The FY 2026 New York State Budget contained proposed legislation aimed at reducing barriers for sale of ready to drink (“RTD”) cocktails containing distilled spirits. This is good news for a nationally struggling alcohol industry, allowing businesses to capitalize on this growing new product segment. It is unclear if this new law will be enacted as the beer industry may not be in support, fearing the loss of shelf space to these new canned and bottled RTD beverages.
Ready-to-Drink (RTD) Cocktail Sales by Any Beer Retailer in New York City
The proposed new law would authorize retailers licensed to sell beer in New York City to also sell spirit-based RTD cocktails containing up to 8.5% alcohol by volume as long as the container is less than a 16 oz single serving can or bottle. Initially, this would only apply to retailers with a physical location in the City of New York but does not appear to prevent shipped orders outside of the City to consumers in other areas of the state.
The geographic limitation to New York City was a deliberate decision by lawmakers. By restricting the sale of spirit-based RTD cocktails to NYC, the state aims to pilot the program in a densely populated and diverse market, allowing for close monitoring of its impact on public health, underage drinking, and the existing three-tier alcohol distribution system. This approach provides an opportunity to assess the effects of expanded RTD sales in a controlled environment before considering broader implementation across the state.
Ready-to-Drink (RTD) Cocktail Sales by New York City Beer Wholesalers Can Be Delivered State-Wide and Even Outside the State
The proposed new law would authorize beer wholesalers located in the City of New York to distribute RTD cocktails with distilled spirits provided they are below 8.5% ABV and in a single serving container less than 16 oz. While the wholesaler must be licensed at a location with the City of New York, the wholesaler is not limited to selling to retailers in the City of New York and is authorized to sell throughout the state. Beer wholesalers can also sell to licensees outside New York State if such sales are permitted by the laws of the state where the product is being shipped.
Reduction of state excise taxes on RTD cocktails
The proposed new law would reduce the excise tax on lower alcohol RTD cocktails below 8.5% ABV to that of still wine at 30 cents per gallon, a significant savings over the taxes that apply to distilled spirits. This will offer savings to craft distillers producing these popular convenient, pre-mixed cocktails and help a struggling industry with declining alcohol sales during a time when adult use cannabis is now available and there is a trend toward no and low alcohol alternatives.
Tracy Jong is a Senior attorney at Evans Fox LLP with 30 years of experience focusing her practice in business law, intellectual property and licensing for alcohol and cannabis. Tracy Jong is a member of the New York Bar and is a registered attorney at the United States Patent and Trademark Office. She can be reached at [email protected].
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