Spirits, hard cider, mead and braggot producers can now ship their products directly to New York consumers.
Gov. Kathy Hochul signed Senate Bill S2852A into law Monday, allowing direct-to-consumer (DTC) shipping from in- and out-of-state manufacturers. The new law will go into effect 90 days after signature, “just in time for the upcoming holiday season,” the New York Cider Association (NYCA) said in a press release.
“This legislation will hopefully support the long-term survival and create another growth spurt of New York’s vibrant craft and farm alcohol producers,” New York State Liquor Authority chair Lily Fan said in the state’s announcement. “I am immensely proud that our agency is able to support our manufacturing licensees in obtaining this long-sought change, which would allow them to directly touch their consumers and build brand loyalty in a meaningful manner.”
The bill was referred to the Senate’s investigations and government operations office in January, sponsored by Sen. James Skoufis (D – District 42).
Cider and spirits producers were temporarily allowed to ship DTC during the COVID-19 pandemic, but those allowances ended when pandemic-related executive orders expired. Wine producers have been able to ship DTC to New York residents since 2005. Beer DTC shipping is not permitted.
“We’ve worked long and hard to achieve this obvious modern-day option for consumer choice across New York State as well as to achieve needed parity among the craft beverage industry sectors,” Nine Pin Ciderworks co-founder and NYCA government affairs committee member Sonya del Peral said in the NYCA’s release.
“Our sincere gratitude to Gov. Hochul for signing the bill in time for the upcoming holiday season, which provides farm cideries the opportunity to begin offering exciting cider options not found on the shelves to New York cider fans,” del Peral continued. “The establishment of this new channel of trade will position New York farm cideries to continue supporting the Empire State’s extraordinary orchards and farms – drink N.Y. apples!”
All spirits, hard cider, mead and braggot producers within New York that have manufacturing licenses in the state will be allowed to ship up to 36 cases of product to residents at least 21 years old, with a maximum of nine liters per case.
Out-of-state manufacturers will have the same volume limitations, but must also obtain an out-of-state direct shipper’s license, with an annual fee of $125.
Opening New York to DTC shipments from out-of-state producers guarantees that the state does not run afoul of the U.S. Constitution’s dormant Commerce Clause, which prevents states from granting privilege to in-state businesses over out-of-state ones.
The clause has been invoked in several landmark bev-alc lawsuits, such as Tennessee Wine and Spirits Retailers Association v. Thomas, which struck down the state’s law that residents seeking retail licenses needed to live in the state for two years before receiving them, and Granholm v. Heald, which paved the way for broader DTC shipping of wine.
According to New York’s new law, all shipments from in- and out-of-state shippers must be “conspicuously labeled with the words: ‘contains alcoholic beverages – signature of person age 21 or older required for delivery – not for resale,’ or with other language” approved by New York’s state liquor authority. Order recipients must be present for deliveries, provide a photo ID, and sign an electronic or paper form upon delivery.
Manufacturers must also keep records of shipments – including product volume and value, purchasers’ names and addresses and details on the carrier company used – for at least three years.
The bill text does not include restrictions on company size.
“After years of needing this for our emerging industry, we are so grateful for the leadership demonstrated by Gov.Hochul in signing the Direct-to-Consumer Shipping Bill into law,” NYCA executive director Scott Ramsey said in the release. “With her signature, she has recognized the significant contribution our N.Y. Hard Cider producers bring to the agricultural and tourism economy of their communities and to this state.
“This legislation not only establishes parity with the N.Y. wine industry, but also strengthens N.Y. cider’s capability to build this growing category for all parties involved and respond to the consumer’s needs in a contemporary 2024 marketplace,” he continued. “By allowing our N.Y. cider growers, producers, and farmers the ability to ship their world class N.Y. ciders and directly connect with their customers to build their small businesses in a safe and meaningful way, this legislation helps to secure N.Y. cider’s leadership status in this industry while also fostering the growth of N.Y. cider’s economic impact and viability to our state’s agricultural landscape.”
New York’s hard cider contributes $1.7 billion in annual economic impact to the state of New York, according to the NYCA. More than 125 licensed producers produce more than 5 million gallons of cider per year, making New York the largest cider-producing state in the U.S. by active cideries. New York is also the second largest state by apple growers.
“Being able to build our markets via direct shipment creates an opportunity for us as small agricultural businesses to maintain our leadership status and expand the category of N.Y. cider into markets that have not existed before,” Steampunk Cider founder and NYCA president Jonathan Oakes said in the release. “This will encourage travel and tourism and allow us to continue to reach forward and fully embrace our place as The State of Cider.”
The move could also boost the state’s tax revenue, according to Sovos ShipCompliant, a bev-alc shipping software and compliance company. Between 2017 and 2020, bev-alc companies shipping DTC with the help of Sovos contributed $438 million in tax revenue to participating states, according to the company.
“This move recognizes and meets the strong demand for DtC spirits shipping from producers and consumers alike – notably, 87% of regular craft spirits drinkers want to purchase craft spirits via DTC shipping legally and 82% want to see laws change to expand DTC spirits shipping,” Sovos regulatory general counsel Alex Koral said in a statement shared with Brewbound, citing Sovos’ 2023 DTC Spirits Shipping report.
“Not only do spirits drinkers support legalizing DtC shipment of spirits, they’re willing to pay for it,” Koral continued. “The DTC spirits shipping report also found spirits drinkers are willing to spend about $114 each month on craft spirits via DTC.