A ruling last month in a lawsuit that an out-of-state beer importer brought against the New York State Liquor Authority has ended a major tax and fee exemption for small brewers in the state, which will cost them millions of dollars in previously-waived costs.
The lawsuit was filed by Massachusetts-based Shelton Brothers in the wake of the SLA’s rejection of a handful of Ridgeway beer labels in 2006 on the grounds that they would appeal to underage drinkers. The importer claimed First Amendment rights were violated by the Authority’s censorship of the labels, but then went one step further to also challenge the Constitutionality of the Authority’s label registration fees and excise taxes, which were levied for all out-of-state brewers and waived for small in-state brewers.
To resolve the lawsuit, the State Liquor Authority issued new rules [PDF] two weeks ago that lifted the 12-year old excise tax exemption, which applied to the first 200,000 barrels of beer brewed by in-state brewers. Since all but two in-state brewers brew less than that amount, nearly every drop of beer brewed by a New York craft brewery was previously not taxed by the state. It now will be, effective immediately, and retroactive to March 28th. In addition, the authority has re-imposed the $150 label registration fee that was previously waived on in-state batches of beer smaller than 1,500 barrels. Many of New York’s smallest brewers will be subject to this fee for the first time.
E.B. White, Here is New York (1949)