Ralph at Tuthilltown

Organizing Meeting was held at TUTHILLTOWN SPIRITS FARM DISTILLERY of New York distillers with the goal of the meeting: formation of a New York Distillers Guild. New York distillers may contact me for summary and list of attendees. It was a positive meeting. 19 attendees representing 11 licensed NY DSPs. All agreed to the need to organize for promotional and for legislative reasons. Membership was agreed generally to be two tiered: Full Member (DSP permit holders only, one vote per DSP member), and Associate Members (non-voting, industry and interested non DSP permit holders). A second meeting is scheduled for one month from now, no date fixed yet.

Meeting was held at TUTHILLTOWN SPIRITS FARM DISTILLERY of New York distillers with the goal of the meeting: formation of a New York Distillers Guild. New York distillers may contact me for summary and list of attendees. It was a positive meeting. 19 attendees representing 11 licensed NY DSPs. All agreed to the need to organize for promotional and for legislative reasons. Membership was agreed generally to be two tiered: Full Member (DSP permit holders only, one vote per DSP member), and Associate Members (non-voting, industry and interested non DSP permit holders). A second meeting is scheduled for one month from now, no date fixed yet.

Update on bill to permit sampling and sales at State and County Fairs, and at Farmers' Markets. The bill is through ECONOMIC DEVELOPMENT, passed; and is now before CODES COMMITTEE, which is reported to be the "toughest committee". Please read the bill below and contact the Chair of the CODES Committee, here is the link to the Committee web page listing the Chair and Members: http://assembly.state.ny.us/comm/?sec=mem&id=33 Here is the link to the text of the bill, please read, note the sections in ALL CAPS are the actual changes to the existing law. http://open.nysenate.gov/legislation/bill/A9863-2011 This bill makes the ability to attend and do sampling and consumer sales of your products at Farmers' Markets, State and County Fairs. This is your DIRECT ACCESS to consumers. Contact your legislator and the RULES committee members and let them know how important this is to Farm Distilleries attempting to introduce new products into the market.

Spent the day Tuesday in Albany lobbying legislators and learning about the progress of the bill permitting access to consumers at farmers' markets, State and County fairs. Learned the bill is through the Senate as we knew. It is in the Assembly and in the Economic Development Committee. We received a tip there was some resistance in the Economic Development Committee to the notion of offering hard liquor samples at fairs. We got the message to through the legislative assistant working with the Committee Chairman of the resistance and provided a response. It was: Both wineries and breweries can offer samples at the locations we are requesting access to in our bill and there is NO LIMIT on the amount they can serve a persons as samples but there are strict regulatory limits on the amount of spirits samples and the number of samples which can be offered by distillers. Please contact your Legislator and if possible drop a letter to the Chair of the State Economic Development Committee and make the point.

Spent the day Tuesday in Albany lobbying legislators and learning about the progress of the bill permitting access to consumers at farmers' markets, State and County fairs. Learned the bill is through the Senate as we knew. It is in the Assembly and in the Economic Development Committee. We received a tip there was some resistance in the Economic Development Committee to the notion of offering hard liquor samples at fairs. We got the message to through the legislative assistant working with the Committee Chairman of the resistance and provided a response. It was: Both wineries and breweries can offer samples at the locations we are requesting access to in our bill and there is NO LIMIT on the amount they can serve a persons as samples but there are strict regulatory limits on the amount of spirits samples and the number of samples which can be offered by distillers. Please contact your Legislator and if possible drop a letter to the Chair of the State Economic Development Committee and make the point.

Spirits made by a DD Farm Distillery must as noted in an above post, be "primarily" NY State grown. No percentage is noted. You may locate a Farm Distillery anywhere if you meet the criteria of the license, which says that a "Farm Distillery may be located on a farm", note the use of the word "may". Additionally, a Farm Distillery in an urban area which is not a farm may qualify as a "FARM OPERATION" if it has leases for farm land where the materials are grown and is "financially responsible for the crop" so it if fails the grower who is cultivating it for you is paid by you.

Sending flowers is nice, but it may work against you as well; be careful how you attempt to influence any NYS agency employees. We have learned the best way to get the most out of the SLA is to get to know them directly. Try delivering your application by hand. Establish a back and forth with someone who responds to your questions. Invite the Commissioner to your site and have a chat (he can't accept flowers). Establish a correspondence that keeps you in touch regularly with the SLA. NY law allows that an attorney can sign off on your application, in effect guaranteeing as an Officer of the Court that your info is valid and the application is complete and the SLA will accept that backup when issuing a preliminary approval. Keep in mind the SLA is working with often outdated ambiguous distillery law, greatly increased distillery application submissions (which are quite a bit of paperwork as you know), the agency is underfunded (with a budget fixed by the Legislature not self-funded), and ridiculously understaffed; that is not to totally excuse poor service but it may at least help mitigate your frustration a bit. Keep at it.

It's interesting that if you add flavor to GNS it can be called "Apple Vodka" for instance, but if you make the vodka from apples it can not be called "Apple Vodka". It is, of course, the result of the timing of the introduction of fruit or other flavored vodkas, which came before distillers began to make vodka from fruit substrates rather than grain.

There is a difference when it comes to what the TTB considers the bonded premises and what your insurance man bonds. Our bonded premises for the insurance company purpose is our entire premises, land and all buildings. But from the TTB and the NYS SLA viewpoints only those areas which hold tax-unpaid goods are the bonded premises. The question of public access to bonded premises may be a State regulatory issue. In either case, Federal or State, there is no prohibition we know of which prevents public access on a conducted tour, or nearly every one of the new distillers would be in violation, since many (us included) run guided tours of the distillery and bottling room, both of which are considered part of the bonded premises. Check with your State Alcohol bureau. In some cases the laying down of simple demarcation tape on the floor is sufficient to demise the bonded from unbonded spaces in a building, and signs or a rail or chain across access points telling visitors where they may not go are sufficient. But it is true that you must not mingle "tax paid" with "tax un-paid" spirits in any space.

Your obligation is to "protect the revenue". Padlocking doors which serve as fire escapes is obviously an issue. We have rolling garage doors which are secured by only the locks which came with the doors. Our bottling room in another building is secure the same way. One answer may be to install motion detectors in your bonded spaces. Our storage areas are padlocked. You may be able to meet the regulatory requirement by padlocking only the spirits storage areas since those are where the spirits (the "revenue") is located. Offices and shop spaces containing tax paid goods may not require the specified padlocks. They are mainly concerned with the "tax unpaid" goods and ensuring no one has unauthorized access.

Local zoning boards and Zoning Board of Appeals' are populated typically by amateurs interpreting law and usually without training in small towns which don't invest money in training their officials. So appeals typically take far longer than they should. It helps to actually invite ZBA members to your facility or site to walk through and see what you do, as most know nothing about distilleries and their fear of the unknown influences their perceptions, especially when there are local residents who resist the change due to unfounded fears. Educate your officials so they comprehend the real nature of your business. By way of presentation of your concept and request, focus on non-alcohol matters such as: economic development, tourism, agriculture, jobs creation which your operation will influence. Fears of explosive and/or hazardous materials are not uncommon among local residents and uninformed officials, they are typically rumor or fear based. And remember that resolution of zoning issues takes time, the officials are typically volunteers, meetings a month or two apart and whenever any question comes up in discussion by the Board the issue is usually tabled till the next meeting for the members to "study" the question and get a legal opinion on the issue.

Which State are you in? A lot depends on the State code as it applies to Farm Operations vs local zoning code. You may want to check with the State Department of Agriculture.

There is no definition of a "farm" contained or referenced in the State code as it relates to distilleries. To be a Farm Operation in NY State you must have at least 7 acres (owned or leased lands) and earn minimum of $10K a year in revenue from farm products sold or land used (say for instance rental fee for someone who is leasing your land for haying). The State Right To Farm Law trumps local zoning in most cases if your land is located in an "Agricultural District", the maps for which are available online, so your local zoning board may not have the authority to deny you a farm permit if you meet State requirements. Any denial may be appealed to the Commissioner of Ag and Markets for determination on a case by case basis. As to the crop, Department of Ag and Markets allows up to three years for a new farm to have a crop, so if you are in the growing process with crops in the ground you may get some certifying letter from Ag and Markets to verify that you are a farm operation. You should also register as a "farm operation" with Ag and Markets to bolster your case. Take a look at: http://www.agriculture.ny.gov/AP/agservices/new305/guidance.pdf.

Local zoning issues are tricky. Remember that most Zoning Boards are amateurs who are interpreting law, often without training and so Zoning Boards often respond to irrelevant and/or fear based concerns of citizens, which can drag out the process. Your zoning manual will describe the parameters for co-occupation of buildings. If you can qualify as a "farm operation" in Indiana you may do an end run around some Zoning regulations. Farms are permitted in most states to operate a store and have an office attached. At the Federal level the only occupation issue is the prohibition against having a residence attached or inside your distillery premises.

One added note, if you are considered a "farm" and a "farm operation" that status may exempt you from many of the standard OSHA and zoning requirements. But seeing as how you're located in an industrial area it may be complicated to gain "farm" designation. In NY it requires lease agreements with farmers producing your raw materials and accepting financial responsibility for the crop. The above noted observation on the character of goods stored in oak is correct, the listing of Hazardous Materials characterizes spirits stored in oak as not included in the listing of Hazardous Materials. You may want to check to see if vodka stored outside your building in a secure stainless steel tank constitutes a hazard in the minds of your regulators.

The bill to open Farmers' Markets, State and County Fairs to NY Farm Distilleries for sampling and sales to consumers is now out of Committee and in the Assembly. It will now take a little time before it will be ready to send to the Governor for signature. Time is short in this session, but we are optimistic. Call your Assemblyman and get him/her on board pushing for passage.

The only caveat I would add to Chuck's observation (with which I agree) is to consider local zoning regulations. These may preclude a business operation, or may draw no distinction between a "farm distillery" and an industrial "distillery". For instance, our distillery is adjacent to a protected river, within which corridor may be no "industrial" use, and the NY State Department of Environmental Conservation which enforces the Rivers Act initially declared our use "industrial" and attempted to get us shut down by issuing no permits for any of our waste disposal systems. We appealed to the Department of Agriculture, described the way we acquire our raw materials and use them to produce an "agricultural product" and that we were according to New York State Agricultural law a "farm" and therefore did not need DEC permits regardless of the river nearby. We acquired a letter from the Commissioner of the Department of Ag and Markets testifying that we were indeed a "farm". The DEC relented and told us we did not need their permits. I should add that we did file an application for a Rivers permit with the DEC and asked them to approve our engineering plan as a courtesy and they are reviewing it now. Though we are not required to do so, there is after all "politics" to be considered. This example by way of illustrating that there may be tangental obstacles out there that have nothing to do with alcohol production which you should investigate. Other examples of zoning issues which may come up include waste disposal and fire safety (sprinklers are costly). So don't limit your due diligence to alcohol laws and regulations.

For New York DSP permit holders. ARTISAN SPIRITS GUILD OF NEW YORK first meeting 11AM, FRIDAY, JUNE 8th at TUTHILLTOWN SPIRITS DISTILLERY, 14 Gristmill Lane, Gardiner, New York. We attempted to organize a smaller number of Artisan DSP permitees a couple years ago but it was too early. I suggested a first meeting be organized at Tuthilltown and response has been strong among New York State DSP owners and management. This is a second launch, but for all intents and purposes it is the initial organizational meeting. This is a "producers" meeting, the invite is limited to those holding or representing the holders of DSP permits. The Agenda will be open, and include generally the following: Discussion and Agreement on purpose and the Formation of Guild Introductions Presentation of draft bylaws Update on AMENDMENT TO PERMIT FARM DISTILLERS TO SAMPLE AND SELL AT FARMERS' MARKETS, STATE AND COUNTY FAIRS Update on HR 777 AN AMENDMENT TO TAX LAW PROVIDING MICRO DISTILLERS AN 80% DISCOUNT ON EXCISE TAXES UP TO 65,000 PROOF GALLONS A YEAR DISCUS and small distillers Open discussion of issues Next meeting date Any licensed New York distillers, if you have not done so already, please let me know you're coming: ralph@tuthilltown.com

In the INTERNATIONAL FIRE CODE, to which most municipalities subscribe, there is the following with regard to storage of "hazardous materials": 2701.1 Scope. Prevention, control and mitigation of dangerous conditions related to storage, dispensing, use and handling of hazardous materials shall be in accordance with this chapter. This chapter shall apply to all hazardous materials, including those materials regulated elsewhere in this code, except that when specific requirements are provided in other chapters, those specific requirements shall apply in accordance with the applicable chapter. Where a material has multiple hazards, all hazards shall be addressed. Exceptions: (including) 9. The storage of distilled spirits and wines in wooden barrels and cask Local zoning may vary where the authorities have taken spirits production into consideration, but in most cases where you're the first one at the gate, the community may not have addressed the question and may have the perception it is much more dangerous than the Fed or International fire authorities feel it is.

"Never give up. Never give up. Never, never, never." Winston Churchil Received a call from Assemblyman Kevin Cahill's office yesterday to let me know that the Assemblyman introduced S-6426 into the NYS Assembly as bill number A9863. Please contact your district Assemblyman and urge their support for the bill. Another bill has been introduced, The bill, A09523 amends ABC law and makes holders of the Farm Distillery and Farm Winery licenses exempt from certain filing requirements such as listing in great detail, the information on the report which till must be filed: must include the total value of those sales made during the period covered by the return (excepting the sales described in clauses (i) and (ii) of this subpara- graph) and the vendor's, operator's or recipient's state liquor authori- ty license number, along with the information required by paragraph two of this subdivision The bill, if passed would make holders of Farm Distillery and Farm Winery licenses exempt from this requirement. This change will greatly shorten the time required for the license holder to file transfer reports. For the short staffed micro distiller this is a good step toward overall reduction of unnecessary or redundant regulatory paperwork.

Governor Cuomo supports farm brewery and winery bill. See details at the link below. Please contact your local legislator and press him/her to seek equal consideration for the Farm Distillers in New York State. Read the details of the bill and how it will help wineries and breweries then ask yourself it the same consideration will help your distillery business survive and prosper. See the press release from the Governor's office at: http://www.governor.ny.gov/press/03062012Legislation

In a conversation this morning with the Legislative Assistant at the office of Senator Bonacic, the topic of timing for passage of the S-6426 was raised. Typically a bill affecting alcohol law is not effective till 180 days after passage. This is to permit the SLA time to promulgate regulations to govern any changes in the statute. I asked our contact to please check with the SLA to see if they foresee any reason to delay since regulations for tastings already exist and would govern tastings and sales at farmers' markets and fairs. We urge you to contact your Assemblyman and State Senator to urge their support of the bill and shortening of the time lag till effective so that Farm Distillers can take advantage of the coming tourism and farmers' market season. The bill has not yet been introduced in the House. So perhaps you can contact your Assemblyman and urge him/her to introduce the bill in the Assembly. It is also critical the Legislature approve the bill and the Governor's counsel call for the bill to be sent with other bills for signing by the Governor at the earliest possible opportunity. Without a call from the Governor's office for the bill once it is passed by the legislature, the bill can sit for months without getting the Governor's attention and signature. Anyone with access to the Governor's office or the office of his counsel should reach out and urge them to call for the bill and hasten the Governor's approval so we don't miss the coming season of farmers' markets and fairs. R

We asked the SLA about permits to sample and sell at untypical sites off premises like fairs and farmers' markets in the absence of the amendment put forward. The Chief Counsel responded: It is possible for us to sample and sell according to Statute: 99-B1.k, which states: 1.The liquor authority is hereby authorized to issue a permit to: k. A person to purchase, receive or sell alcoholic beverages or receipts, certificates, contracts or other documents pertaining to alcoholic beverages, in cases not expressly provided for by this chapter, when in the judgment of the liquor authority it would be appropriate and consistent with the purpose of this chapter. We've requested the permit application. However it should be noted the permit does not permit "sales", only sampling, promotion and the "taking of orders" (though we don't know what that means, exactly, since the buyer would still have to go to the retail shop nearby to pick up their goods). The distiller loses the opportunity for the spur-of-the-moment purchase on the spot by a sufficiently impressed taster. It is for that reason we should persist and not diminish the enthusiasm and resolve to pass S-06426. The goal is equal consideration with the wineries and brewers so that Farm Distillers producing New York branded agricultural spirits may offer samples and sales of their goods at Farmers' Markets, State and County Fairs and other non profit fairs without additional permits or fees. R

I think the intention is as you describe; the first lot of proof gallons up to the specified number is at the discounted rate and all above that is paid at full board FET. It is not that a distillery passing the limit must pay at the higher rate for everything.

HR777 is undergoing some revision. The 65,000 pg limit is not fixed in stone. There is general agreement with the 100,000 pg limit. But a distiller making over 65,000 pg of product and selling it seems capable of living with the higher tax rate if necessary; of course this is only my opinion. And production through the still and bottling over 65,000 pg a year implies to me that the distillery is doing well and perhaps backing away from the "micro" status. The Section (A) quoted above applies to the tax "credit", which it seems all agree would be difficult to get passed and hard to manage. A tax discount is what we are aiming for. Tax credits are not looked upon favorably by IRS. A simple discount is apparently the way to go. I agree (and not sure why I didn't include it in my post earlier) that the term "distiller" in the title does alienate blenders and rectifiers. It SHOULD be "Artisan Spirits Producer" to be more inclusive. And no Chuck I didn't see that ad. But the discussion about the nature of "craft" has been in my head and I've been searching for an acceptable term. Stumbling upon the Wikipedia description of the term "artisan" struck a chord. It allows for the potential existing in every craft for transforming one's "craft" to "art". I'm not one who believes that an "artist" should be more highly thought of than a "craftsman", but there seems to be a general feeling in the minds of the public that it is somehow a higher calling to be an artist. I don't agree. However I do believe that a craftsman can approach his work with an artistic mindset and therefore raise the work to another level. The main difference between "art" and "craft" is purpose, the artist is free to go where his imagination and skills take him; the craftsman works for profit, perhaps for a client doing his best to produce the finest work product to specifications set by the client or necessity, skilled work for hire. All the greatest artists in history, arguably, were in it for the money and were commissioned to do the work we admire most. It takes effort and a change in approach to transform craft to art. Distilling shares fundamental characteristics with heroic sport, with great art and deep religion, and with profound mathematics when the distiller is able to create a metaphoric relationship between his (her) work and life, with some objective relevance capable of being recognized by another person. It's a tall order and no room for casual application of the use of the term "art" which seems ubiquitous. It is the transformation of the work from utility to metaphor that matters when trying to make the leap. Followup thought: we hear distilling fine spirits referred to from time to time as "an art", and the perpetrators "artists". For the craft of spirits making to become art and the distiller an artist I believe it's necessary to adopt a way of life, view the application of skills and the overall effort as an expression of a relationship to something, like the earth, like life. The final criteria is the sharing. But forgive me getting all pedantic. R