Changes for Farm Breweries, Wineries, Distilleries

ALBANY -- Governor Andrew M. Cuomo may not be the poster boy for grocery stores that would like to be able to sell wine, something he has dismissed out of hand, but he may have won some friends among the state's craft brewers, winemakers and distillers.

Cuomo today proposed legislation that would create a "Farm Brewery" license. It would allow craft brewers who use products grown in the state to operate in a similar fashion to the state's wineries which have flourished under the 1976 Farm Winery Bill, leading to increased demand for locally-grown farm products as well as expanded economic development and tourism.

He also proposed legislation to exempt Farm Wineries and Farm Distilleries from the current costly tax filing requirement.

"These bills provide a boost for breweries, farmers, wineries, and communities across New York State," Cuomo said. "This legislation will give our state's growing craft beer industry the tools needed to create jobs, promote agriculture, and encourage environmentally friendly economic development across New York State."

His bill to promote the economic growth of the craft brewery industry includes:

Increasing Retail Outlets for New York Products: The legislation would allow Farm Breweries to sell New York State-labeled wine at their retail outlets. In addition, Farm Wineries would be permitted to sell New York State-labeled beer for off-premises consumption.

Allowing Farm Breweries to Open Restaurants: The legislation would allow 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 and wine, souvenir items, and additional products similar to those allowed under the Farm Winery statute.

To hold a Farm Brewery license, a producer's beer must be made primarily from locally-grown farm products. Until the end of 2017, at least 20% of the hops and 40% of all other ingredients must be grown or produced in the state. From January 1, 2018, to December 31, 2022, no less than 60% of the hops and 75% of all other ingredients must be grown or produced in the state. After January 1, 2023, no less than 90% of the hops and 90% of all other ingredients must be grown or produced in the state.

The beer manufactured under these guidelines would be designated a "New York State labeled beer." The legislation is modeled after the 1976 "Farm Winery Act," which spurred the growth of wine production in the state, including the creation of 237 farm wineries and tripling the number of wineries, which in total now have hit the 316 mark.

Also today, the governor proposed exemptions for Farm Wineries and Farm Distilleries from a costly and burdensome tax filing requirement. Currently, all beer, wine, and liquor wholesalers in the state are required to report sales made to restaurants, bars, and other retailers. However, because Farm Wineries and Farm Distilleries are small, often family-owned operations, they have struggled to afford the costs of complying with this annual reporting.

According to the Governor's Office, "The burden imposed on them by this filing requirement outweighs the benefit received by the State Tax Department, as purchases from Farm Wineries and Farm Distilleries 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."

Here is some of the pertinent reactions to the proposals:

• Dean Norton, New York Farm Bureau president: "We've seen tremendous growth opportunities for our farmers from alcoholic beverage license categories that are specifically linked to locally produced farm goods – from the growth of farm wineries to the relatively recent trend of farm distilleries. This is an opportunity for local farmers to bring New York back to being the premier hops growing state that we once were, creating added value markets and new jobs in our State."

• Dennis Rosen, State Liquor Authority chairman: "This legislation will provide a significant benefit to local farmers, by helping to create a sustained demand for their products. Ultimately, by providing incentives for farm breweries to expand, these businesses will become, much like farm wineries, destination locations that will promote economic development and tourism within their communities. This bill will boost agriculture and breweries, as well as create jobs and increased economic development across New York."

• Darrel Aubertine, Department of Agriculture and Markets commissioner: "This bill will exempt Farm Wineries and Farm Distilleries from burdensome tax filing requirements that have hurt small business here in New York. Our Farm wineries and Farm distilleries are small, often family owned operations, and they have struggled to afford the costs of complying with this annual reporting. Governor Cuomo has made opening New York State to business a top priority of his administration, and this bill will help cut burdensome costs that have been imposed on small farm wineries and distilleries. New York's craft brewery and farm winery industry is an important part of our economy, supporting jobs and tourism across the state, and I look forward to working together to make sure this legislation becomes law."

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