Governor Kathy Hochul Signs Landmark Law Enabling DTC Sales Of Spirits and Cider Made In New York

On August 19th, 2024, New York Governor Kathy Hochul signed new legislation to expand direct-to-consumer (DTC) sales of alcoholic beverages produced in the Empire State. The newly enacted law, S.2852A/A.3132A, allows producers of spirits, cider, and mead to ship their products directly to consumers around the country. It’s a development that notably broadens market access and growth potential for the state’s independent distillers and cider makers, whose numbers have increased exponentially over the past 20 years.

“This legislation levels the playing field, allowing these small producers to reach new markets and foster economic growth across the state,” said Governor Hochul in a press release on her website. “With this new law, we are ensuring that New York remains a national leader in craft beverages, continuing to support our local businesses, tourism, and agriculture.”

Nationwide DTC Alcohol Laws

DTC sales of alcoholic beverages in the United States are governed by a patchwork of state laws, with each state setting its own regulations on how alcohol can be sold, shipped, and consumed. Traditionally, the sale and distribution of alcohol is tightly regulated and must adere to to the "three-tier system," which separates producers, distributors, and retailers. The rise of e-commerce and changing consumer preferences, however, has led to increased demand for direct shipping options for alcoholic beverages.

While wine has long enjoyed more permissive DTC laws, with the ability to ship directly to consumers in most states, beer, spirits, and cider have faced more restrictive regulations. As of 2024, only a limited number of states permit DTC shipping of beer and spirits, with varying requirements for licensing, age verification, and tax compliance.

The Impact of COVID-19 on DTC Legislation

Independent distilleries, breweries and cider mills faced unique economic challenges during the COVID-19 pandemic. State-mandated shutdowns closed tasting rooms, retail spaces and suspended facility tours, cutting off vital sources of income. In response, New York State temporarily allowed local producers to ship their products directly to consumers, offering them an alternative revenue stream. The temporary measure was a success and proved that DTC shipping could be conducted in a safe and responsible manner.

New York State's Approach To DTC Alcohol Sales

Recognizing the value of DTC shipping to New York’s small businesses, the push began to make the COVID-19 exceptions to the existing law permanent. The initiative benefited from bipartisan support, thanks to the presence of independent beverage producers in dependably Democratic cities and exurbs as well as the GOP strongholds of rural Upstate New York.

New York's new legislation is a game-changer for the state's craft beverage industry. The law provides producers with a much-needed tool to reach consumers directly, bypassing traditional wholesale channels that have often been difficult for smaller operations to penetrate.

New York currently has the highest number of cideries in the nation and ranks second for number of distilleries. The new law further cements the state's position by allowing craft cider and spirit producers to enjoy the same opportunities afforded wine makers and the ability to expand their reach beyond the local market.

The Economic Impact Of New York’s New DTC Law

The ability to ship directly to consumers is expected to have a significant economic impact on New York's craft beverage industry. By providing easier access to a broader market, small producers such as Taconic Distillery and Hillrock Estates, can increase their sales and visibility, which in turn supports local agriculture and the state’s overall economy. Additionally, this law helps level the playing field, offering small distilleries and cideries a competitive advantage in a market that has been traditionally dominated by larger, more established brands.

The new DTC law takes effect in 90 days, with the upcoming holiday season providing an opportunity for consumers to explore New York’s craft beverages from the comfort of their homes. The new law also sets a precedent for other states to follow, potentially paving the way for more widespread adoption of DTC sales across the country.

Photographs courtesy of the Governor Kathy Hochul and Pierre Auguste.