The most basic principle behind liquor licensing laws is that it is illegal to sell alcohol without the proper license(s). Once upon a time, this concept was fairly straightforward, when sales transactions were made or negotiated in person. Then came the Internet, which, as in so many aspects of our lives, has both simplified and complicated how we interact and do business. Online purchasing has made it easier for small businesses to get their brands and products out to a larger audience, thereby increasing its likelihood of financial success. At the same time, this new transactional path has created a new dynamic that the old laws do not clearly address.

Take for example ShipCompliant, a Colorado-based corporation that has created an online platform that facilitates the Internet sale of alcoholic beverages by licensed retailers, licensed wineries and out-of-state wineries (that are allowed to sell to New York residents).  On the platform, these businesses can advertise and sell their products on websites, in online magazines, etc. In exchange for access to the platform, each business must pay a fee to the company for each sale made using its services.

The problem is that New York does not permit unlicensed entities to participate in, and receive compensation from, the sale of alcoholic beverages. This company has a product designed to assist in compliance with alcohol and tax laws and is compensated based on a per-bottle basis or on sales volume. On December 14, 2012, ShipCompliant submitted a Petition for Declaratory Ruling to the New York State Liquor Authority that acknowledges that this business model does     not violate the Alcoholic Beverage Control Law or the Rules of the Authority. There is a Special Full Board Meeting scheduled to be held on January 17, 2013 to address the petition.

Is this “sharing” of retail revenues, or a simple way of calculating fees such that they correlate to the benefit and use of the service (e.g. more sales, more fees)? Does this business model allow an unlicensed entity to sell alcoholic beverages? I don’t think so. It is simply a software (or SaaS) solution to help licensed sellers sell their licensed products. Commercial channels of trade have changed and the regulatory authorities need to adjust to the current business world. Internet sales direct to consumer are a reality. Permitting ShipCompliant to operate freely in New York will not only increase compliance, but will help strengthen New York winery (and craft brewery and distillery) businesses. Everyone will benefit. I have written and submitted a letter of support, and I encourage others to do the same.