(New York, NY) – The New York State Society of Certified Public Accountants published a fascinating story last week, one that has significant implications for breweries in the Empire State.
For well over a decade, in-state breweries have been exempt from paying taxes on the first 200,000 barrels of beer that they produced. The law saved those in-state breweries $4.34 on each barrel they sold in Upstate New York (or technically, anywhere outside of New York City) and $8.06 on each barrel they sold in New York City.
One problem. Out-of-state businesses like Shelton Brothers still had to pay these taxes.
After Shelton Brothers sued the New York State Liquor Authority over censorship of beers that carried labels like “Santa’s Butt,” the agency backed down and allowed the labels.
Shelton Brothers wasn’t done yet and turned its attention to the cost of getting those beers in the state.
If Shelton Brothers planned to be back with more products to sell in the state, not only would there be that tax to pay, but in addition to getting written approval, Shelton Brothers would have to pay $150 per label to New York—another cost that was waived for in-state brewers. Shelton Brothers no doubt wanted to make sure there would be no hassle with future products. But beyond that, any out-of-state brewer or distributor wanted to level the playing field: New York state microbreweries were enjoying a price advantage thanks to the tax break, which meant they had advantages in selling to bars, restaurants and grocery stores.
Late last month, after a long drawn-out battle, a court ruled that the exemptions for in-state companies were unconstitutional since out-of-state companies still had to pay the taxes.
The ruling comes less than four months after New York officials launched a campaign called “I Love NY Brew,” supporting the state’s small breweries. According to the press release, New York’s small breweries produced nearly 1.1 million barrels of beer in 2010. The new measure will result in those same breweries now paying several million dollars in additional taxes each year.
One brewer that is not happy is Scott Vaccaro of Captain Lawrence Brewing.
(Vaccaro) says the new law would mean close to $100,000 in extra fees for Captain Lawrence per year. “The New York State brewing industry is doing really well,” he says. “This is a great way to stop it.”
It bears repeating that New York breweriess will now pay the same tax that out-of-state breweries have paid.
All Vaccaro and his peers can do for now is cry in their beer…and wonder how the future would be different if the New York State Liquor Authority hadn’t been so offended by that Santa’s Butt artwork many years ago.