News from New York, distillers take heed and act

[Ralph at Tuthilltown]

ALERT TO FARM DISTILLERS SELLING GOODS AT THE DISTILLERY: Word from the SLA is that a Farm Distillery may NOT offer for sale the products of another distillery. It is an illogical situation since Farm Distillers are permitted to offer "samples" of the goods of any other distillery, but can not sell those goods. It flies in the face of the purpose of the Farm Distillery and those regulations which permit Farm Wineries to sell the goods of ALL distillery classes.

So by way of warning, do not sell other distilleries' goods in your Farm Distillery shop/tasting room.

By way of action, contact your local legislator and alert him/her to the discrepancy in the law. A simple change is all that is necessary, and the argument is sound for this change.

R

[Ralph at Tuthilltown]

MEETING ANNOUNCEMENT

NEW YORK CRAFT DISTILLERS GUILD

The next meeting of the NEW YORK CRAFT DISTILLERS GUILD will be hosted by our friends at CATSKILL DISTILLING COMPANY, Monte Sachs host.

The last meeting allowed attendees to clarify many of the questions which come from our sometimes frustrating efforts to understand ABC law and how it applies to the craft distiller. From that meeting came an invite from Paul Karamol, Senior Attorney at the SLA for me to sit in on a meeting with his regulators and interns for a discussion about which supplementary accommodations might be considered to help craft distillers be in compliance and the State to understand the nature of our operations.

First question was “How do we define a “small batch” distiller?” The answer of course, as I commented, depends upon who you are asking, a Bardstown distillery or one of our small NY craft distillers. Other issues included the annual label/brand registration requirement and annual fee and the amount, which are inappropriately higher than the requirements for wine or beer.

Much of the discussion revolved around the way to “level the playing field” for all classes of producers. It was also noted that there is a proposal being drafted matching the discussion among the Guild members on the topic of the unnecessarily high number of spirits production licenses. The observation that a single “Distiller” license and a single “Farm Distiller” license should be all that is required and fees for these permits should be tied to volume produced, with no cap on production.

It appears the SLA is aggressively addressing issues pertaining to the craft distillery movement in NY. Some of you may expect to hear from the SLA Chief Counsel with some questions about your operation and experience with the SLA in preparation for a meeting scheduled for review by the SLA Board. Please respond to any of the questions which you feel do not intrude on your proprietary matters.

NEXT MEETING: October 5^th, Friday

TIME: 11AM

Catskill Distilling

2037 State Route 17b, Bethel, NY 12720

(845) 583-3141

Proposed Agenda:

1. Introductions and welcome
   
2. Federal and State legal update
   
3. Legislative actions
   
4. New York Grain Depot and Malting Facility
   
5. Farm Bureau
   
6. Safety Standards
   

[Ralph at Tuthilltown]

NY FARM DISTILLERS, here is text included in the bill just signed into law which pertains to your ability to sample and sell NY Branded Spirits at Farmers' Markets, State and County Fairs, the following are the pertinent sections, NOTE THE EFFECTIVE DATE IS APRIL 1, 2013 on all these changes:

* 6. Any person having applied for and received a license as a farm

distillery under this section may conduct consumer tastings of liquor

pursuant to rules or regulations promulgated by the liquor authority,

and subject to the limitations set forth in paragraph c of subdivision

two-c of this section at the state fair, at recognized county fairs and

at farmers' markets operated on a not-for-profit basis.

* NB Effective April 1, 2013

The other pertinent amendments' text:

* A licensed farm distillery may conduct upon the licensed premises,

or at approved locations as permitted in subdivision six of this

section, consumer tastings of liquor manufactured by the licensee and

from no more than three other class A, A-1, B, B-1, C or D distilleries,

subject to the following limitations:

* NB Effective April 1, 2013

(iv) A licensed farm distillery may apply to the liquor authority for

a permit to sell liquor in a sealed container for off-premises

consumption at the state fair, at recognized county fairs and at

farmers' markets operated on a not-for-profit basis. As a condition of

the permit a representative from the distillery must be present at the

time of sale.

* NB Effective April 1, 2013

[Ralph at Tuthilltown]

The following from Nicole Austin regarding the OSHA review she has sought out for New York Farm Distillers:

To update those that were not at the last NY Distillers Guild meeting, we discussed options to proactively address health and safety issues within our industry. We proposed gathering the group to participate in an industry-specific OSHA 10-hour training course, conducted by a certified instructor whom I have worked with previously. As long as we get at least 12 people to participate, the cost should be ~$100 per head, and you will receive a card acknowledging your completion of this course (which can be shared with your insurance company). I think this will be extremely valuable for all attendees, and especially for anyone who doesn't have previous construction or manufacturing industry experience.

Apologies that we couldn't organize the OSHA 10-hr course in early November, as was originally discussed. The safety consultant I engaged wanted some additional time to understand our industry more completely and to put together an appropriate course.

She proposed mid-December, but I know that's a busy time for all of us. Would January 7th & 8th work for everyone (the course is legally required to be conducted over at least two days)? We had tentatively proposed to conduct the course at the restaurant next to Tuthilltown.

Please let me know if you can make it on Jan 7th & 8th and how many people from your distillery you expect to attend. Please contact me if you have any questions about the course or about Health & Safety in general.

PLEASE LET NICOLE KNOW IF YOU PLAN TO ATTEND and if the dates are okay.

Ralph

[Ralph at Tuthilltown]

NEXT MEETING OF THE NY CRAFT DISTILLERS GUILD SET:

AGENDA

NY CRAFT DISTILLERS GUILD MEETING

12/12/12

Harvest Spirits, Valatie, NY

OPENING REMARKS

INTRODUCTIONS

ITEMS:

Governor’s Summit, overview and changes;

Promotion of NY Distillers’ products with State assistance,

Comments of promotional proposal by NY WINE AND GRAPE FOUNDATION,

What we can do to promote small distillers in NY on our own;

2013 Season Plan;

Formalization of NY CRAFT DISTILLERS GUILD;

Greenmarkets, Fairs, other off premise tasting/sales;

Central grain/fruit depot and malting facilities proposal;

OSHA training program, Nicole Austin;

Proposals for law changes,

Discussion of proposal to revise Licenses section of ABC Law as pertains to distilleries;

Next Meeting

[Piping Rock Distillery]

Hi,

Might I inquire how one goes about joining the NY guild? Do you have to be an open shop to join? I tried doing an online search and can't find anything.

I also tried sending a PM... but unfortunately it is not allowed.

Thank you.

Best Regards,

Larry DeVivo

[Ralph at Tuthilltown]

Larry, and others interested in the NEW YORK CRAFT DISTILLERS GUILD, note: We are in the organizational mode just now. No formal "administration" or structure. But we're working on it. In the meanwhile anyone actively engaged in application process for Fed and NY permits is welcome to meetings. We ask only that you defer to permit holders during discussions and votes if we have any. You're welcome to the Dec. 12th meeting.

[Piping Rock Distillery]

I just wanted to say it was a pleasure meeting all of you yesterday.

Thank you for all the hard work you are doing for the craft distilling industry in NY state (and beyond). Very informative.

I hope we can all share one of my vodka "blends" one of these days. (ha-ha... )

[Ralph at Tuthilltown]

NEW YORK CRAFT DISTILLERS GUILD MEETING MINUTES

Harvest Spirits, Valatie, NY

December 12, 2012

Attendees

Guild members: Albany Distilling Company, Kings County, Harvest Spirits, Tuthilltown Sprits, Coppersea, Industry City. Also present: Dwight Grimm

Minutes

1. Call to order

2. Summit on Craft Beverage [Ralph Erenzo]

§ Reviewed results from the summit. Governor made some recommendations for immediate action, including changing the interpretation of the SLA’s licensing:

§ If you have a Farm Distillers License (FDL), you can sell spirits but you cannot sell other goods. As a result of the summit, this will change 4/12/2013.

§ If you have a Farm Winery License (FWL), you can sell anything sold on the farm including food.

§ Members were encouraged to review the Farm Brewery Law (appended to minutes). The FWL will ultimately have the same privileges of the Farm Brewery Law but it will take some time to get there.

§ Benefits to the FDL amendments include lower fees, ability to sell other distillers’ goods, permission sell at farmers markets, and provides framework to operate a satellite shop.

§ It was noted that even if a distiller has an FDL, only NYS branded goods can be sold at farmers markets. Defined as 70% NYS-based components.

§ Ralph requested that Guild members submit recommendations directly to him (ralph@tuthilltown.com), if anyone has ideas on how to draw appropriate distinctions. It was noted that sometimes vagueness can be a benefit - you will gain and loose something by making the distinction clear.

3. OSHA safety course [Nicole Austin]

§ Reviewed the purpose and timing of the OSHA certification training.

§ Proposal: as a group, hire a safety consultant together and complete the 10 hour training. Benefits include: makes Guild members look proactive on safety; will receive an official card that is recognized by insurance; will save money if it is completed as a group; could be a potential PR opportunity

§ Training is 10 hours but has to be a minimum of 2 days and a max of 6 months. So, they can be split apart by month or completed in 2 days)

§ First proposal was to complete in back-to-back two days. Proposed dates 1/7/2013-1/8/2013 at the restaurant next to Tuthilltown.

§ The question was raised whether the certification last in perpetuity or if it required renewal. It was explained that once you receive it, it is good forever but you can get additional (ad-on) trainings like OSHA 30, OSHA 40, manufacturers, etc.

§ The first half of the training is standard but the second half is industry specific. Could get a good trainer for the second day if it is split up because he is unavailable on January 7^th or 8^th. Could get him if the date was moved.

§ It was noted that if you qualify as a farm under ag and markets, then you do not need to qualify for OSHA. But, it is still a good idea because could get press out of it—shows that the group is concerned about safety. Also looks good to builders inspectors.

§ It was noted that it could be a portrayed as a double edge sword in the media, e.g. raise concerns over safety. There was some disagreement to this point, noting that OSHA wants a good faith effort, taking a responsible approach

§ Guild decision – Split training into 2 days and tack it onto to a Guild meeting.

§ OSHA training: 1^st day – January 7, 2^nd day – March meeting

4. Proposal from NYS Wine Council [Ralph Erenzo]

§ The group reviewed the proposal submitted by the Governor’s office.

§ Everyone agreed that the position of NYS Spirits Ambassadors was an interesting concept but that the requirement that the Ambassador be a mixologist is not consistent/representative of the group.

§ Some of the NYS-specific events look good, but things like the gala seemed out of character for farm distillers.

§ Ralph posed to the group: How would you spend $1M? Remember, the proposal was crafted by an agency and this group knows what works best for farm distillers. The money has not been allocated yet. Guild task: Put together a short proposal on how you want to spend the dollars and send it to Ralph. Note that these dollars can only be used on advertising and promotions. Examples of uses:

§ Perhaps $150K should be used to study how the funds should be spent?

§ Highway signs, “Distillery this way”

§ The Distillery Trail

§ A virtual distillery trail where people could click on the links and purchase products

§ Distilleries’ trade website

§ Instead of an ambassador, hire a coordinator to take care of coordinating events and such. Let the distillers handle the pitching because they know it first hand. Could consider hiring someone within an agency at a lower cost than an independent consultant.

§ Ambassador could serve as the public face, such as a well known journalist in wine and spirits

§ It was discussed that maybe the Guild should put on its own events next year. The State will match dollar for dollar, but if people do not/can not put up funds this year, perhaps it is best to ride out the state dollars for a year.

§ Everyone agreed that it should be a coalition and should not come out of the wine council.

5. Hudson Mercantile Run [Ralph Erenzo]

§ Tuthilltown is putting on an event next fall

§ Albany to NYC, stopping along the way to pick up goods and then end up in NYC at a farmers market event. Will pick up wine, beer and spirits.

§ Tourism industry is involved

§ There is also another idea on the table for a flotilla (Halfmoon and other boats) to go from NYC in Albany but Ralph recommended that the kick off be in Albany and end in NYC in order to tie the two events together.

§ The Governor and Bloomberg will be involved.

§ Ralph will provide more information as it becomes available.

6. Legislative matters

§ Got word form Brian McCkenzie that Congressman Reed will submit tax bill, HR 777 – but unsure of new bill number

§ Has not been modified too much except: applied 80% discount of first 60K gallons to anyone’s production, not just craft distillers. Based on proof gallons.

§ Congress is going to raise taxes on excises tax (DISCUS?) but even a 3x increase would not match the significant reduction.

§ Once it is introduced, you should call everyone you know to get this passed. Stay tuned.

§ May want to draft a stock letter of support using one of those sites that submits letters on behalf of individuals.

§ Ralph met with NYS Assembly Ways and Means and was eager to submit bill language. Will format it in a way that is understandable.

§ Class A license versus Class A1 license – how do you define craft distiller?

§ For example – label registration fee. Trying to make it a benefit of farm distillery to only have to register once.

§ Sourcing:

§ The issue of non-NYS-based sugars (beet and cane) were raised. Sourcing is important because it has to come from NYS but don’t always know source from distributer. Bigger entities know and often grow their own product.

§ Benefits should be based on 1) size and 2) source

§ State has strong inclination to support agriculture – but we also need to let them know we are small business.

§ There is no infrastructure for some things – even though want to buy from NYS.

§ Another point was raised is that point/goal is to keep it in NYS. Example: For Valatie, if competition comes in from a product featuring apples from china priced at $10 less on the shelf, it will be difficult to compete.

§ One recommendation was that the law should say - if you can get in it in NYS, you must, but beyond that you have to get product where it is available.

§ The group was reminded that the purpose of the farm distiller license was to help grow the farms, not the distilleries. Although it is great that there are more distilleries, may need to use the small business angle to work this issue.

§ If NYS wants to promote the farms, then we need to support them through the steps – and support NYS coopers, distributers, distillers, etc.

§ There is no one to assist distillers find farms in NYS. There is a need for an “agricultural liaison” that can connect the farms to the distilleries to get the product.

§ The Carey Center for Global Good in Rensselaerville got a small grant to do that. They brought it in farmers and farm brewers in Rensselaerville.

§ Guild proposal: should the Guild have an event that connects distillers to the farmers and farmers can pitch us their products and vice versa? Nicole will reach out to the Carey Center (Rebecca).

§ Discussed NOFA event in Saratoga for NY sustainable farmers. Event is in January/February.

7. SME Conference, DC [Ralph Erenzo]

§ Ralph went to DC for a conference for small and medium enterprise groups – to discuss exporting

§ Raised the issue of standards in whiskey and how it is difficult to export. Able to speak directly to EU. There is a tacit agreement with Tax and Trade Bureau (TTB), which means things are not progressing quickly.

§ DISCUS’ opinion: wants to see standards of identities cleaned up in US. But it is not an international issue, it is only US. How do we define whiskey? “Fermented mash of grain” is the basic definition.

§ Other countries can sell products in the US that do not meet our standards but we cannot export to countries, which is a problem for US distillers.

8. ADI survey result [Coppersea]

§ NYS distilleries production increased by about 80%

§ Still less than .5% of US distillers are craft distillers. Lots of growth potential. But farm distillers are starting to get the attention of the big guys.

§ Note: the state tax is not worth fighting right now because state has no money and the Legislature is a mess. The real focus should be on the feds – the federal excise tax break is huge.

Next meeting: January 7, 2013 at Tuthilltown Spirits (OSHA training to follow)