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

Bingo.

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

 

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.

 

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

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

 

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.

 

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

 

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

 

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.

 

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

No bonus? Forgedaboutit!

 

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.

 

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.

 

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

 

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

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

I suspect that section is there to explain that the reason they challenged the registration law was because it had a relatively large impact on them as compared to NYS brewers. They may be trying to head off the complaint that they filed the suit to get the fee imposed on NYS brewers as opposed to having it lifted from importers.

 

I'm guessing its because of the Supremacy clause and the notion of pre-emption.

 

If you actually read the whole thing (I admit it's long, but still) you're see that they say that they pay a significant amount of registration fees while making up a much, much smaller percentage of total sales. This is because Shelton has a metric crapton of brands, but basically none are high volume. Because they need to register each brand, they end up getting hit a lot harder by that fee than a brewery that makes many fewer brands and sells more of each.

 

unlike the brooklyn brewing charity foundation?

 

I'm well aware of their portfolio and am happy to support my local brewers rather than trainspot the latest from trend from Europe. Certainly some old standbys I'd be sad to give up, but there's enough variety from the great brewers here and nearby, and other importers bringing in quality product from elsewhere

 

God, I love Beer Advocate. You log on to learn about beer, and get a bonus Constitutional law discussion.

(being serious, not snarky. This discussion is interesting, & completely out of my knowledge base)

 

Not to make this Constitutional Advocate or anything, but the question arises because Section 10 on the Constitution explicitly says that the States can't do certain things that Congress is empowered to do in Section 8 (e.g., it says that States can't coin money). Section 10 says nothing about restricting the States' ability to regulate interstate commerce.

The Equal Protection Clause (1868) post-dates relevant Commerce Clause precedent that finds states cannot tax imports from other states. Additionally, in post-1868 cases, the 14th Amendment is usually not cited in connection with the Commerce Clause this precedent.

 

Way to avoid the latest trend. . . by supporting local brewers. . .and by not purchasing "old standbys".

Um, . . .

 

As a Con Law prof (undergraduate) I absolutely love this.

 

Please don't take my statement to mean you didn't have a legitimate question(s).

There's plenty of explicit things in the Constitution that caselaw determines isn't the case (1st amendment, Congress shall make "no law abridging" . . . there's plenty of time/place/manner restrictions for example, completely contrary to the verbage "NO" law. . .). And then there's the opposite. . . right to privacy? Nowhere in the Constitution. Courts made it up last century as a constitutional right.

But the ability to regulate commerce IS in Section 8 . . .so I don't understand where you're getting confused. Section 10 says state's can't do what Congress can in section 8, section 8 says congress can.

The 14th amendment involves everything involving States and federal rights, re: incorporation.

 

Well, well, well. I have just been made aware of this thread. Let me just make a few points here. I am not a lawyer like Mr. Shelton, so I cannot claim to have any direct knowledge of what effects these tax law changes will have. I also have nothing to do with legislative issues or dealings with political figures - I make beer. I argued to Mr. Shelton, in a private email, that perhaps he should not be doing things that will have negative effects on small breweries.

I pointed out that I like many of the beers he imports, that I have helped promote them (as most of us have, in some way or other), and that I've poured them in numerous tastings. Why, I wondered - talking, as I thought I was, to him alone - would he want to do a thing like this? Even if his statements regarding tax law are correct (and I have no idea whether they are), many states have situations that in some way favor in-state brewers. Frankly, it never occurred to me to think of them as unfair. I will not go down this path and print bits and pieces of Mr. Shelton's response; I would, however, characterize it as inflammatory. Mr. Shelton and I have had many heated arguments, often to the wee hours, all over foreign capitols; it's a running joke at this point.

I will also say that I have not, with anyone, anywhere, discussed, mentioned, or alluded to this issue. Nor have I read any of these blogs he speaks of. Did I ask Mr. Shelton "WTF"? Yes, I certainly did. I did not expect to find my comments to him characterized in the press; I thought I was talking to Mr. Shelton. But then again, I'm an adult, and I do read the news, and I should know better - people do these things. And, the more I think of it, in this situation, that makes me the idiot here. Mr. Shelton is far smarter, and knows exactly what he's doing.

 

I don't see what was "um" worthy about my statement, perhaps I wasn't clear. I have some I've frequently purchased from Sheltons' portfolio, they have a couple English Bitters and Milds, styles I find hard to locate from other sources, thus personal "standbys."

But I would willingly forgo them, along with their trendy, ticker-bait, "look how new and rare and hard to find our selection is" and stick to my local brewers.

 

Because it affects his bottom line and everyone should be treated equally?

 

Right. But a registration law, requiring all distributors to pay a given fee for each brand they sell probably wouldn't be unconstitutional, at least not on its face.

 

I just didn't understand how not buying the products you've been buying as old standbys was avoiding a trend.

Whereas, "support your local ____" you were going to adhere to seemed to be a more prevalent trend than purchasing old standbys.

 

I did read it. But, as I said above, a rule that taxes per brand, without discriminating against out-of-state brewers, would not be facially unconstitutional, since it's not discriminatory on its face. I don't know what New York's State Constitution looks like, but the taxing power is usually broad, and I would expect such a law to be subject to merely rational basis review, which basically no law ever fails (so as to be unconstitutional).

 

It was worded a bit offhand, I didn't know I needed to carefully parse the semantics before posting. I have "standbys" I regularly buy from both local and far flung breweries, a couple of which are Shelton. I am annoyed with Shelton for damaging my local brewing scene and for their petulant response, so I will cut out what portion I buy from them. The "trend" comment was in reference to my view of their business model: long tail, low volume, putting an emphasis on rarity

 

Basically, I'm less inclined to feel bad because it's just an incident of their business, another cost that has to be considered among the others. They were certainly legally correct in their challenge to it; but, even if the law were structured so as to be constitutional, I don't feel particularly bad that their business model exposes them to an increased cost relative to other business models.

 

Section 10 says States can't do specific things. There are powers given to Congress in Sec 8 that aren't mentioned in Sec 10. Nowhere does it say that Sec 8 powers are entirely exclusive to Congress.

Sec 10:

 

You don't need to do anything. The general notion, not the semantical value was what didn't make sense (to me).

Can you point me to this "damage" you speak of? It sounds like a claim not backed by evidence, or that is speculative, but I'm not in New York, maybe there have been lots of documented layoffs and breweries closing their doors specifically over this already that I'm not aware of.