Over Stepping Their Authority: New York vs Wine Retailers
The New York State Liquor Authority (NYSLA) has exceeded its authority in asking a New Jersey wine store, The Wine Library, to stop selling wine to residents of New York so as to do the bidding of local alcohol interests.
On August 12, the New York State Liquor authority sent a letter to Wine Library that stated the following:
The New York State Liquor Authority is in receipt of information that you are selling and shipping alcoholic beverages into New York State….In view of the above, you are directed to cease and desist selling and shipping alcoholic beverages into New York State.”
What’s really important to understand here is that the NYSLA has absolutely no authority to tell a consumer which retailer (in-state or out-of-state) it may buy wine from, nor does it have the authority to tell an out-of-state retailer that it may or many not sell a bottle or bottles of wine to a New York resident. A New York resident may purchase wine via phone or Internet from any wine retailer in the world, including retailers across the river in New Jersey. By asking the Wine Library in New Jersey to “cease and desist” from selling wine to residents of New York I can only surmise that the NYSLA (or its legal department) were being either careless or attempting to be intimidating.
It’s quite easy to conclude that the NYSLA was trying to be intimidating, if not careless. In the letter they sent to the Wine Library, the New Jersey Division of Alcohol Beverage Control was cc’d, Why? Well, New York has no jurisdiction over a New Jersey wine store. But the NJ Alcohol Beverage Control does. But what’s important, again, is that New Jersey retailers may sell wine to anyone they want anywhere in the world and neither the authorities in New Jersey or New York have anything to say about that.
Now, the issue of actually shipping the wine across state lines is another issue entirely. Whether the Wine Library arranged for the shipment to a New York resident, it is entirely possible that it was the New York resident that is responsible for shipping the wine to themselves. I don’t know if Wine Library is or will claim this or not nor do I know if there will be any litigation over this.
But what I do know is that the NYSLA has no authority to comment on who a New Jersey wine store sells to.
What I also know is that there is a concerted effort among New York distributors to use politics, the law and the NYSLA to assure as much as possible that they don’t have to compete on a level playing field and that they are throwing around their weight (gained only be being given extraordinary privilege within NY liquor law) to make this happen. Consider the following:
• New York Distributors have actively attempted to stop consumers from using any and all means for obtaining wine from out-of-state sources, be they wineries or wine stores.
• New York Distributors have made the case to the NYSLA in public and in private that companies like Amazon and Lot 18 and other marketers ought not be allowed act as marketers of wine for out-of-state wineries or retailers.
• New York Distributors have attempted to change the law so that smaller distributors can’t warehouse wine in less expensive nearby states, effectively trying to put these smaller, artisan distributors out of business
• New York Distributors have attempted to end the so-called “Grey Market” in New York, which allows a number of hard to find and out of vintage wines to make their way onto NY wine lists and stores shelves.
Now, I don’t know why all of a sudden the NYSLA is going after The Wine Library. But I’m willing to bet dimes to dollars that it was big New York distributors that insisted they do so. The problem is that the NYSLA is exceeding its authority in trying to tell The Wine Library it can’t sell wine to New Yorkers. Of course it can. But here is the really interesting question: Are the wines that are being bought from The Wine Library by New York consumers being shipped back into New York by the consumers themselves and is The Wine Library merely being paid to put the wine in boxes and to call the carriers on behalf of the consumers? If so, shouldn’t the NYSLA be going after the New York consumers, rather than doing the big NY distributors’ dirty work?
The law in New York that prohibits consumers there from having wine shipped to them directly from out-of-state wine stores is arbitrary and protectionist. In fact there is no good reason why shipment of wine from out of-state wine stores to New York consumers can’t be governed by exactly the same set of rules and regulations that govern the shipment of wine from out-of-state wineries. Both are acting as retailers and the transactions would be identical in nature.
There is another issue here too. By banning New York consumers from having wine shipped to them from out-of-state retailers, New York law is discriminating against all imported wines. While the state allows domestic wines (from domestic wineries) to be shipped into the state, it completely bars the shipment of imported wines from out-of-state since only retailers in the U.S. sell imported wine. That’s product discrimination. And again, it’s a form of discrimination that can have only one purpose: protect big New York distributors.
You might ask why I’m not railing against New York retailers, who are also protected from competition by these kinds of bans on shipping. Well, the fact is there are numerous retailers in the state of New York that are all in favor of allowing NY residents to have wine shipped to them from out of state wine stores. They are in favor of it because they aren’t cowards who fear competition.
Of course the irony here is that another internet retailer, based in NY, who feels that they are now covered from a compliance standpoint, is actually the party that started the complaint. It’s not exactly a big secret.