Shelton Brothers issue statement regarding New York's repeal of beer tax and fee exemptions

Discussion in 'Beer News' started by Todd, May 1, 2012.

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  1. Todd

    Todd Founder (13,254) Aug 23, 1996 Finland
    Staff Super Mod Pooh-Bah Society Trader

    Some of you may remember the recent thread regarding New York state ending tax and fee exemptions for in-state brewers, the resolution of a lawsuit initiated by Shelton Brothers against the State Liquor Authority (SLA) for rejecting beer labels in 2006 under the assumption that they'd appeal to children. During the lawsuit, Shelton Brothers also questioned the fairness of tax and fee exemptions offered solely to in-state breweries, with the intentions of having them eliminated for everyone. The SLA and Department of Taxation and Finance eventually conceded that giving preferential treatment to beer brewed in state was "unconstitutional." However instead of eliminating the taxes and fees for everyone, the state eliminated the exemption for everyone.

    The bottom-line is that all beer sold in New York state is now subject to state and city excise taxes (previously waived for the first 200,000 bbls; NY breweries only), and each individual brand sold in state will require an annual $150 registration fee (previously waived if the volume produced per brand was under 1,500 bbls; NY breweries only).

    In response to recent coverage by the press and bloggers, much of which has been less than favorable, the following statement was issued by the Shelton Brothers today.

  2. emannths

    emannths Initiate (0) Sep 21, 2007 Massachusetts


    The previous arrangement was illegal. The increased costs are minuscule. NY brewers should quit their whining.
  3. meltroha

    meltroha Initiate (0) Aug 16, 2011 Ohio

    Thanks for talking down to everyone! I wasn't one of the people bashing you, but I am pretty sure that some of them may be of equal intellect as you. You should have just stopped distributing there, instead of trying to be ready yourself. I do not live in New York, so I really do not have a say in this, but I certainly will never drink your beer due to this. I am also sure that many people will also do the same, as we are a community.
  4. bigfnjoe

    bigfnjoe Initiate (0) Oct 22, 2009 Pennsylvania

    Awesome, more Cantillon, Fantome, 3F, Jolly Pumpkin, and Anchorage for all of us!

    Solid response by Shelton....very well-thought out and well-spoken.
  5. stupac2

    stupac2 Initiate (0) Feb 22, 2011 California

    I never understood the negative reaction to the decision. The old situation was illegal and unfair, it's not like Shelton were bad guys for pointing that out.

    Also, lulz at the above. Do you honestly think people are going to stop drinking Cantillon because of this? Or that they won't buy the Westy bricks? Yeah right.
  6. meltroha

    meltroha Initiate (0) Aug 16, 2011 Ohio

    Crap, I just saw all you distribute. I will be drinking your beer, strike that last statement. I still think small breweries should be exempt, at least for what they sell in state. 200000 bbls may be high for the cut off, maybe like 100000 would be more appropriate
    BBThunderbolt and ShogoKawada like this.
  7. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    The state of NY can do that. But they cant do it for only small NY breweries.
  8. Todd

    Todd Founder (13,254) Aug 23, 1996 Finland
    Staff Super Mod Pooh-Bah Society Trader

  9. somenerd

    somenerd Initiate (0) Jan 16, 2009 Massachusetts

    There may have been a few snarky lines that crept in, but I have to agree with bigfnjoe and emannths— by and by, this seems like a pretty well thought-out and rational response to all the ragers.
    So the tax situation didn't work out the way they had intended (whoopsie-doodle). It certainly sucks, but I can't see it putting anybody out of business.
  10. cmmcdonn

    cmmcdonn Initiate (0) Jun 21, 2009 Virginia

    Is it wrong that I read the Brooklyn brewer part aloud with a terrible NY accent?

    No bonus? Forgedaboutit!
    avenuepub likes this.
  11. grandq

    grandq Initiate (0) Jun 4, 2005 New York

    The condescension in the Shelton's official response makes me want to boycott their beers even if their actions didn't.

    I get it, they contested an impediment to interstate commerce. But it bothers me that a middle-man importer from out of state - who don't incur the actual operating costs of creating a product in this expensive, heavily taxed state, to say nothing of the beer-specific fees and taxes - whinges on about leveling the playing field.
    halo21, raverjames, jacksback and 2 others like this.
  12. PangaeaBeerFood

    PangaeaBeerFood Initiate (0) Nov 30, 2008 New York

    A few thoughts here:

    It's completely inappropriate for the negative backlash, particularly from professional brewers.

    That being said, I don't agree with him here. As an out of state business, you ACTIVELY CHOSE to do business in New York and likewise have the option of paying the fees or not. As a local New York brewery, you need to pay those fees for EVERY SINGLE BEER you produce, regardless of where it goes. The mandatory nature of it for local businesses makes it far more imposing.

    I also don't know much about interstate commerce law, but I don't see why a State can't offer a tax exemption to local businesses to promote the growth of small business and lower prices on local goods. Tariffs have been used to do this internationally since the dawn of commerce.

    I don't blame Shelton Brothers for this situation, I blame New York State. However, this situation feels a lot like a kid trying to get out of doing his homework by pointing to his friend and saying, "He didn't do it either!" That never ends in no homework. It ends in spoiling it for everyone and LOTS of tension.

    Just my two cents on the issue.
  13. cbeer88

    cbeer88 Initiate (0) Sep 5, 2007 Massachusetts

    Careful there. The last poster who threatened a boycott changed his mind in only 8 minutes after looking up what he'd be boycotting.
  14. leedorham

    leedorham Initiate (0) Apr 27, 2006 Washington

    I don't shop at Wal Mart, unless I need something they sell.
  15. codasnap52

    codasnap52 Zealot (730) Jan 24, 2008 Connecticut

    That is exactly what I was thinking. Although Shelton Bros provides the beer industry and the brewers they represent with an important service, they are indeed just middle-men in their business. I appreciate the hard work they put into their jobs, and selling quality beer from far places to our markets is commendable, but they exist to MAKE money. Can't fault them for that, but if this issue was brought up initially by a little mom and pop brewery, I think we all might have had a slightly different reaction.
    sliverX likes this.
  16. Sesmu

    Sesmu Zealot (732) Feb 28, 2007 Massachusetts

    I don't see anything condescending in Sheltons' response. If anything, I think they were being sarcastic towards the well-wishers, which is understandable.

    Personally, I don't understand it either, but if this is the case, it is what it is. The bottom line is the ball was in NY State Administration's court and they chose to go with this decision.

    If they want to support small breweries, in and out of state, as I understand it they can make an exemption by size. If they want to support local business, I'm sure there are legal ways to do it. Even from the beer tax they collect they can set up some sort of a fund to support small local businesses, including breweries, or something to that extent. But again, it's certainly not Sheltons' fault that NY State decided to tax everyone.
  17. stupac2

    stupac2 Initiate (0) Feb 22, 2011 California

    Personally, I judge things like this on the merits. The fact that it was Shelton who got the unconstitutional tax break repealed is completely irrelevant to how I react to it. I cannot understand why it matters to anyone.
    beerindex likes this.
  18. Bluecane

    Bluecane Initiate (0) Dec 30, 2011 New York

    Agreed. There's just 1 point that seems disingenuous; they complain about the impact of the fees on them -- even aside from the fact that they're clearly unconstitutional -- but then they tell the complaining breweries to suck it up because it's no big deal. You can't really have it both ways.

    Ultimately, this was the correct legal decision. But, I'm not as sure that the Shelton Brothers and other similarly-situated brewers/distributors have my emotional support.
  19. emannths

    emannths Initiate (0) Sep 21, 2007 Massachusetts

    Though it's been decided law since about the existence of the US Constitution, the courts have never really explained why Congress's power to regulate interstate trade restricts the States' powers to regulate it through import tariffs. The elimination of such tariffs was a major goal in the switch from the Articles of Confederation to the Constitution, but it's unclear why Congress doesn't need to take legislative action to create laws limiting the States' powers to regulate interstate trade. Lots more discussion in this long article.

    Nonetheless, there's 200+ years of legal precedent that says it's unconstitutional for states to favor commerce of in-state goods over imported ones.
  20. Beerandraiderfan

    Beerandraiderfan Initiate (0) Apr 14, 2009 Nevada

    Because the Commerce Clause in conjunction w/ the notion of equal protection in the U.S. Constitution (14th amendment) prohibits acts in restraint of interstate commerce. "No state shall deny to any person within its jurisdiction the equal protection of the laws."

    International tariffs are not interstate commerce. Hence the difference.
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