Editor’s Note: We’re very pleased to welcome back Devin Morgan to the Farmshed CNY blog. In this second installment of his series on small business law for farmers and food producers in Central New York and the Finger Lakes, Devin explains New York State’s recently passed Farm Distillery Bill, which loosens the legal restrictions regarding value-added production of distilled spirits using New York State agricultural products. Salute!
An Introduction to New York’s Farm Distillery Law
Have you been thinking about making whiskey from your organic corn, applejack from this year’s apple harvest, or pear vodka using your pears and the potatoes from other NY farms? Distilled spirits can be a fun and appealing value added product for farmers in New York State. On October 3, 2012, Governor Cuomo signed a new Farm Distillery Bill that makes this opportunity even more appealing. The big change is opening up more options for direct sale of farm distilled spirits. Distilled spirits are still more tightly controlled than beer, cider, or wine, but now you can offer tastings and sell them at Farmers’ Markets and State and County Fairs. Given the growth and popularity of Farmers’ Markets, this is a great new opportunity.
New York State law has enabled the operation of small batch distilleries through a fairly simple and inexpensive licensing procedure since 2002. The major requirements were a single identified location and use of “primarily farm and food products” from NYS. That generally means sourcing most of your ingredients from New York State. You would want to use at least 75% NYS farm ingredients for meeting New York labeling requirements. It is a little different from the Farm Winery license, in that a Farm Distillery can be on a farm, but it doesn’t have to be. The new Farm Brewery licensees have the same option. But for farmers, growers, and other folks interested in making whiskey, fruit brandies, vodkas, and other spirits on a small scale, it still had some pretty significant limitations on distribution. You could make it, but you could only sell it where it was made (your farm or separate farm distillery operation). Or, you needed to find a licensed wholesaler or retailer willing to sell it for you just like large scale operations. Many times it is difficult to get a retailer or wholesaler to take a chance on a new, small batch product without some sort of track record. And it takes money to find and woo these people. It is one of the reasons that so many specialty foods get their starts with Farmers’ Markets and craft shows–the ability to prove your product and fund your search for distribution partners with direct sales from the markets and shows.
Under the new law, Farm Distilleries can get a permit to offer tastings and sell their hooch at Farmers’ Markets, as well as the New York State Fair and recognized County Fairs. Clearly, the use of the many successful Farmers’ Markets across the state for direct-to-consumer sales of spirits is the big opportunity. But I have already heard talk of distillers planning to make a splash at next year’s New York State Fair. It might be worth going just for all of the new and not-so-new Farm Distilleries that can now showcase their products. And I’m sure that up and coming retailers and distributors interested in local craft spirits will be attending the State Fair and other events with this in mind.
Another very cool aspect of Farm Distilleries enabled by recent changes (including the Farm Brewery law passed this summer) is the opportunity to offer tastings and sell New York beer, cider, and wine from other licensed brewers, farm breweries, wineries, farm wineries, and cider producers. That’s right, you can sell the full line up of alcoholic products on your farm, as long as they are all made with New York stuff. That’s something that no liquor or grocery store can do.
You still can’t sell spirits direct to consumer using mail order, common carriers, or the internet, but the combination of what you can do on-site and the ability to go to your customers using Farmers’ Markets represents a great opportunity for farmers interested in mastering the art of craft distilling (or partnering with someone who already has the moonshining know-how).
Do you have a legal question related to your farm, food, or beverage business that you would like to see answered in a future Farmshed CNY blog post? Submit your question to Devin using the Eat. Drink. Law. Contact Us page here.
About the Author
Devin Morgan is an author, speaker, and attorney with Knull Group (www.eatdrinklaw.com), a firm for food-obsessed business and intellectual property lawyers in Cooperstown, NY. He is focused on the growth of the craft food and beverage industry in New York State and is the primary author of the Eat. Drink. Law. blog. Click here to receive a free report from Devin on growing a distinctive food or beverage business. Knull Group is a big supporter of Farmshed CNY’s quest to map the local food scene across Central New York. This post is for general information only and is not legal advice. Attorney Advertising.
Tags: Central NY, Cideries, Distilleries, Farmers Markets, Food Policies, Wineries
With this farm license, can you sell to bars?
That’s some helpful information. I’ve gone through the law you’ve mentioned over and over and I just can’t tell if it lets farm distillers use the spirits from other farm distilleries in their own distillery products. They will let one distillery buy in bulk from another, but I’m wondering if it lets a farm distillery act as a blender, finisher and bottler of other farm distilleries’ spirits, since the spirits themselves could be considered farm products. It seems like such a scenario could prove helpful to many in the farm booze community.
Clayton, the Farm Distillery License allows sales to pretty much everyone authorized to buy in New York State, customers, wholesalers, and retailers. Licensed liquor retailers can include restaurants, bars, bed & breakfasts, and a variety of other establishments.
Spirited, my read is that farm distilleries cannot currently blend spirits from other farm distilleries and bottle them for resale without being separately licensed as a rectifier. You are correct that fermented products can be included in “farm and food products” so would be eligible ingredients. But I don’t see any basis in the law for a farm distillery to buy or sell alcohol for that purpose. Class D was not included in the list of folks a farm distillery can sell in bulk to (which seems a bit odd). I don’t have an official statement from the SLA on this and it could certainly be a worthwhile thing to raise–the farm rectifier license.
Where/how do you apply for a farm distillery permit in NY?
Solomon, it looks like you apply for a wholesale license through the New York State Alcohol Beverage Control Liquor Authority, check out this website: http://www.opal.ny.gov/gorr/pas/paslib.nsf/d74e34081d647438852569ae0050fd9c/9be86c13f746ca05852573be006e242b?OpenDocument&ExpandSection=1
Solomon, the website Neil provided is a good place to start, but also note that it is a lengthy, multi-step process with a lot of paperwork and requirements. It actually starts with getting a Federal license, then you would apply to the NYS Liquor Authority. Neither the Feds nor the state take granting these licenses lightly and require a lot of background detail about the location, business operations, and all of the owners. It is likely to take months and cost thousands of dollars.
Devin, where can I find whole Law Code thet defines NY Farm Distilling Law?
Pepe, the NYS Alcoholic Beverage Control (ABC) law can be found online at:
http://public.leginfo.state.ny.us/menugetf.cgi?COMMONQUERY=LAWS
Click on the ABC law link and then Article 5 (Special Provisions Relating to Liquor) and then section 61 link for Distillers Licenses. Farm Distillery is class D (paragraph 2-c).
Of course, you still end up with cross-references to all of the retailer, wholesaler, and other licenses in the ABC law that can interact with Farm Distilleries as far as who you can buy from and sell to and then a cross-reference to the Agriculture & Markets (AGM) law for the New York “farm products” definition. The good news is that it is all available there. The bad news is it’s still a pain to track down everything relevant.