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would receive 20 cents a bottle on each
bottle sold. Moreover, the Author-
ity found evidence the retailer did not
know where the warehouse was and had
no involvement in selecting the product
that was to be sold. It also appeared that
the retailer did not actively approve a
sale; rather, the sale went through un-
less the retailer took steps to cancel it
within four hours.
The Liquor Authority expressed
grave concerns as to whether the busi-
ness practices of the parties matched
the protocols in the request for a de-
claratory ruling. ShipCompliant’s rep-
resentatives explained that the proto-
cols were adjusted from time to time
based upon discussions with attorneys
at the SLA. Lessons were learned as
compliance issues came to light. Ship-
Compliant assured the Members that
it is seeking to create a fully compliant
system and asked the Authority to as-
sist them in reaching this goal.
The Members asked for comments
from other interested parties. Speakers
who addressed the Board pointed out
it is illegal for a non-licensed person to
participate in the profits of a licensed
entity. The term for such participation
is “Availing.” Those opposed to the ap-
plication argued that the non-licensed
entity (“Advertiser”) is availing because
it received a significant portion of the
gross sales price.
Additional questions raised included:
If a wholesaler is involved and only one
retailer, is there a gift or service issue?
If an out of state winery is storing its
goods in New York and shipping from
New York, doesn’t it need a New York
wholesale license?
If an out of state winery is storing goods
in New York and shipping from New
York to customers in New York, aren’t
they doing business in New York and
shouldn’t they pay New York State in-
come taxes?
Are the products involved in the trans-
actions so limited that the goods are es-
sentially assigned to one retailer? If so,
is the wholesaler limiting sales to a single
retailer or group of retailers in violation
of New York law?
The Liquor Authority clearly in-
tends to tackle the issue of internet sales
and third party advertisers. However, the
Members wish to proceed with caution.
The factors involved are complicated,
and the Members will continue to study
all the issues discussed before crafting
a declaratory ruling or advisory. Indus-
try Members who wish, should address
their comments to the secretary of the
Authority, Jacqueline Held at
JHELD@
abc.state.ny.us
.
The full hearing can be viewed at:
Player.php?view_id=2&clip_id=502.
Keven Danow is an attorney representing members
of all three tiers of the Beverage Alcohol Industry and
a member of the firm of Danow, McMullan & Panoff,
P.C. 275 Madison Ave, NY, NY. 10022 (212-370-3744)
. This article is not intended to
give specific legal advice. Before taking any action, the
reader should consult with an attorney familiar with the
relevant facts and circumstances.
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