Craft Beer, It's HOT!!

 New York's is showing breweries and wineries some real love. The legislation will protect an important tax benefit for small breweries that produce beer in New York, exempt breweries that produce small batches of beer (regardless of location) from paying an annual State Liquor Authority fee, and create a Farm Brewery license that will allow craft brewers to expand their operations through opening     restaurants or selling new products.

1.    Protects a Vital Tax Benefit for New York State's Breweries

Under the agreement, any brewery that produces 60 million or less 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.

2.    Exempts Small Breweries from Paying Annual State Liquor Authority Fee

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. 

3.    Creates a Farm Brewery License to Promote Growth of Craft Breweries

The agreement includes creating a "Farm Brewery" license that would 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 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. The beer manufactured under these guidelines would be designated as "New York State labeled beer." The legislation is modeled after the 1976 "Farm Winery Act," which spurred the growth of wine production in this state, including the creation of 249 farm wineries and tripling the number of wineries.

4.    Exempts Farm Wineries, Distilleries and Breweries from Burdensome Tax Filing Requirements

The legislation exempts Farm Wineries and Distilleries as well as Farm Breweries 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 not necessary.