Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Robinson

DATE TYPED 2/4/05

HB

SHORT TITLE Carrying of New Mexico Wine by Vendors

SB 133

ANALYST McSherry

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

NFI

NFI Indeterminate Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

New Mexico Department of Agriculture (NMDOA)

Regulations and Licensing Department (RLD)

Economic Development Department (EDD)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of Bill

Senate Bill 133 proposes a new section of the Procurement Code. The bill proposes language

that, if enacted, would require any vendor who “does business with the state,” and holds a liquor

license or license to sell wine, to carry and sell New Mexico-made wine, made from New Mex-

ico-grown grapes.

Significant Issues

The Attorney General’s Office asserts that the bill does not define the phrase, “does business

with the state.” It is unclear, AGO continues, whether the intent of the bill is to impose require-

ments on entities selling liquor to state agencies, or on state facilities selling to members of the

public, or both. The New Mexico State Fair, certain state museums, and other state facilities al-

low the sale of liquor on their premises during certain public and private functions. It is possible

that other state agencies purchase alcoholic beverages directly from liquor licensees using state

funds. It is also unclear what is meant by the term “the state”, and whether that includes all state

agencies and institutions, including educational institutions.

Senate Bill 133 -- Page 2

The bill does not define the use of the term “carry”. AGO states that It is unclear whether this

term is intended to require a liquor licensee to offer New Mexico wine at state functions. As

written, AGO continues, a liquor licensee could comply with its provisions by “carrying wine for

sale” to the general public, without offering it for sale at state functions or at state facilities.

AGO asserts that the bill does not carry any penalties for failing to comply with its provisions.

PERFORMANCE IMPLICATIONS

New Mexican vineyards and wineries may increase their business and markets in the state.

FISCAL IMPLICATIONS

Vendors which sell NM wine may have an impact on the price of wine (increase/decrease) sold

to or from state facilities.

ADMINISTRATIVE IMPLICATIONS

According to the Attorney General’s Office, the bill doesn’t prohibit state agencies from “doing

business” with liquor licensees who don’t carry New Mexico wine for sale. It is unclear how

state agencies will interpret its effect.

TECHNICAL ISSUES

The Regulations and Licensing Department (RLD) asserts that the proposed bill may authorize

certain liquor license holders, whose licenses do not currently authorize the carrying and selling

of wine, to practice in violation of the Liquor Control Act. This change, according to RLD,

could effectively permit the expansion of the current rights for certain liquor license holders to

carry and sell wine.

Potentially, RLD speculates, liquor license holders, such as holders of common carrier, small

brewer’s, and certain wholesaler licensees who do business with the State Of New Mexico and

whose license may not otherwise permit them to carry and sell wine would be permitted to do so.

Conflicts may also arise with the Franchise Laws according to RLD. The agency states that it is

unclear whether wine sales would be limited to liquor license holders for on-premises consump-

tion, off-premises consumption, or both, or for sales to the general public. RLD asserts that by

requiring a licensee vendor to sell New Mexico wine, who is not otherwise permitted to sell any

type of wine, the bill would effectively change what is not permitted under the Liquor Control

Act.

OTHER SUBSTANTIVE ISSUES

The Department of Agriculture states that by allowing the state an additional avenue for purchas-

ing New Mexico wines, and additional market for New Mexico wines, and a significant promo-

tional opportunity of these wines to local, national, and international consumers would be estab-

lished.

Senate Bill 133 -- Page 3

According to the Attorney General’s Office (AGO), if this bill were enacted and viewed as a pro-

hibition against a liquor licensee “doing business”, in any fashion, with any state agency unless

that licensee carries New Mexico wine for sale, the bill could be subject to challenge as restrain-

ing trade. If viewed as a prohibition against a state agency “doing business,” with a liquor licen-

see who does not carry New Mexico wine for sale, AGO continues, the bill could be subject to

challenge as requiring an unfair procurement factor.

The Economic Development Department (EDD) relates that, as sales increase for New Mexican

wines, so would the demand for additional grapes, processing supplies, and distribution. The

Department relates that local economies would be stimulated through manufacturing as well as

tourism. Further EDD cites that many NM wineries are located in rural areas, and any type of

economic stimulation will have significant impacts on local residents.

ALTERNATIVES

AGO suggests that the bill be re-drafted to conform to the Procurement Code and its requirement

of fair and equitable procurement. AGO states that a preference to those offering to furnish New

Mexico wine at a state function in response to a state procurement could potentially accomplish

the objective perceived by the proposed bill.

RLD proposes that the Liquor Control Act may need amending should the bill be enacted so that

there would not be conflicting language between the Code and the Act.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

The New Mexico Department of Agriculture asserts that avenues to promote and sell New Mex-

ico wines, and economic opportunities within the industry would not be expanded should the bill

not be enacted.

The Attorney General’s Office predicts that state agencies who do engage in business with liquor

licensees will continue to do so without regard to whether the licensee carries New Mexico wine

for sale.

EM/lg