A threat that could have put New York’s breweries in financial jeopardy and driven up the cost of craft beer has been staved off, thanks to collaboration by breweries and sympathy from Albany.
As Rochester correspondent Mark Tichenor reported, a recent lawsuit filed by the Shelton Brothers importation and distribution company resulted in the end of exemption from excise tax and brand label fees for New York breweries. That meant that effective immediately, New York breweries were required to pay a $150 fee on each individual beer label registered for sale, plus 14 cents on the gallon (add an extra 12 cents in New York City) –– new costs that could amount to half a million dollars a year or more. The sudden change would have been potentially devastating for our craft beer industry, driving up prices and forcing job cuts.
The New York State Brewers Association acted swiftly to lobby Governor Cuomo, citing the fact that New York’s brewing industry contributes $200 million in sales to the state’s economy and employs roughly 3,000 people directly (not including retail, wholesale, and other indirectly related jobs, which number in the tens of thousands). Led by Cuomo, legislators reached an agreement to protect our breweries in surprisingly short order.
Under the agreement, any brewery that produces 60 million or fewer gallons of beer in New York would be eligible for a refundable tax credit applied against New York State personal income and business taxes. The credit amounts would be 14 cents per gallon for the first 500,000 gallons produced in New York, and 4.5 cents per gallon for the next 15 million gallons produced in the State––thus effectively negating the tax burden. Furthermore, the legislation will exempt breweries that produce brands of 1,500 barrels or less annually (regardless of location) from the $150 annual brand label fee.
“Governor Andrew Cuomo and state lawmakers have clearly recognized the contribution the craft brewing industry is making to revive the state’s economy, create jobs and demonstrate that New York is indeed ‘Open for Business.,’” said David Katleski, Association president and owner of Empire Brewing in Syracuse, in a statement on the NYSBA website. “The deal announced by the Governor and legislative leaders gives us the help we need to continue to add jobs and keep prices down for our loyal customers.”
In addition to the tax credit, the legislation includes the creation of a “Farm Brewery” license, which would allow craft brewers that use New York State ingredients similar benefits to those enjoyed by farm wineries.
The new license would allow Farm Breweries to grow in the following ways:
- Increasing Retail Outlets for New York Products: The legislation would allow Farm Breweries to sell New York State labelled beer, wine, and liquor at their retail outlets. In addition, Farm Wineries would also be permitted to sell New York State labeled beer for off-premises consumption.
- Allowing Farm Breweries to Open Restaurants: The legislation allows Farm Breweries to obtain licenses to operate restaurants, conference centers, inns, bed and breakfasts or hotels on or adjacent to the farm brewery.
- Increasing Tastings: The legislation would allow both Farm Breweries and Farm Wineries to conduct tastings of New York State produced beer and wine at their premises.
- Selling Related Products: The legislation would allow farm breweries to sell beer making equipment and supplies, food complementing beer tastings, souvenir items, and additional products similar to those allowed under the Farm Winery statute.
In order to receive a Farm Brewery license, the beer must be made primarily from locally grown farm products. Until the end of 2018, at least 20% of the hops and 20% of all other ingredients must be grown or produced in New York State. From January 1, 2018 to December 31, 2023, no less than 60% of the hops and 60% of all other ingredients must be grown or produced in New York State. After January 1, 2024, no less than 90% of the hops and 90% of all other ingredients must be grown or produced in New York State. (from the governor’s website):
Assembly Member Joseph Morelle said of the tax credit and farm brewery license creation, “New Yorkers across the state will soon be able to know that the fresh ‘Made in New York’ beer they enjoy this summer is made from ingredients grown and produced in this state, benefiting our local communities and small businesses. These measures are a win-win-win for our state’s recovering economy, the craft brewers who will benefit from a lower tax burden, and consumers across the state who want to buy fresh and buy local, including when it comes to beer.”
The farm brewery license is an exciting development, but most important, breweries all over the state are breathing a sigh of relief over the averted tax disaster. “It’s remarkable that it happened so fast,” said Ethan Cox, CEO and co-founder of Buffalo’s Community Beer Works, commending the lobbying efforts of New York’s craft breweries and Governor Cuomo for his sympathy to the industry. “When you think of the top craft beer states––Colorado, California, Oregon––New York should be on that list.” It’s nice to know that our representatives in Albany understand the importance of our state’s craft breweries and are willing to pass legislation to help them grow. Here’s to a beer success story!