New York Regulations

[Wes Henderson]

It is apparent that NY is much like other states, wherein a DSP licensee is not permitted to hold an on-premise license. Anyone know of loopholes here, where a manufacturer may operate a bar adjacent to the DSP?

Thanks,

WH

[Ralph at Tuthilltown]

Read New York State ABC law. Certain Distillery licenses allow the licensee to apply for on-premise sales. It means going through the application ringer and complying with on-premise sales regulations, but you are permitted to make application for the permits.

R

[Wes Henderson]

Read New York State ABC law. Certain Distillery licenses allow the licensee to apply for on-premise sales. It means going through the application ringer and complying with on-premise sales regulations, but you are permitted to make application for the permits.

R

Thanks Ralph. I was hoping you would reply. My client is looking at the Farm Distiller's license, in addition to a possible A-1, but I was hoping there was a shortcut on this particular issue. When you call the ABC, they shoot down the notion pretty quick of having a saloon controlled by the same licensee as the the DSP.

BTW, enjoyed the Hudson Baby Bourbon at the recent ADI Workshop.

Best,

Wes Henderson

[Ralph at Tuthilltown]

I think it's actually a Federal violation for a producer or wholesaler to own a bar. That's not to say it is insurmountable. And the fact is that wineries with tasting rooms and/or restaurants or breweries with brewpubs and serving food already contradict the Federal Code. (When asked how this is so, representatives of both the State of NY and the Fed sitting at the same table simply smiled and shrugged their shoulders.) The laws contradict, that's just the way it is and the States are given latitude on certain matters the Fed chooses not to confront, for better or worse. There's a bill on The Hill now, HR 5034, that proposes to further expand States' right to make laws which contradict Federal law as they apply to those States; and limits the Fed's ability to challenge those laws as un-Constitutional. It is supported by the wholesalers and opposed by nearly every other segment of the industry.

It's an example why you should be carrying on this discussion also with your local State and Federal Representatives, pushing for a voice in how the law is (right now as we correspond) being rewritten. At the State level the Alcohol Beverage Control Law is being revised bottom to top by the State Liquor Authority Legal offices. And while I don't doubt the good will and skills of SLA attorneys, for me the question is one of that old bugaboo "separation of powers". We don't have our Highway Legislation written for the Legislature by the State Troopers. Sorry to take to the soapbox but this is happening NOW. Also not trying to be alarmist. It is possible to reshape Draft legislation through the Public Hearing process, but is redrafting something already conceived and executed in writing; rather than broadening the conception overall from the bottom up with more input from the "regulated".

At the Federal level there are half dozen categories that affect your business: legislative, taxation, export, EU law, access to markets, arcane and inapplicable laws; and that's just the short list.

Don't get me started.....

So find adjoining spaces; buildings with no residences in them. Form two companies to hold the licenses separately from one another, build a solid glass wall between the two and get to work. The SLA may balk, but this is not a novel idea, it is being considered by many prospective distillery pub owners. It will mean new interpretation not new law. But look what the wineries and breweries did once they became activists for their own micro-industrial businesses. For your particular vision and in a City, it will be difficult without a savvy attorney who knows NY liquor law. It will be made more easy with the help of the offices of your State Legislators but they are often measures of last resort. Think before you sic a Legislative Assistant on any official or Agency; that Legislative Assistant will move on and up, the administrators of the System remain and you must deal with them. This is not a good place to emulate Cortez; don't burn the boats, at least not till you've gotten your roots in and have money and comfort and can afford to fight.

Jeesch, I just realized you posted this months ago. Sorry for taking so long to respond.

R

[Denver Distiller]

I think it's actually a Federal violation for a producer or wholesaler to own a bar.

It's not, Ralph. We operated a bar/brewery/distillery for eight years and had multiple BATF/TTB inspections. Of course, I made everything that we served...vodka, gin, vermouth, liqueurs, lagers, ale, wine, etc., but we did it. I also know that the boys at Bardenay run a true bar serving other distiller's spirits in addition to their own.

[grehorst]

It's not, Ralph. We operated a bar/brewery/distillery for eight years and had multiple BATF/TTB inspections. Of course, I made everything that we served...vodka, gin, vermouth, liqueurs, lagers, ale, wine, etc., but we did it. I also know that the boys at Bardenay run a true bar serving other distiller's spirits in addition to their own.

As I recall it was explained to me by the TTB that if the distillery owned 100% of a bar it wasn't a problem as far as the federal gov't was concerned. Their concern is when a distillery has a smaller interest in a bar (99% or less) which may create a situation in which the distillery partner could exert undo influence on the bars other partners to creating a tied house- in other words an exclusive arrangement to sell the distillery products. So, feds don't see it as a problem for a distillery to be an exclusive owner of a retailer. Beyond that it's entirely a state issue as to whether or not a distillery (or brewery or winery) can own a retail outlet.

[Ralph at Tuthilltown]

As I recall it was explained to me by the TTB that if the distillery owned 100% of a bar it wasn't a problem as far as the federal gov't was concerned. Their concern is when a distillery has a smaller interest in a bar (99% or less) which may create a situation in which the distillery partner could exert undo influence on the bars other partners to creating a tied house- in other words an exclusive arrangement to sell the distillery products. So, feds don't see it as a problem for a distillery to be an exclusive owner of a retailer. Beyond that it's entirely a state issue as to whether or not a distillery (or brewery or winery) can own a retail outlet.

This is helpful news. Thank you.

It is rumored that Colorado is a very distillery friendly State. Do you feel your State liquor control agency serves the public and industry well? Are they responsive and knowledgeable? My little informal survey.

Ralph

[grehorst]

RE Wisconsin.

Our state overseers are the Department of Revenue. They do the job assigned to them by the legislature. This means there is no (or perhaps extremely little) room for interpretation. The standing rule is if it isn't expressly allowed in our state laws it can't be done. Our contact at the department of revenue is a very helpful person who is very responsive and knowledgeable.

In our situation, if there is anything we want to do and it is not allowed in the regs we have to change the law. Difficult to do in a state with VERY strong special interests ( Wholesalers, Tavern League, MADD, etc...) whose interests may not always be in sync with ours.

[half pint]

This is helpful news. Thank you.It is rumored that Colorado is a very distillery friendly State. Do you feel your State liquor control agency serves the public and industry well? Are they responsive and knowledgeable? My little informal survey.Ralph

I believe Denver Distiller's pub was actually in Michigan. From what I understand both Colorado and Michigan are considered 'easier to work with', is this true Denver Distillier? I would love to hear about any experience like this now that these types of set ups are becoming more popular.

[Ralph at Tuthilltown]

RE Wisconsin.

Our state overseers are the Department of Revenue. They do the job assigned to them by the legislature. This means there is no (or perhaps extremely little) room for interpretation. The standing rule is if it isn't expressly allowed in our state laws it can't be done. Our contact at the department of revenue is a very helpful person who is very responsive and knowledgeable.

In our situation, if there is anything we want to do and it is not allowed in the regs we have to change the law. Difficult to do in a state with VERY strong special interests ( Wholesalers, Tavern League, MADD, etc...) whose interests may not always be in sync with ours.

New York is similar in that the STATE LIQUOR AUTHORITY takes the same view, if it isn't explicitly permitted in the statute it is not permitted. And we've been successful introducing various changes that helped. But there are, not so much "loopholes" but different paths to take. For instance in NY a Farm Winery and a Winery, as well as a Farm Distillery may apply for and receive a license for on premises consumption if there is a restaurant on or operating adjacent to the licensed facility. And we are permitted (one of the changes we were successful pushing through) permit holders may hold more than one permit so a Distillery can also be a Farm Winery, which is what we did.

It is possibly the most successful gambit in New York so far, turning the topic from "alcohol" to "agriculture" and "economic development for rural areas" and "TAX REVENUE" as we argue for changes in law. It softens the focus on alcohol and reminds the legislature that craft scale distilling high end spirits is to the "liquor industry" what a neighborhood artisan baker is to the Wonder Bread factory.

R

[delaware_phoenix]

For NY distillers, you might not have seen this:

http://www.abc.state.ny.us/system/files/sample-containers.pdf

SLA has either determined or made visible a regulation that spirits samples may not be left with retailers. Wine and beer, yes; spirits, no.

[Jonathan Forester]

Cheryl, I read about that when it first came out awhile ago. I don't know how that regulation came about, or if it is being inforced. BUT, I know that it hasn't stopped anyone yet. I know of literally hundreds of folks who are getting sample bottles of spirits given to them, and dozens of companies giving away samples, both to on and off premise, and consumers.

For NY distillers, you might not have seen this:

http://www.abc.state.ny.us/system/files/sample-containers.pdf

SLA has either determined or made visible a regulation that spirits samples may not be left with retailers. Wine and beer, yes; spirits, no.

[delaware_phoenix]

I know Jonathan, and I'm sure that such a rule is completely ignored by the distributors. I just had been visiting the SLA web site and noticed the announcement of the main page. I wonder is this a new regulation or law or has it been around for ages? If the latter, maybe this is SLA's way of saying we intend to enforce this even though they don't. Plus I just get tired of a different set of rules in place because people imagine beer and wine are "safer" than whiskey.

Technically, our basic permits at the Federal level are contingent on our following the laws of our state.

[Jonathan Forester]

Cheryl- I am pretty sure that law was passed just recently. The advisory is dated 2010-1, which I think means the first advisory note of 2010.

[Ralph at Tuthilltown]

The bill to permit Farm Distillers access to consumers for sampling and sales at State and County Fairs and at Farmers' Markets is now through all COMMITTEE review and goes before the full ASSEMBLY for a vote. Please contact your Assemblyman and press for support. It's looking very good.

[grehorst]

Ralph, just curious, did DISCUS take a stand on this issue either way?

[Ralph at Tuthilltown]

DISCUS did not take any explicit stand I am aware of on the issue of New York farm spirits sales and sampling at Farmers' Markets, State and County fairs.

[Ralph at Tuthilltown]

Word from the SLA is there is a bill already passed by the two houses, approved, and through committee vetting, awaiting signature of the Governor. For complete review of this bill go to:

http://open.nysenate.gov/legislation/bill/S7727-2011

The main feature of this bill: it levels the playing field among farm brewers, farm distillers and farm wineries for the purpose of holding tastings at the licensed site. Under current law a winery or distillery may not offer sampling of cider. This bill mandates the same sampling ability for all "farm" produced alcoholic beverages at the tasting rooms of all three producers' facilities.

The bill will be signed by the Governor (awaiting his signature now) and will become effective 180 days after signature.

[Ralph at Tuthilltown]

NEW YORK DISTILLERS ALERT: Just got word of a bill introduced in the NYS Senate by Senator Parker which was introduced in February 2012, can't say why we have not heard of this till now. The bill can be viewed at the Bill Search page of the NY Legislature: http://assembly.stat...ary=Y&Actions=Y

The proposed bill number is SB6393.

This bill proposes to raise State excise tax rate for distilleries on spirits you produce from the current $1.70 per liter to $2.26 per liter. This is a substantial increase in the excise tax you will pay on your artisan goods to the State of New York. On top of that, the increased revenue that tax increase generates is not designated to be used to improve the services of the SLA or help the development of the industry, it is to be put right into the General Fund.

Please contact your local State representatives and let them know that an increase in the excise tax does nothing to help the growing micro distilling industry, nor the beverage alcohol industry in general when the money goes into the General Fund and not to improve the climate for the industries affected. It is especially inappropriate to raise taxes on Farm Distilleries, Farm Breweries and Farm Wineries which are small, privately owned agricultural operations contributing to the economy in various ways including jobs creation, agricultural development and economic development in rural areas.

Fight this bill!!!

OKAY, NEW INFO: Senator Bonacic's office reports this bill has no Assembly Sponsor and is now in Committee and appears to have no future. WHEW!

But see the next post about another bill now in Committee and passed by both houses in Albany which is a good change to ABC law.

[Ralph at Tuthilltown]

Another alert, this one for support of a bill now in WAYS AND MEANS COMMITTEE at the NYS Legislature. The "enabling legislation" which spells out the purpose and scope of responsibilities mandated of the STATE LIQUOR AUTHORITY currently stipulates the agency is responsible for "regulating" the beverage alcohol industry in New York, but unlike the Department of Ag and Markets it has NO mandate to "develop" the industry. New York State Senator Gabryszak has introduced a bill which would add "job creation" and "industry development" to the enabling document and the responsibilities of the SLA. This is a major step forward in recognizing beverage alcohol production as an economic force in New York State, creating jobs and contributing to local, regional and State economies. Please check this out and reach out to your Legislators and ask them to support this bill.

Here is a brief description of the bill the full description of which including the actual text of the bill can be found on the Senate Bill Search site on line, further info can be found on the bill search site on line:

A02412 Summary:

BILL NO A02412B

SAME AS Same as S 1515-A

SPONSOR Gabryszak (MS)

COSPNSR Saladino

MLTSPNSR

Amd S2, ABC L

Provides that the state policy with regard to the alcoholic beverage control

law shall be to promote economic development and job opportunities in the beer,

wine and liquor industries of the state.

[Ralph at Tuthilltown]

Holy cow, I just realized how often I'm posting here. I can only say there's a lot to consider in NY law and at the national level as the industry changes, and it IS changing.

REGARDING USE OF NEUTRAL SPIRITS FOR NEW YORK BRANDED VODKA: In a conversation with the SLA Chief Counsel and the Chairman the question arose: if a Farm Distiller wants to make a gin, can they acquire the base spirit from an out of State producer, is it considered a commodity basic necessity? The answer is that if the neutral spirits are produced from New York grown grain or fruit the neutral spirit may be produced in an out of State facility. And you'd better get a receipt showing the source of the base material if the SLA inquires the source.

There is only one neutral spirit producer in the State offering a variety of neutral spirits for sale to Farm Distilleries, LAKE DISTILLING. I'm curious how long it will be before some entrepreneur notices this gaping hold in the industry and develops a Farm Distillery to produce only grain and fruit neutral spirits from New York agricultural materials which can then be used by the growing number of Farm Distillers who are required to use New York grown.

[Ralph at Tuthilltown]

And yet again.....another eye opener from ABC Law revealed:

The question has come up about selling of samples at tasting rooms of Farm Distilleries in New York. The SLA Chief Counsel responds to the question that there is no provision for sale of samples to consumers at a Farm Distillery. And as you all know, if it is not explicitly permitted in the law, it is not permitted. I questioned the Chairman of the SLA Board how this can be resolved and his answer was that the cure is "Legislative", we'll have to go through another amendment process, but we all know ABC law will be a long time in repair for our class of producer.

Another item we learned, according to the Chief Counsel at SLA, there is also no provision in the Farm Distillery Act which permits a Farm Distillery to sell the products of any other Farm Distillery. A Farm Distillery can buy the products of another distillery in bulk. And the law does permit "tastings" of all New York branded spirits, which means you can buy spirits in bulk from other distillers and offer visitors a taste of New York branded spirits of another Distillery but you can't sell it to them. It's an absurd oversight in the composition of the law that subverts the whole intent of the "Farm" category of distillery, and needs repair.

It's on the list too.