Agreement Retains Vital Tax Benefit for State's Small Breweries
Exempts Small Breweries from Paying Annual State Liquor Authority Fee
Albany, NY (June 14, 2012)
Governor Andrew M. Cuomo, Majority Leader Dean Skelos, and Assembly Speaker Sheldon Silver today announced an agreement on 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 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.
"New York's craft breweries are not just creating great beer that is consumed across the world, they are creating jobs, supporting farmers and our hops growers, and bringing in tourism dollars all across the state," Governor Cuomo said. "This is a big victory for our craft brewers and will help New York's already vibrant beer industry continue to grow. This shows that New York State is truly open to business once again, and I thank Majority Leader Skelos, Speaker Silver, and the legislative sponsors for their hard work in reaching this agreement."
The agreed-upon legislation includes the following provisions:
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.
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 announced 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
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. This exemption, which will be 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 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 labelled 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.
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.
Assembly Speaker Sheldon Silver said, "I stand in firm support of this tax credit's ability to support our local businesses, the backbone of our state's economy. From farming to distribution, New York's breweries create jobs. By enacting this tax credit for brewers, we are supporting the future of a growing industry in the Empire State."
Senator Lee Zeldin said, "It is critically important to do everything in our power to help New York's craft brewers succeed. This industry has thrived and expanded over the past decade while other industries have suffered and jobs have been lost. That's why I, as the original Senate sponsor of this legislation, am excited to help announce an agreement to keep New York's craft beer flowing. The agreement reached with Governor Cuomo and the Assembly to provide brewers with a tax credit and bottle label exemption, is exactly what our New York economy needs. It will enable brewers large and small- from Blue Point Brewery in my district- to Matt's Brewery in Utica, to continue to expand and grow, create jobs and keep the price of New York's craft beer competitive."
Senator Joseph A. Griffo said, "This agreement marries one of New York's oldest and largest industries - agriculture, with one of the state's fastest growing - craft breweries. Together they help make up some of the most stable employers in my area of the Mohawk Valley and in parts of urban and rural New York. I am pleased that this Governor, our Senate Majority and our partners in the Assembly realize that carefully targeted tax breaks are one of the best ways for us to help keep and create these jobs."
Senator Patty Ritchie said, "This legislation will help expand an already growing industry here in Central and Northern New York. It's a win-win for the beer and wine industries, as well as farmers; that will help foster tourism, create jobs and increase the demand for farm products grown in our region."
Senator Mark Grisanti said, "Local breweries and wineries will benefit from this legislation as it seeks to ease the tax burden for small breweries and allow those seeking to add retail operation the ability to get the appropriate licenses. Government should support small businesses as they are a catalyst for economic growth, job development and tourism. I applaud the Governor and Legislative Leaders for working together to remove the shackles that have tied this industry up. New York State's vibrant craft beer and wineries will now have the opportunity for abundant success."
Senator Roy McDonald said, "This agreement demonstrates the importance of working together to assist small businesses in New York state. Reducing the burden of taxes and fees are exactly the type of decisions that need to be made to help these business owners be successful."
Senator David J. Valesky said, "Farm breweries have the potential to be an economic stimulus throughout New York State. I congratulate the Governor and legislative leaders for recognizing this potential and encouraging growth in the industry. This is a win for agriculture, small businesses and consumers."
Assembly Member Joseph R. Lentol said, "This legislation gives the growing craft beer industry needed support in its development. In voting for this tax credit, we are making it easier for this sector of our economy to grow and prosper, create new jobs, and deliver another great Made In New York product to our marketplace."
Assembly Member Joseph Morelle said, "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."
Assembly Member Bill Magee said, "This agreement will help create small, craft-style breweries and lead to more jobs. Farmers want options so there are more ways to market their products, and this legislation will help them do that. In addition, the craft beer brewed on farms will be able to be sold at farmers markets, giving our breweries and our agricultural economy a needed shot in the arm."
Assembly Member Anthony J. Brindisi said, "Small breweries, like F.X. Matt Brewery in Utica, have been one of New York's success stories even during this tough economy. This legislation is imperative to help make sure craft brewers are able to keep investing in their communities, growing their businesses and creating new jobs."