It was good news from the State of New York yesterday for craft brewers on Long Island.
Governor Andrew M. Cuomo signed legislation that will strengthen and help grow New York State’s vibrant craft beer industry. The legislation is designed to support New York’s breweries and wineries, increase demand for locally grown farm products, and expand industry-related economic development and tourism. The legislation protects an important tax benefit for small breweries that produce beer in New York, exempts breweries that produce small batches of beer (regardless of location) from paying an annual State Liquor Authority fee, and creates a Farm Brewery license that will allow craft brewers to expand their operations through opening restaurants or selling new products.
“In addition to producing some of the finest beer in the world, New York’s craft breweries are creating jobs, supporting our state’s farmers and hops growers, as well as bringing in tourism dollars in local communities across New York,” Governor Cuomo said. “The legislation signed today demonstrates that the new New York is truly working for small business, as this law will allow breweries and wineries the opportunity to invest in new opportunities and expand their operations. I commend the bill sponsors and legislative leaders for their work on this important law.”
The new legislation includes the following benefits:
Protects a Vital Tax Benefit for New York State’s Breweries
Any brewery that produces 60 million or fewer gallons of beer in New York will now be eligible for a refundable tax credit applied against New York State personal income and business taxes. The credit is worth 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.
These tax credits will help encourage the continued expansion of New York’s craft brewing industry, which already consists of more than 90 breweries, accounts for thousands of jobs and supports more than $200 million of economic activity each year. Under a previous law, small brewers in New York received an excise tax exemption, but the legal structure of the exemption was challenged, leading to its repeal. With the new benefits signed into law today, every small brewer will fare at least as well as they did under the prior exemption.
Exempts Small Breweries from Paying Annual State Liquor Authority Fee
Breweries that produce brands of 1,500 barrels or less annually (regardless of location) are now exempt from the $150 annual brand label fee. This exemption, which is eligible to brewers in and outside of the state, will save New York breweries tens of thousands of dollars, and will help smaller breweries retain the capital they need to grow their operations and create jobs.
Creates a Farm Brewery License to Promote Growth of Craft Breweries
The legislation creates a “Farm Brewery” license that will allow craft brewers that use products grown in New York State to operate in a similar fashion to the state’s farm wineries, leading to increased demand for locally grown farm products as well as expanded economic development and tourism.
The new license allows Farm Breweries to grow in the following ways:
- Increasing Retail Outlets for New York Products: The law allows Farm Breweries to sell New York State labeled beer, wine, and liquor at their retail outlets. In addition, Farm Wineries and Distilleries will also be now permitted to sell New York State labeled beer and liquor for off-premises consumption, and Farm Distillers will also be now permitted to sell New York State labeled beer and wine for off-premises consumption.
- Allowing Farm Breweries to Open Restaurants: The new law allows the owner of a Farm Brewery to conduct tastings of and serve New York State labeled beer at any restaurants, conference centers, inns, bed and breakfasts or hotels that he or she owns on or adjacent to the Farm Brewery.
- Increasing Tastings: The new law allows Farm Breweries, Farm Wineries, and Farm Distilleries to conduct tastings of all New York State labeled beer, wine, and liquor at their premises.
- Selling Related Products: The new law allows 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.
Exempts Farm Wineries, Distilleries and Breweries from Burdensome Tax Filing Requirements
Farm Wineries and Distilleries as well as Farm Breweries are now exempt from a costly and burdensome tax filing requirement. Currently, all beer, wine, and liquor wholesalers here in New York are required to report sales made to restaurants, bars, and other retailers. However, as Farm wineries, distilleries and breweries are small, often family owned operations, they have struggled to afford the costs of complying with this annual reporting. The burden imposed on them by this filing requirement outweighs the benefit received by the State Tax Department, as purchases from farm wineries, distilleries, and breweries account for a very small percentage of the state’s total beer and wine sales. These businesses are already required by law to maintain sales records which the Tax Department may obtain upon request, making the additional mandatory filing requirement unnecessary.