BILL NUMBER: S9273
SPONSOR: KRUEGER
 
TITLE OF BILL:
An act to amend the alcoholic beverage control law, in relation to the
exemption of certain parcels of land from licensing restrictions prohib-
iting manufacturers, wholesalers and retailers of alcoholic beverages
from sharing an interest in a licensed premises or to sell at retail for
consumption off and on the premises; to repeal certain provisions of
such law relating thereto; and providing for the repeal of such
provisions upon expiration thereof
 
PURPOSE OR GENERAL IDEA OF BILL:
To allow for a New York City business to serve alcoholic beverages at an
on-site cafe and to relocate an off-premises retail establishment owned
by that business to the same site notwithstanding that there is a de
minimis corporate relationship with a foreign winery.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill repeals an existing tied-house exemption granted
by the Legislature for an off-premises retail establishment owned by a
New York corporation and reinstates it at its New York corporate head-
quarters. Section 2 allows for the licensure of an on-premises retail
establishment at the same location. In both cases, the retail estab-
lishment is prohibited from purchasing products from the manufacturer
(winery) for retail sale.
 
JUSTIFICATION:
New York's Alcoholic Beverage Control Law prohibits a distributor
(wholesaler) or manufacturer (including vineyards and wineries) from
holding an interest, directly or indirectly, in a licensed retailer of
alcoholic beverages, such as a restaurant or liquor store. Likewise, a
retailer may not hold an interest, directly or indirectly in a distribu-
tor or manufacturer. These are known as the "tied-house" laws.
The original intent of these post-Prohibition statutes was to ensure
that manufacturers and/or wholesalers of alcoholic beverages were not
positioned to exert undue influence, or worse yet, monopoly power, over
retail establishments. In fact, in most jurisdictions the danger to be
avoided is spelled out more specifically by prohibiting undue influence
and inducements between the manufacturer and wholesaler tiers and the
retail tier of the "three-tiered" system in order to trigger a tied-
house issue. New York, on the other hand, has a long tradition of strict
interpretation that any relationship, however de minimis, is prohibited.
While originally aimed at promoting competition, in today's highly
complex corporate world, current law and its strict interpretation in
New York creates unintended consequences especially where the evil to be
avoided is not remotely present. The Legislature has regularly addressed
these challenges by exempting certain properties in order to support
rational economic development goals. Exemptions, such as those provided
by this bill, are narrowly tailored to prevent undue market influence by
identifying select locations using metes and bounds descriptions.
This bill will allow an established New York corporation to consolidate
a retail store to its New York headquarters as well as open a cafe at
the same location. Product may not be purchased from the manufacturer to
be sold at retail at either retail establishment.
 
PRIOR LEGISLATIVE HISTORY:
New bill
 
FISCAL IMPLICATIONS:
None
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S9273: 105 alcoholic beverage control law, 105(25) alcoholic beverage control law, 106 alcoholic beverage control law, 106(13) alcoholic beverage control law