Brian Mahoney is an associate in the Business and Finance Department at Nixon Peabody. Brian practices corporate and tax law, emphasizing matters related to commercial transactions, mergers and acquisitions and finance. Brian assists with the drafting of various commercial contracts and agreements related to the formation, purchase and sale of business entities. He advises clients regarding federal, state and local tax matters in connection with the formation, growth and divestiture of their businesses.
On Friday, November 14, Governor Cuomo signed into law the Craft New York Act, and opened new growth opportunities for New York producers of beer, wine, spirits and cider. The Act, which becomes effective December 14, 2014, cuts restrictions on producers and establishes a $3 million marketing fund for the promotion of craft beverages and craft beverage tourism.
New York craft brewers will benefit directly from an increased production cap and some loosened restrictions around beverage tastings and food service. These changes encourage cooperation within the industry and have the potential to open up exciting new delivery models for craft brewers to reach their customers.
The increased production cap will encourage further investment in an industry that has seen tremendous growth in recent years. Brewers holding a microbrewery license or a farm brewery license will benefit from a 25% increase in the production cap, which will increase from 60,000 barrels to 75,000 barrels annually. This increased production cap is expected to encourage craft brewers to invest in the growth of their businesses.
The Act opens up new business opportunities for farm breweries by providing that licensed farm breweries may sell not only beer and cider manufactured by the licensee itself, but also any New York State labeled beer, cider or spirits. The law is also amended to provide that farm breweries may apply for a license to sell other alcoholic beverages for on-premises consumption.
Licensed brewers will also see opportunities for new business models. In addition to conducting on-premises tastings and retail sales for off-premises consumption, licensed brewers will be permitted to sell their beer and any other New York State labeled beer by the glass for on-premises consumption, provided that they also offer certain food services. Licensed brewers may be able to further expand their business models by applying for other licenses permitting on-premises consumption.
Lastly, the Act further encourages industry cooperation by providing $2 million for craft beverage promotion. A portion of those funds are available as grants to non-profit industry groups promoting New York craft beverages. A further $1 million is available to provide working capital for craft beverage tourism projects.
This is an exciting time for New York craft beverage manufacturers. With the new law taking effect next month, now is the perfect time to evaluate how the Act creates new opportunities for your business model.
