You can’t swing a hand-crafted artisan cocktail or local craft beer around the Hudson Valley without hitting a farm distillery or farm brewery. And it’s wonderful!
The farm distillery, farm brewery, farm cidery, and farm winery industries and their “New York labeled” products have a lot of support from New York state government.
These industries support local agriculture, create jobs across many sectors, and drive tourism.
For their delicious tipples to be “New York labeled”, these producers are required to use a certain percentage of New York grown ingredients in their products. New York labeled liquor and wine must be made from 75% New York state grown or produced ingredients. New York labeled cider may only use New York apples or other pome fruit. New York state labeled beer’s local ingredient requirement increases over time.
New York state labeled beer must:
- Until December 31, 2018, be brewed with 20% New York grown hops and 20% other ingredients (not including water),
- From January 1, 2019, until December 31, 2023, be brewed with 60% New York grown hops and 60% other ingredients (not including water),
- From January 1, 2024 on, be brewed with 90% New York grown hops and 90% other ingredients (not including water),
New York state is continually updating its laws to further promote these industries, and to address inconsistency in the laws that apply to each of these industries.
The New York State legislature recently passed legislation allowing farm distilleries to sell New York made beer, wine, and cider by the glass. Farm breweries, wineries, and cideries were already permitted to do so. This allows cross promotion amongst local producers.
Currently, wineries are exempt from sales and use tax on samples sold in their tasting rooms. Breweries are exempt, but only for samples they give away. A new law has passed the state Assembly and Senate that would extend the sales and use tax exemption to samples sold at breweries, distilleries, and cideries. This creates more uniformity in the laws governing these industries and leaves more money in the coffers for these businesses for investment and growth.
A toast to tax credits! What was originally a beer production credit was expanded to distilling and wine and cider making for tax years after January 1, 2016. This credit, applied toward the tax due, as opposed to deductions which reduce your taxable income, is a refundable credit. This credit is available to registered distributors – distillers, manufacturers, brewers, and fermenters of alcoholic beverages – who annually produce in New York state:
- 60,000,000 or fewer gallons of beer;
- 60,000,000 or fewer gallons of cider;
- 20,000,000 or fewer gallons of wine; or
- 800,000 or fewer gallons of liquor.
The credit is $.14 per gallon for the first 500,000 gallons of beer, cider, wine, or liquor, plus $.045 per gallon for each additional gallon, up to 15,000,000 additional gallons of beer, wine or cider, and up to 300,000 additional gallons of liquor produced in New York state.
Farm breweries, farm wineries, farm cideries, and farm distillers have also been exempted from certain sales and use tax information filing requirements. Such filings can be a time and cost burden, especially for smaller operations. However, they are still required to maintain their sales records and make them available to the taxing authorities upon request.
The laws that govern local alcohol production (Alcohol Beverage Control Law, State Liquor Authority regulations, tax laws, just for a start) are complicated and not necessarily consistent between industries. An attorney can assist you navigate the intricacies and help you take advantage of the laws designed to promote your business and save you money.
Alanna C. Iacono is an associate practicing elder law, real estate law, concentrating on commercial and residential real estate transactions, landlord-tenant, foreclosure and condominium/HOA law. She can be reached by phone at 866-303-9595 toll free or 845-764-9656 and by email.