Bills passed by the Legislature will aid expansion of the state’s craft beer industry by creating a farm brewery license, loosening restrictions of the State Liquor Authority on small breweries and granting tax exemptions to micro-breweries. By 2024, the new farm breweries will be required to use 90 percent of their hops from local farms. Photo by AP.
June 25, 2012The Legislature passed three bills to aid and expand the state's craft beer industry last week by creating a new type of business license, a farm brewery license, giving tax exemptions to small breweries and loosening the restrictions placed on them by the State Liquor Authority.
In support of the measures, Senate Majority Leader Dean Skelos said, "New York's craft breweries create fantastic beer, but just as important, they have a strong and growing impact on our economy because they create jobs, support agriculture and promote tourism," a sentiment echoed by all parties involved.
The first part of the three-pronged approach, the new farm brewery license, would enable manufacturers of less than 60,000 gallons of beer annually to sell their products at retail outlets for off-premises consumption.
In addition, such breweries can now operate restaurants and inns on, or adjacent to, the farm brewery property, allowing for profit from beer-tasting events and other forms of "agro-tourism" that have provided a boon to New York state's wineries. Off-premises "branch offices" would also be allowed, up to a limit of five such establishments.
This part of the legislation is modeled after the 1976 Farm Winery Act, which tripled the number of wineries to about 248 within the state, according to Julie Suarez, director of public policy of the New York Farm Bureau.
Suarez said at the time of the farm brewery bill's proposal that the legislation will most benefit the Finger Lakes and Central New York regions of the state, which grow the most hops in New York. It will benefit the growers as much as the brewers, she said, because by 2024, those with farm brewery licenses will be required to use 90 percent of their hops and 90 percent of all other ingredients in their beer from New York farms.
In a press release lauding the passage, Dean Norton, president of the New York Farm Bureau said, "Beer mugs are clinking across New York state as the NY Farm Bureau raises a glass to the Senate and Assembly for passing legislation creating a 'farm brewery' license. This will provide opportunities for local breweries to prosper and it will expand markets for New York farmers and their crops, much like what happened in the New York wine industry when similar legislation passed in the 1970s."
In terms of tax credits, the new law would establish a dual approach to financial relief.
First, it would give tax credits for small breweries based on the amount of gallons of beer they produce annually, up to a maximum credit of $745,000. Only breweries that brew less than 60 million gallons per year are eligible for the credit.
Additionally, the legislation would waive the $150 per barrel label fee imposed by the State Liquor Authority for breweries whose annual output is 1,500 barrels or less.
Lastly, concurrent legislation was passed exempting both farm wineries and new farm breweries "from a costly and burdensome tax filing requirement," as described by Gov. Andrew Cuomo months ago when he first introduced the bill.
Presently, "All beer, wine and liquor wholesalers here in New York are required to report sales made to restaurants, bars and other retailers," according to a press release from the Governor's Office. Under the new legislation, farm wineries and breweries would not be considered wholesalers anymore, hence would not need to file their numbers.
"Our farm wineries and farm distilleries are small, often family-owned operations and they have struggled to afford the costs of complying with this annual reporting," said Darrel Aubertine, commissioner of the Department of Agriculture and Markets, when the legislation was first proposed.
Breweries will still have to keep records of how much beer they sell to individuals, wholesalers and retailers for Tax Department audit purposes, but would not need to file the paperwork.
Assembly Speaker Sheldon Silver praised the passage of the agreed upon measures, saying "These measures will help create jobs, revitalize our local economies, and produce another great 'Made in New York' product. By enacting a brewers' tax credit, creating a State Liquor Authority beer label registration fee exemption for small breweries, and creating a new farm brewery license, we are supporting the future of a growing industry in the Empire State."
Sen. Joe Griffo, R-Rome, added, "Agriculture is one of the oldest industries in the state and this bill combines it with craft breweries, which is one of the fast growing. Promoting craft breweries and agriculture is common sense and good economic policy."