In a blow to New York's growing number of small beer crafters, the state has quietly ended tax and fee exemptions for in-state brewers after it was sued by an out-of-state distributor.

The announcement stunned local brewers, many of whom learned in an email that two treasured exemptions—worth hundreds of thousands of dollars to some breweries—had been declared unconstitutional by a state court on March 28 in response to a lawsuit by Shelton Brothers, a Massachusetts-based distribution company.

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