A new law in New York is designed to increase recycling and pad the state’s coffers. But the law is making no friends in the brewing community. In fact, it has caused one of the most fascinating pieces of beer news we’ve seen in a long time. It appears that Pennsylvania-based Yuengling, “America’s oldest brewery,” is seriously threatening to pull out of New York entirely if the state doesn’t reconsider the law.

The law raises the state excise tax on beer, increases the handling fees distributors pay, and mandates a New York-specific bar code for all beer cans and bottles sold in the state. Millions of dollars - as well as big headaches for beer companies - are at stake.

The uproar against the bill’s requirements was swift, illustrating the treacherous difficulties of raising beer taxes. (Even if state governments say they really, REALLY need the money.)

We quote trade publication Beer Business Daily:

Yuengling’s threat to pull out of New York if the state doesn’t reconsider its “expanded Bottle Bill” provision about mandating NY-specific UPC codes wasn’t just an idle threat. The scion of America’s oldest brewery, Dick Yuengling, put his money where is pen is and wrote a letter to New York governor Paterson himself.

This law “will add up to much higher prices and less choice for all NY state beer consumers,” writes Dick.

Dick continues: “While these may be unintended consequences, they will be consequences nonetheless and, ultimately, the effects will be far reaching throughout the state, including the possibility of major job losses throughout the industry in NY State. We view the provisions in this legislation as anti-competitive and anti-consumer, and it is the residents in the state of NY that will ultimately suffer from this.”

Mr. Yuengling went on to inform the governor “with great sadness” that unless there is some type of corrective legislative ‘clean up’ process to address the new bar code requirement, Yuengling would “be forced to pull our Brands completely out of NY State” once the requirement starts being enforced.

In the words of Beer Business Daily…wow. The industry has a June deadline before these new requirements are enforced, so “the clock is ticking,” as the trade pub notes.

“The state is being stubborn in revisiting any provisions of the new bottle law,” except possibly the bar code issue, BBD reported.

Lager Heads will keep our ear to the ground to find out how this standoff ends. It’ll be interesting to see if Albany blinks, or if Yuengling actually carries out its threat.