One of our Law Clerks, Brandon Hellwig, from our Syracuse office, takes a look into some new changes coming from the Governor’s office.
In May of 2016 New York Governor Andrew Cuomo announced that he was advancing legislation, which if enacted, would modernize New York’s 80 year old Alcohol Beverage Control Law, or as it is commonly referred to the “ABC” Law. The ABC Law was enacted in an era immediately following Prohibition, where religious and conservative attitudes towards alcohol led to what today seem like arbitrary restrictions on the time, place, and manner in which alcohol can be sold, consumed, and manufactured. Governor Cuomo’s efforts to change these arbitrary restrictions are part of a larger campaign to ease New York’s business restrictions to promote economic growth.
Brief History of Prohibition and the ABC Law
Prohibition in the United States was a nationwide constitutional ban on the production, importation, transportation and sale of alcoholic beverages that remained in place from 1920 to 1933. Prohibition was mandated under the Eighteenth Amendment to the United States Constitution. During Prohibition secret neighborhood bars called “speak-easies” began operating and people from all walks of life continued to enjoy alcohol, albeit illegally. Prohibition was also partly responsible for the rise of organized crime across the country because criminal organizations were making millions of dollars selling illegal alcohol. This was referred to as “bootlegging”.
Public support for prohibition began to steadily decline as the 1930’s began, and with the Great Depression the government also quickly realized how much tax revenue it was missing with alcohol being illegal. State and local governments realized that with alcohol also comes business and as a result taxable revenue. Ultimately, the Eighteenth Amendment (which established Prohibition) was repealed on December 5, 1933, with ratification of the Twenty-First Amendment to the U.S. Constitution. The Twenty-First Amendment granted each state the power to regulate the trafficking of alcoholic beverages within its borders.
In 1934, New York State enacted Chapter 478, known as the Alcoholic Beverage Control Law (“the ABC Law”), creating the State Liquor Authority and the Division of Alcoholic Beverage Control. The State Liquor Authority’s first Annual Report noted that Chapter 478 was enacted by the Legislature to provide for “the protection, health, welfare and safety of the people of the State.” The responsibilities of the Division of Alcoholic Beverage Control include:
- Reviewing applications and investigating applicants to determine eligibility;
- Issuing licenses and permits for the manufacture, wholesale distribution and retail sale of all alcoholic beverages;
- Regulating trade and credit practices related to the sale and distribution of alcoholic beverages at wholesale and retail;
- Limiting, in the Authority’s discretion, the number and type of licenses issued as determined by public convenience and advantage;
- Inspecting premises where alcoholic beverages are manufactured or sold;
- Investigating licensees in connection with violations of the ABC Law, and working with local law enforcement agencies to ensure compliance with the ABC Law; and
- Conducting disciplinary proceedings and hearings, and revoking, canceling or suspending for cause any license or permit, and/or imposing monetary penalties where appropriate.
The regulations and restrictions contained in the ABC Law reflected some of the attitudes that led to Prohibition. Originally no alcohol could be sold or served on Sunday, no establishment serving alcohol could be within 200 feet from a school or church, and the number of liquor licenses issued was severely restricted. These archaic restrictions are still in place today.
Governor Cuomo’s Proposed Changes
In May 2016, Governor Andrew Cuomo attended a ribbon cutting ceremony at Three Heads Brewery in Rochester, New York. Three Heads Brewery is one of New York’s newest craft breweries, and the ceremony was marking the opening of a brand new facility that will allow Three Heads to expand significantly.
At the ceremony Governor Cuomo announced his initiative to modernize the ABC Law, and to make it easier for businesses like Three Heads Brewery to engage in the manufacture, distribution, and retail sale of alcoholic beverages. The Governor stated:
“This new legislation will build on that progress by modernizing the state’s Blue Laws (another term of the ABC Law), cutting through the red tape and removing artificial barriers to growth. The grand opening of Three Head’s Brewery in Rochester is a testament to our continued success, and I look forward to working together to keep the momentum moving forward in the years ahead.”
The Governor’s proposed changes include:
- Expand Sunday Sales: The Alcoholic Beverage Control Law includes provisions strictly prohibiting the sale of alcoholic beverages at on-premises establishments (restaurants, bars, taverns) before noon on Sunday. The Governor’s legislation would create a permit to allow these licenses to serve between the hours of 8am and noon on Sunday.
- Modernize the Licensing Process: The ABC Law contains provisions, known as the “Two Hundred Foot Law,” prohibiting full liquor licenses to locations within two hundred feet of a building that is exclusively used as a school or place of worship. There have been numerous examples where the local municipality, school or place or worship has not opposed, and in many cases supported, the approval of an application only to see the business denied because of the Two Hundred Foot Law. The law was first enacted in 1892 and included in statute when it was adopted in 1934, and strictly prohibits the SLA from issuing a license to a facility in that vicinity. The Governor’s legislation would provide the SLA with discretion to consider license applications for restaurants that fall within the Two Hundred Foot Law, provided the local municipality, in addition to the school or place of worship, are provided prior notice and an opportunity to be heard on the application.
- Reduce Paperwork for Craft Manufacturers: At the 2012 Wine, Beer and Spirits Summit, Governor Cuomo ended the State Liquor Authority’s policy prohibiting multiple manufacturing licenses at the same location, recognizing the additional burdens this placed, for example, on a small winery that wanted to also make whiskey – including building a separate facility. However, businesses holding multiple licenses must still file paperwork and renewals for each separate license. The Governor’s legislation would combine craft manufacturing licenses into one application to reduce burdensome paperwork for these small businesses.
- Authorize the Sale of Wine in Growlers: Current law requires that wine sold at retail for off-premises consumption be kept in their original sealed containers, and consequently, New York wineries are prohibited from filling growlers. This prohibition unduly burdens wineries that can open a container to sell wine for on-premises consumption, or can sell wine for off-premises consumption, but cannot fill a growler to be taken away from the winery. The Governor’s legislation would enact a common sense change to the law to allow wineries to fill their customer’s growlers. In addition, the Governor’s legislation would authorize wineries and farm wineries to allow customers to take home partially finished bottles of wine.
- Reduce Fees for Craft Beverage Salespeople: The ABC Law currently requires that any salesperson or solicitor employed by a manufacturer or wholesaler must obtain a solicitor’s permit in addition to a bond. Recognizing the financial hardship imposed by these unnecessary additional fees, the Governor’s legislation would reduce the fee for a solicitor’s permit and eliminate the bond requirement.
- Reduced Fees for Small Wholesalers: The primary business of most alcohol beverage wholesalers is selling their products to licensed retailers, such as bars, restaurants and liquor stores. However, there are currently a number of small wholesalers in New York that sell limited number of brands they import directly to large wholesalers for distribution to retailers. Under the current law, these small wholesalers must pay the same amount for their license as their larger counterparts, with costs ranging from $1,460 for a one year beer license to $27,280 for a three year liquor wholesale license. This financial burden often requires these small businesses to make a choice between continuing to hold a New York wholesale license or to relocate their business outside of New York. The Governor’s legislation would amend the ABC Law to create a low-cost “importer’s license” that would be available to wholesalers that sell only to other wholesalers.
The proposed changes are meant to build on the progress achieved by the passage of the Craft New York Act, which cut burdensome requirements and restrictions placed on the marketing of craft products such as craft beer, wine, and liquor. The Craft New York Act also provided Craft Beverage Grant programs worth millions of dollars to help emerging and already established craft beverage businesses.
It seems that the last remnants of Prohibition in New York are being swept away, and that the State is increasingly willing to offer support to breweries, distilleries, and wineries. Hopefully these new policies will lead to growth, prosperity, and more employment opportunities for the citizens of New York State.
The exclusive purpose of this article is educational and it is not intended as either legal advice or a general solution to any specific legal problem. Corporate offices for Nave DWI Defense Attorneys are located at 432 N. Franklin Street, Suite 80, Syracuse, NY 13204; Telephone No.: 1-866-792-7800. Prior results do not guarantee a similar outcome. Attorney Advertising.