BILL NUMBER: S7793

SPONSOR: VALESKY
 
TITLE OF BILL:  An act to amend the alcoholic beverage control law, in
relation to establishing a custom distiller's endorsement for holders of
class D distiller's licenses

 
PURPOSE:

The purpose of this bill is to create a new endorsement to a Class D
distiller's license (Farm Distillery) so that such licensee can conduct
the business of a custom spirits center, in a manner that is as similar
as possible as a Custom Beermakers' Center, Custom Cidermakers' Center,
or a Custom Winemakers' Center operates. Such Custom Beermakers', Cider-
makers', and Winemakers' Centers are already authorized under Federal
and New York State Law, but not centers that manufacture liquors.

 
SUMMARY OF PROVISIONS:

Section 1: Amends Alcoholic Beverage Control Law section 61 (2-c)to
permit a Class D distillery (i.e. a farm distillery) to obtain an
              

endorsement to also conduct the activities permitted under a new ABC Law
section 61-c that establishes the powers of a Custom Distiller's
Endorsement.

Section 2: Amends ABC Law section 61-a (1)to authorize the SLA when
issuing a combined craft manufacturer's license to also include the
Custom Distiller's endorsement established in ABC Law section 61-c.

Section 3: Adds a new ABC Law section 61-c to create a Custom
Distiller's Endorsement. Under this provision, any farm distillery that
wants to also conduct the business of a custom distiller's center, may
do so after applying to the Authority for approval of such endorsement.
Such an endorsement would allow for the establishment and conduct of a
custom distiller's business and facility on the same premises as the
farmers distillery for the production of spirits for personal and home
consumption, exclusively.

Such a facility would provide individuals with rental space (to make and
store homemade spirits manufactured at such a facility), the use of
equipment and storage facilities, and/or the purchase of spirits making
supplies and lab work needed for the production of spirits exclusively
for personal household use and or to be given away to friends and busi-
ness associates, not for commercial use or resale purposes. It defines
liquor making supplies as products grown or produced in New York that
would be needed to qualify the manufactured liquor to be a New York
labeled liquor. All such liquors manufactured under such endorsement
must be New York labeled liquors. A custom distiller's endorsement would
be authorized, if permitted by the Federal Alcohol and Tobacco Tax and
Trade Bureau(TTB): to conduct training classes on how to manufacture
liquors; conduct certain tastings of such New York labeled spirits
produced on the premises; and other ancillary activities associated with
educating its patrons or running such a homemade spirits center.

To keep adequate records of the private individuals who helped to manu-
facture such spirits and/or to whom such distilled products are deliv-
ered to; the Endorsee must keep accurate records of the name, address,
and other contact information of all individuals, corporations, or other
business entities that pay for and/or accept such New York labeled
liquors manufactured by such Class D licensee, under the distillation
endorsement. In addition, such records must report the amount of liquors
so manufactured. This provision is needed to ensure that only private
individuals can contract to manufacture small amounts of such liquors,
help to manufacture, or bottle such liquors or to accept delivery of
such liquors manufactured under such endorsement and that such liquors
are used exclusively for private and household consumption and not for
any commercial sale or resale.

Section 4: This Act shall take effect 60 days after it shall have become
law.

 
EXISTING LAW:

Federal law deems that the home production of limited amounts of beer,
cider, and wine, for home and personal consumption, is to be exempt from
federal licensing and registration requirements and taxation (i.e. it
does not need to be produced by a bonded facility). Many states have
adopted laws to allow for such custom beer/cider/winemakers' centers to
be established or have deemed them to be authorized since they are
exempt from federal jurisdiction. Under federal regulations, New York
did enact Chapter 422 of the Laws of 2016 to authorize these custom
beer/cider/winemakers' centers for them to be allowed to exist in this
state. However, such centers were not created for those businesses that
wished to manufacture liquor.

 
JUSTIFICATION:

This bill will help to facilitate the production of homemade spirits, in
addition to beers, ciders, and wine,(at home craft beverage centers)
which was authorized by Chapter 422 of the Laws of 2016. It encourages
production of these beverages and the sale of New York State agricul-
tural products by allowing a farm distillery licensee to operate a
licensed facility where individuals can rent space, equipment, and stor-
age facilities to manufacture them for personal consumption. Further,
assistance could be provided to these hobbyist spirits makers. This
lowers the overhead costs for home or personal production and provides
space for enthusiasts who do not have room where they live to produce
homemade spirits.

In addition, such custom centers can conduct training courses on how to
produce spirits. By providing these courses, as well as any ingredients
that may be needed, the custom centers would increase the demand for
locally grown fruits and other ingredients, providing additional markets
for New York farmers.

For many urban and suburban residents, they often do not have appropri-
ate space to make homemade spirits in their homes or apartments and
purchasing equipment is cost prohibitive. Establishing the custom spir-
its makers' centers would provide the kinds of facilities that these
residents need. Such centers could also be located in villages and towns
that are near local fruit farms or in cities, where there is a growing
interest in producing homemade spirits for home consumption and personal
use only.

In addition, this bill may help to encourage expansion of the grape,
other fruits, and vegetable growing industries in this State. This is
because it would increase the demand for locally grown New York agricul-
tural products. Initially, the concept for the enactment of Chapter 422
of the Laws 2016 came from apple and grape farmers who wanted to estab-
lish such a Home winemakers Center on their farm so that they could
increase the sales of their apple and grape crops. In addition, economic
activity could be generated from the sale of liquor making supplies and
leasing space for the making of homemade products.

This bill, while modeled on Chapter 422 of the Laws of 2016, still
remains different in that distilled products are of a very different
nature that homemade wines, beers and ciders. The reason being that such
spirits have much higher alcohol levels, the distillation process can be
more hazardous than the processes to make wine, beer, and cider.
Further, while under Federal Rules and Regulations, there are Wine,
Cider, and Beer Makers centers to manufacture such alcoholic beverages
for home consumption, the same is not the case for the manufacture of
liquor. Hence, unlike the home wine, cider and beer makers centers,
which can be established either in a licensed facility that can make
alcoholic beverage OR a free standing facility that is not authorized to
manufacture alcoholic beverages for commercial use or resale; under this
bill, such liquor centers must be located at a facility that is licensed
to manufacture liquors.  Further, since wine, beer, and cider manufac-
tured as such home brew makers' facility is exempt from Federal regu-
lation, and used only for personal use, it is not taxed as an alcoholic
beverage; however, under this bill all liquors manufactured would be
subject to an liquor excise tax collection under the operation of
liquors manufactured by a farmer distillery license.

Another benefit of this bill is to authorize current licensed manufac-
turers to establish ancillary businesses to increase their overall
profit margin. By enacting this bill into law, farm distilleries could
increase the utilization of their otherwise idle equipment and facili-
ties, increase sales of New York State products that are grown locally,
but are not being utilized by commercial operations, and collect rent
for their underutilized space within their facilities to individuals
wishing to use a custom liquor center.

 
LEGISLATIVE HISTORY:

New Bill

 
IMPLICATIONS:

None.

 
LOCAL FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
60 Days after it shall have become law.