Relates to the shipment of alcoholic beverages into the state and requires the completion of a report by the primary source of supply before commencing such sale or shipment.
TITLE OF BILL: An act to amend the alcoholic beverage control law, in relation to the shipment of alcoholic beverages into the state
PURPOSE OF THE BILL: This bill would amend the Alcoholic Beverage Control Law to insure that alcoholic beverages distributed in this state pass through those authorized to sell the product. This will protect against counterfeit or "grey market" goods and would serve as an enforcement tool in the collection of state excise taxes. This would be accomplished by adding a new "primary source" statute that would require the manufacturer of an alcoholic beverage to identity the entities that are authorized to distribute, at wholesale, the product in this state.
SUMMARY OF SPECIFIC PROVISIONS: Section 1 of the bill would add a new section 101-c to the Alcoholic Beverage Control Law. The subdivisions of this new section would provide as follows:
Subdivision 1 defines the term "primary source of supply" as being the manufacturer or brand owner of the alcoholic beverage, if it is produced in the United States, or the exclusive importer, as designated by the manufacturer, for products manufactured outside the United States.
Subdivision 2 requires the "primary source of supply" to submit documentation to the Authority which identifies the particular product, the licensed wholesalers in this state authorized to sell the product at wholesale, and the entities responsible for complying with the state's brand label registration and price posting laws with respect to the product.
Subdivision 3 requires that. the form containing the documentation provided for in subdivision 2 must be filed, with certain exceptions, at least 30 days before the product is shipped into, or sold in this state.
Subdivision 4 requires that the form containing the documentation must be amended when certain changes are made to the information that has already been submitted.
Subdivision 5 addresses the manner (certified mail) by which the documentation must be submitted to the Authority.
Subdivision 6 exempts those selling privately held wine and liquor and out-of-state wineries shipping directing to consumers from compliance with the provisions of the new section.
Subdivision 7 advises licensed wholesalers that they cannot sell an alcoholic beverage unless they are listed as an authorized distributor in the form submitted by the primary source of supply.
Subdivision 8 advised licensed retailers that they cannot buy an alcoholic beverage unless it is purchased from a wholesaler who is listed an authorized distributor in the form submitted by the primary source of supply.
Subdivision 9 imposes limited record keeping requirements on the primary source of supply with respect to the licensees in this state who purchased alcoholic beverages from the primary source of supply.
Subdivision 10 gives rule making power to the Authority to assist in the administration of this section.
Section 2 of the bill would make the new section effective immediately.
JUSTIFICATION: There are substantial quantities of "grey market" alcoholic beverages being imported into, or sold in this state. These products are either counterfeit versions of the genuine alcoholic beverage produced by the manufacturer, or the genuine product that has been obtained by a wholesaler from a person who was not authorized to distribute the product.
Both scenarios are a cause of concern. With respect to counterfeit products, there is no assurance that the alcoholic beverage is safe for human consumption. The product, because of its packaging, appears to the consumer be the genuine product. However, the consumer will have no idea that the product may be something of lesser quality or, more importantly, something that may pose a serious, immediate health risk to the consumer.
With respect to genuine products distributed by unauthorized wholesalers, such activity undermines the "three tier system" in place in this state. Sale of alcoholic beverages by such wholesalers can result in unpaid excise taxes and a disruption in the orderly distribution of alcoholic beverages, one of the stated purposes of the Alcoholic Beverage Control Law.
Initially, those unfamiliar with the "primary source of supply" concept may be concerned that it is an attempt to require manufactures to have franchise agreements with wholesalers, thus restricting the number of wholesalers who can sell the product. The proposed statute specifically states that manufacturers are riot required to limit the number of wholesalers that can market their products. They need only identify the wholesalers who will be carrying their products.
EXISTING LAW: There is no current statute specifically addressing this issue. Existing sections of the Alcoholic Beverage Control Law, with respect to brand label registration and price posting, provide limited means to track whether alcoholic beverages are being distributed by authorized wholesalers.
PRIOR LEGISLATIVE HISTORY: Similar intent to A.9815/S.6691 of 2009-2010.
Increased revenue from the collection of excise taxes.
EFFECTIVE DATE: This act shall take effect on the one hundred eightieth day after it shall have become a law.
STATE OF NEW YORK ________________________________________________________________________ 4499 2011-2012 Regular Sessions IN SENATE April 7, 2011 ___________Introduced by Sen. MARCELLINO -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations AN ACT to amend the alcoholic beverage control law, in relation to the shipment of alcoholic beverages into the state THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The alcoholic beverage control law is amended by adding a new section 101-c to read as follows: S 101-C. PRIMARY SOURCE OF SUPPLY. 1. FOR THE PURPOSES OF THIS SECTION, THE "PRIMARY SOURCE OF SUPPLY" OF AN ALCOHOLIC BEVERAGE SHALL MEAN THE MANUFACTURER OR BRAND OWNER IF LOCATED IN THE UNITED STATES OR, IN THE CASE OF AN ALCOHOLIC BEVERAGE MANUFACTURED OUTSIDE THE UNITED STATES, THE EXCLUSIVE DESIGNATED IMPORTER OF SUCH ALCOHOLIC BEVERAGE. 2. BEFORE COMMENCING THE SALE OR SHIPMENT OF ANY ALCOHOLIC BEVERAGE INTO OR WITHIN THIS STATE, THE PRIMARY SOURCE OF SUPPLY OF SUCH ALCOHOL- IC BEVERAGE SHALL SUBMIT TO THE AUTHORITY A COMPLETE REPORT, ON FORMS PRESCRIBED BY THE AUTHORITY, WHICH SHALL INCLUDE: (A) THE NAME OF THE PRIMARY SOURCE OF SUPPLY; (B) A LIST OF THE NAMES OF THE LICENSED WHOLESALERS IN THIS STATE DESIGNATED TO SELL THE ALCOHOLIC BEVERAGE: (I) SUCH LIST SHALL BE CONSISTENT WITH ANY LIST SUBMITTED PURSUANT TO PARAGRAPH (A) OF SUBDIVISION FOUR-A OF SECTION ONE HUNDRED ONE-B OF THIS ARTICLE RESTRICTING THE DISTRIBUTION OF SUCH ALCOHOLIC BEVERAGE TO CERTAIN WHOLESALERS; (II) THIS PARAGRAPH SHALL NOT REQUIRE THE PRIMARY SOURCE OF SUPPLY TO RESTRICT THE SALE OF ANY ALCOHOLIC BEVERAGE TO CERTAIN WHOLESALERS; (C) THE NAME OF THE PERSON, IF NOT THE PRIMARY SOURCE OF SUPPLY, DESIGNATED TO FILE THE PRICE SCHEDULE FOR THE PRODUCT REQUIRED PURSUANT TO PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION ONE HUNDRED ONE-B OF THIS ARTICLE;EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10362-01-1 S. 4499 2
(D) THE NAME OF THE PERSON, IF NOT THE PRIMARY SOURCE OF SUPPLY, DESIGNATED TO FILE THE APPLICATION FOR REGISTRATION OF THE BRAND OR TRADE NAME LABEL PURSUANT TO PARAGRAPH (A) OF SUBDIVISION FOUR OF SECTION ONE HUNDRED SEVEN-A OF THIS ARTICLE; (E) THE PRODUCTS TO BE SOLD IN, OR SHIPPED INTO, THIS STATE, INCLUD- ING: (I) THE BRAND NAME; (II) CLASS TYPE; (III) FANCIFUL NAME. (F) CONFIRMATION OF COMPLIANCE WITH APPLICABLE FEDERAL AND/OR STATE LABELING REQUIREMENTS, SUCH AS TTB IDENTIFICATION NUMBER FOR THE BRAND LABEL AND NEW YORK STATE DEPARTMENT OF AGRICULTURE AND MARKETS LABORATO- RY ANALYSIS; (G) IN THE CASE OF AN IMPORTER, DOCUMENTATION ESTABLISHING THAT THE IMPORTER IS THE EXCLUSIVE IMPORTER FOR THE FOREIGN MANUFACTURER OR BRAND OWNER OF THE PRODUCT FOR THE PURPOSE OF COMPLIANCE WITH THIS SECTION. 3. SUCH FORM SHALL BE SUBMITTED TO THE AUTHORITY AT LEAST THIRTY DAYS BEFORE THE ALCOHOLIC BEVERAGES SET FORTH THEREIN ARE SHIPPED INTO OR SOLD IN THIS STATE. FOR GOOD CAUSE SHOWN, AND FOR REASONS NOT INCONSIST- ENT WITH THE PURPOSE OF THIS CHAPTER, THE AUTHORITY, IN ITS DISCRETION, MAY ALLOW FOR THE SUBMISSION OF A FORM LESS THAN THIRTY DAYS BEFORE THE ALCOHOLIC BEVERAGES SET FORTH THEREIN ARE SHIPPED INTO OR SOLD IN THIS STATE. 4. A NEW FORM MUST BE FILED IN THE EVENT THAT A MANUFACTURER CHANGES ITS DESIGNATED IMPORTER OR WHOLESALERS PRIOR TO CONTINUING THE SALE OR SHIPMENT OF ANY ALCOHOLIC BEVERAGE. 5. ALL FORMS SHALL BE FILED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND SHALL TAKE EFFECT UPON RECEIPT OF THE FORM BY THE AUTHORI- TY. 6. THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO PRIVATELY HELD WINE OR LIQUOR BEING SOLD PURSUANT TO SECTION NINETY-NINE-G OF THIS CHAPTER OR TO WINE SOLD PURSUANT TO A DIRECT INTERSTATE WINE SHIPPING LICENSE ISSUED UNDER SECTION SEVENTY-NINE-C OF THIS CHAPTER. 7. NO LICENSED WHOLESALER SHALL SELL AN ALCOHOLIC BEVERAGE TO A RETAILER UNLESS SUCH WHOLESALER HAS BEEN AUTHORIZED BY THE PRIMARY SOURCE OF SUPPLY, PURSUANT TO SUBDIVISION TWO OF THIS SECTION, TO SELL SUCH ALCOHOLIC BEVERAGE. 8. NO RETAILER SHALL PURCHASE AN ALCOHOLIC BEVERAGE OTHER THAN FROM THE MANUFACTURER, IF LICENSED IN THIS STATE TO MANUFACTURE SUCH ALCOHOL- IC BEVERAGE, OR FROM A WHOLESALER WHO HAS BEEN AUTHORIZED BY THE PRIMARY SOURCE OF SUPPLY, PURSUANT TO SUBDIVISION TWO OF THIS SECTION, TO SELL SUCH ALCOHOLIC BEVERAGE. 9. THE PRIMARY SOURCE OF SUPPLY SHALL MAINTAIN RECORDS OF ALL TRANS- ACTIONS WITH WHOLESALERS LICENSED WITHIN THIS STATE WHICH SHALL SHOW THE NAMES, ADDRESSES AND LICENSE NUMBERS OF SUCH LICENSEES TOGETHER WITH THE QUANTITY AND PRICE OF ALCOHOLIC BEVERAGES SOLD TO SUCH LICENSEES. SUCH RECORDS SHALL BE MAINTAINED FOR A PERIOD OF TWO YEARS AND SHALL BE MADE AVAILABLE FOR INSPECTION BY THE AUTHORITY AND THE DEPARTMENT OF TAXATION AND FINANCE. 10. THE AUTHORITY IS HEREBY AUTHORIZED TO DO SUCH ACTS, PRESCRIBE SUCH FORMS AND MAKE SUCH RULES, REGULATIONS AND ORDERS AS IT MAY DEEM NECES- SARY OR PROPER TO EFFECTUATE THE PROVISIONS OF THIS SECTION. S 2. This act shall take effect on the one hundred eightieth day after it shall have become a law.