In-state beer brewers are foaming at the mouth over a court case that increased the cost of producing and distributing beer by up to $4 per keg.
New York’s dozens of craft beer makers had previously been exempt from state and city excise taxes as long as they made fewer than 200,000 barrels.
Types of beer produced in small batches, such as limited releases, were likewise exempt from an annual $150 registration fee.
But in a lawsuit resolved this March, the State Liquor Authority and the Department of Taxation and Finance conceded that the tax breaks were unconstitutional. The case had been brought by out-of-state distributor Shelton Brothers.
“A long line of United States Supreme Court decisions … prohibit a state from giving preferential treatment to items produced in the state,” the SLA said in an April 10 advisory.
Brooklyn Brewery co-owner Robin Ottaway said the decision wasn’t necessarily unfair, but he was caught completely blindsided.
“Just like that, you wake up one day, and you’ve got a $500,000 cost increase," Ottaway said.
“The New York craft brewing industry has been booming,” added Scott Vaccaro, owner of the Westchester-based Captain Lawrence Brewing Co. “We’re adding jobs, we're growing our businesses, and then all of a sudden we get this bomb dropped on us."
Both Ottaway and Vaccaro said they hadn’t decided yet whether to raise prices, but they're worried they may have to.
Certain officials appear sympathetic to the brewers’ plight. Last Thursday, Brooklyn City Councilmember Stephen Levin said the city had a responsibility to help the Brooklyn Brewery thrive.
And in March, Gov. Andrew Cuomo proposed legislation designed to expand economic development and tourism opportunities at New York’s craft breweries.