Explaining the Northern/Davidson brewery sale

RegulationSeveral of my readers have expressed confusion about the sale of the Davidson Brothers Brewing facility in Queensbury to an Oneonta beverage distributor and brewery owner, Northern Eagle Beverages Inc., citing what they see as a possible violation of the state's "three tier" or "tied house" rules that regulate cross-ownership of businesses in the beverage world.

I checked with William Crowley, spokesman for the State Liquor Authority (SLA), to sort out the confusion. Here is his response:

"What you and your readers are referring to is the commonly known as the 'tied house' laws, which can be found in Sections 101, 105 and 106 of the Alcoholic Beverage Control Law.

"In a nutshell, New York’s tied house laws prohibit (1) New York manufacturers (breweries, distilleries, wineries, cideries) and wholesalers from having a financial interest in a retail business (restaurants, bars, grocery, and liquor stores) no matter where the retailer is located; and (2) New York retailers from having a financial interest in an alcoholic beverage manufacturer, no matter where the manufacturer or wholesaler is located. The tied house law does not, however, prohibit a manufacturer from having an interest in a wholesaler, or vice versa.

"For example, Anheuser Busch (Budweiser) operates a brewery (manufacturer) in Baldwinsville, NY. In addition they also have a New York wholesale license to distribute beer throughout the state. This is not a tied house violation as these provisions only prohibit wholesalers/manufacturers from having an interest in a retail business. Consequently, Anheuser Busch could not have an ownership interest a stand-alone bar, restaurant, liquor store, etc.

"Northern Eagle Beverage holds a wholesale license in New York State, while Davidson Brothers Brewing holds a manufacturing license (micro-brewery), consequently there are no tied house issues here. While, as you may know, Davidson Brothers also operate two licensed restaurants, they do so through a statutory exception that allows micro-breweries to operate restaurants owned by the brewery at or next to their brewery. 

"Notwithstanding this exemption in the law, micro-breweries with adjacent restaurant licenses are considered manufacturers under the ABC Law. The tied house laws would, however, prevent Davidson Brothers from having a financial interest in a restaurant that was not part of the brewery."

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