(Wine-Searcher) - The Governor of New York became the Grinch for wine retailers in the state this Christmas, after quashing a bill that would have reduced the powers of the State Liquor Authority.

Andrew Cuomo said the measure, which would have made it harder for the SLA to crack down on merchants who shipped wine to states where out-of-state purchases are prohibited, would have effectively rendered New York a pirate state, "intent on breaking other state's laws".

The bill, sparked by the SLA's battles with Albany-area wine and liquor outlet Empire, had drawn the interest of retailers across the nation, who feared a veto would have a chilling effect on Internet sales across the country by emboldening other states to take similar enforcement measures.

"While we are deeply disappointed that the Governor did not approve [bill] A.5920, we will continue to fight the blatant overreach by the New York State Liquor Authority to regulate inter-state sales to the detriment of New York businesses," Empire owner Brad Junco said.

"Its attempt to arbitrarily enforce the laws of other states against successful New Yorkers sends a chilling message to anyone doing business here. In his veto message the Governor mentions his work to cut regulation and modernize the wine industry but the SLA is inventing new road blocks that restrict legitimate commerce. We believe that meeting customers' demand for the online sale of wine is not only in the best interest of the consumer and New York's economy but is also protected marketplace activity under the Commerce Clause of the US Constitution."

Daniel Posner, president of the National Association of Wine Retailers and owner of a White Plains wine shop also expressed concern. "We are obviously very disappointed. You are just limiting selection to consumers with acts like this."

Cuomo said he recognized the need to update state alcohol and beverage laws and directed the Liquor Authority to host a series of roundtable discussions on the issue starting in March.

Meanwhile, the temperatures around Albany must be getting pretty cold, as a spokeman for wholesalers – who oppose any loosening of regulations – also called the proposed bill "chilling", marking a rare case of unanimity between wholesalers and retailers. Craig Wolf, president and CEO of the Wine & Spirits Wholesalers of America, had called on Cuomo to veto the bill, saying it was "a bad bill that will make an even worse law".

He said the legislation would block the SLA from taking an enforcement action against a New York licensee for alleged violations of other states' liquors laws until those violations have been dealt with by regulators in those states.