Wine Consignment - Legal ?? How to Do It?

Is consigning wine legal ? In NY? What’s the actual process and payback ?

Just not familiar and want to be educated .

Great idea! Surprised no one made an app for that!

AFAIK, not legal anywhere in the US.

U.S. Code Title 27.
FEDERAL ALCOHOL ADMINISTRATION Section 205. Unfair competition and unlawful practices

It shall be unlawful for any person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer or wholesaler, of distilled spirits, wine, or malt beverages, or as a bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate:

(d) Consignment sales
To sell, offer for sale, or contract to sell to any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, or for any such trade buyer to purchase, offer to purchase, or contract to purchase, any such products on consignment or under conditional sale or with the privilege of return or on any basis otherwise than a bona fide sale, or where any part of such transaction involves, directly or indirectly, the acquisition by such person from the trade buyer or his agreement to acquire from the trade buyer other distilled spirits, wine, or malt beverages—if such sale, purchase, offer, or contract is made in the course of interstate or foreign commerce, or if such person or trade buyer engages in such practice to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products or if the direct effect of such sale, purchase, offer, or contract is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such trade buyer in interstate or foreign commerce: Provided, That this subsection shall not apply to transactions involving solely the bona fide return of merchandise for ordinary and usual commercial reasons arising after the merchandise has been sold;

But this could be a private individual and not a “person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer or wholesaler, of distilled spirits, wine, or malt beverages, or as a bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate”

IIRC this is done a lot in California and NY - Look at some of the great (former) wine list in NY with Veritas and Cru.

Good point, Michael. I don’t know what, if any, restrictions there may be for private individuals.

I just want to take a moment to applaud all the lawyers out there. The above is a single sentence, and not a complete sentence at that. Well done! This is exactly the kind of thing that will keep you in the money, allowing the purchase of ever more and better wines neener

Each jurisdiction has its own rules.

First, this is the sort of thing that gives lawyers a bad name. What a mess! [barf1.gif]

But you’ve misread this, Ken. As I’ve tried to show with the highlighting, this doesn’t prohibit consignment sales by individuals. It’s limited to transactions within the trade; it doesn’t extend to end consumers.

What’s it all about, then? [scratch.gif] One can only guess. Here’s a theory:

Note that the heading is “Unfair competition and unlawful practices.” If you know something about federal and state unfair competition laws, it looks like it’s aimed at consignment sales and buy-back provisions that would amount to discounts because they are very advantageous terms of sale that would draw business away from other sellers. There are oodles of unfair comp laws barring below-cost or “unfair” pricing. That usually means selling cheaper than the competition can afford to offer, which really, really pisses off the competition. These days we usually accept that Walmart can sell cheaper than your local mom and pop. We don’t consider that a breach of antitrust/unfair competition laws. But in days past, price discounting was often viewed as a bad thing – unfair to others. This section appears to date to 1935, and the only amendments appear to be technical changes cross references and the like as other laws were tweaked and renumbered.

Some states, including NY, require wholesalers to post their prices, and they have to offer their products to any comers at the posted price (subject to availability, of course). Those laws are usually accompanied by bans on rebates and limitations on credit (i.e., customers have to pay in 30 days) so that sellers can’t give other economic concessions to buyers.

My hunch is that this is meant to codify in federal law what were probably common or universal state rules at the time, shortly after Repeal.

But that’s just a guess.

If you read it in context (which I would not wish on anyone), it’s a subparagraph, so the subject is missing in the portion you quote. That’s just the predicate. (And what a predicate!) The subject is in the intro paragraph above.

Perhaps this was written by the moles planted in Congress by the remains of the Womens’ Christian Temperance Union in order to wreak havoc on the alcohol industry for another century.

I cannot speak to legalities- but as I said in another thread to someone looking at this option, don’t do it.

There are plenty of legitimate wine stores out there- and in NYC especially- who can legally purchase your wines from you and then resell them. And many of these operations will handle small transactions of just a few bottles worth less than $1,000 in total- especially if you are local.

Consignment arrangements put all the risk on you and give the seller a chance to make a profit with no cash outlay and generally no risk in the event of damage (which usually falls to the consignor- check any contracts carefully.) Unless someone is going to give you 75%+ of the sales proceeds (which I have never seen offered) in a consignment arrangement AND contractually assume liability for damage or loss via their own insurance coverage- there is absolutely no reason to even consider such a transaction.