve it. so good I will forgive your editng error. as in…. Why would the Chairman would choose to do this? find an intern. mort

  3. Steve Bate - September 25, 2014

    I don’t know enough about the details of this case to comment on it specifically, but I do feel compelled to take issue with your characterization of the Chairman as anti-business. That just couldn’t be more wrong from the perspective of the state’s craft beverage industry. Under Chairman Rosen’s leadership, there have been a range of important reforms to ABC law to clarify its provisions and streamline its implementation. Coupled with significant changes within the Authority that have dramatically improved “customer service” and facilitated compliance, this administration has proven to be exceptionally business friendly. (Feel free to edit me, Mort.)

  4. Chris - September 25, 2014

    I am curious to know if any of the NY Wholesalers have been equally fined and subjected to such harsh interpretation for having compliance issues in other states they do business in. It can’t be possible that none of the Wine & Spirit Wholesale companies that do business in multiple states have not been out of compliance in other states at some point or another.

  5. Jacob - September 25, 2014

    Steve – Your characterization that the Chairman is behind these reforms in NY craft wine, beer, and spirits in not accurate. Taste NY is a program backed by Governor Cuomo. Unfortunately, the SLA had existing policy (via the antiquated ABC law) that was contrary to the Governor’s plan so he has had to work with the Chairman and the Legislature in order change those policies.

  6. Thomas Pellechia - September 25, 2014

    I had no idea that Mort is a pedant, but I have known of Tom’s bad self-editing 😉

    As for the Chairman and the so-called wonderful new attitude from SLA: plus ca change, plus c’est la meme chose.

  7. Brian Miller - September 28, 2014

    I don’t understand why NY would care to pursue this. Another wine.com tattle?

  8. pawineguy - September 29, 2014

    Is there a NY law or regulation that prevents NY retailers from shipping in violation of another state’s law? If there is, and I can only assume that’s the case, not sure how he’s overstepping his bounds?

  9. Jacob - October 8, 2014

    Pawineguy – No, there is no such regulation. Your assumption shows you have too much faith in bureaucrats such as this guy. Even if such a law did exist, the constitutionality needs to be questioned.

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