Designates nationally recognized credit cards as "cash" for purposes of the sale of alcoholic beverages

3 Co-sponsors

• Thomas Croci
• Patrick M. Gallivan
• Timothy M. Kennedy

Title of bill

An act to amend the alcoholic beverage control law, in relation to designating nationally recognized credit cards as "cash" for purposes of the sale of alcoholic beverages

Purpose of the bill

To allow retailers to use nationally recognized credit cards to purchase wine, beer and liquor from licensed wholesalers.

Summary of specific provisions

Section 1 amends S 101-aa(1)(f) of the Alcoholic Beverage Control Law to include within the definition of cash "nationally recognized credit card."

Section 2 amends § 101-aaa(1)(g) of the Alcoholic Beverage Control Law to include within the definition of cash "nationally recognized credit card."

Section 3 provides the effective date.

Existing law

Under current law, the definition of "cash" for purposes of these sections of the ABC Law includes: currency and coin of the United State of America, certified check, money order, electronic funds transfer, bank officer's check or draft or a check drawn on the account of the retail licensee payable to the manufacturer or wholesaler and dated no later than the date of delivery of the alcoholic beverages and which is honored upon presentment for payment.

Justification

Amending the ABC Law in the manner prescribed by this legislation furthers Governor Cuomo's stated directive to modernize the regulation of New York's alcohol beverage industry. These simple amendments will permit licensees to operate in accordance with 21st Century business practices while continuing to protect the purpose of the ABC Law's credit restriction, i.e., prohibiting "tiedhouse" arrangements whereby the retailer becomes indebted to the upper-tier industry member.

Credit cards are basic tools of modern commerce, and are ubiquitous throughout the world today. As such, they can and should be included in the definition of "cash" that alcohol beverage retailers may use to purchase products from duly licensed alcohol beverage wholesalers. Allowing licensed retailers to buy alcohol beverages from distributors using credit cards will facilitate commercial transactions and improve accountability through enhanced record-keeping, while preserving regulatory policy objectives such as credit limitations and tied-house restrictions. If a retailer uses a credit card to buy alcohol beverage inventory, the wholesaler receives payment immediately. The wholesaler is not extending credit to the retailer; rather, credit is extended by a financial institution that has no direct interest in the alcohol beverage industry. The involvement of the third-party financial institution actually creates an additional barrier between the retailer and the, wholesaler, effectively alleviating the historical concerns behind these credit limitations. Moreover, the involvement of the financial institution issuing the credit card increases timely and effective accountability through independent, timely and effective record-keeping as to all credit card transactions. Hence, as a matter of alcohol regulatory policy, the use of a credit card in no way affords the wholesaler an opportunity to gain undue influence with the retailer; the ensuing credit obligation owed by the retailer is to the

card-issuer, not the merchant selling the alcohol inventory to the card holder.

Prior legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.