New York Lawmakers Pass Brewery and Craft Beer Reforms

Lawmakers in New York recently passed three measures with the ultimate goal of making it easier – and less expensive – for small brewers and farmers to operate in New York.

New York City restaurant lawyers consider this a major victory for those operations involved in craft beer brewery. The measures will likely result in the expansion of the industry and increased success for those already involved.

These types of small business owners have historically been constrained by strict liquor laws governed by the state, as well as restrictions on revenue and operations.

The changes will create a new type of business license, called a farm brewery license. This will allow certain tax exemptions for smaller breweries and also loosen those state restrictions. Ultimately, legislators hope it’s going to be good for the local economy as both a job creation mechanism, as well as a tourism draw.

Gov. Cuomo signed the brewery and craft beer legislation into law on Aug. 5.

The farm brewery license would effectively enable those breweries that make less than 60,000 gallons of beer each year to sell their product to retail locations for consumption off-site.

Breweries would also be allowed to operate a restaurant or inn either on site of the brewery or just adjacent to it. These small business owners could hold beer-tastings. This is a type of branch-off business that has proven wildly successful for local winemakers and vineyard operators.

The reforms will also allow business owners to sell products that would be considered complimentary to their core product. So for example, they could sell the equipment necessary for individuals to brew and bottle their own beers. They could also sell food that might pair well with beers. And, they could sell certain souvenir-type items and things that also might be made out of hops, like soaps and shampoos.

If this legislation proves as successful as the Farm Winery Act, which passed in 1976, we could see craft beer-making businesses balloon. After that act passed, wineries in the state increased three-fold — there are now roughly 250 in New York State.

Lawmakers believe this is going to boost industry for growers in the Central New York region, as they cultivate the majority of the hops in the state. By 2024, those with farm brewery licenses would be required to obtain 90 percent of their hops and other ingredients from farms in New York. This ensures the product is local, and consumers are tasting genuine New York craft beers.

Even more exciting are the tax credits. The first of those would include a credit of up to about $750,000 for breweries that made less than 60 million gallons annually. The state would also waive the $150 barrel label fee that is currently imposed on those manufacturers that make 1,500 barrels or less each year. What’s more, smaller breweries could expect less paperwork. Right now, all wholesalers of liquor, wine and beer have to report their annual sales to outside retailers (think restaurants, bars, etc.). But the new measures would no longer categorize them as wholesalers – so they won’t have to report those numbers, which can often be an expensive and time-consuming process. They’d still have to keep tabs on these figures, but they won’t be required to report them with their tax filings.

These measures are going to be big, particularly for family-owned breweries. Those who are considering getting into the business should contact an experienced New York restaurant lawyer, to ensure they are in compliance with all local, state and federal restaurant laws. And to make sure they are getting all of the benefits to which they are entitled under these new provisions.

The Wright Law Firm is a business law firm located in Midtown Manhattan. Call (212) 619-1500 for a confidential consultation.

Additional Resources:

Cuomo signs bill for small brewers, By Jimmy Vielkind, Times Union