Monday, February 22, 2010

Status of FWWS 2010 Legislation

Your Board has been very busy in the short session of the Legislature this year. Together with our lobbyists, Mark Gjurasic and Terry Kohl, we have pursued three pieces of legislation on behalf of small Washington wineries: the Craft Winery Development Act, the Payment Parity Act, and the Tax Reporting Relief Act. Descriptions of these bills have been previously distributed to all FWWS members and are posted on our website. The Washington State Liquor Control Board has remained neutral on all three bills but did issue a questionable and problematic fiscal note on the tax bill. The only opposition to the bills has come from the Washington Wine Institute and the Beer and Wine Wholesalers Association. The WWI continues to object to all three bills and provided comments to us at the request of State Rep. Wood. One may read the WI’s comments and our response to them at:

WWI Comments

FWWS Response

Craft Wineries Proposal

The Craft Winery Development Act is our most important bill as it would eliminate all unnecessary wine regulation that does not have a public safety basis. It replaces the “Intent Bill” that we pursued in 2007 and 2008, with the major difference being that the Intent Bill would have applied to all wineries and the Craft Bill applies only to small wineries that elect to be treated as craft wineries. After the Washington Beer and Wine Wholesaler’s Association and The Washington Wine Institute opposed our Craft Bill, we amended it to delete the option for trade credit. Nonetheless, these two groups continued to oppose the bill and it did not receive a hearing in this short session of the legislature.

We believe the Craft concept, which applies only to smaller wineries and which further requires an opt-in, is a sound one to address continuing resistance to change from some in our industry. We repeatedly hear from Legislators that they are tired of the wine industry coming to Olympia every year and asking for small exceptions to the existing wine law. It’s time to fix the liquor code once and for all, and the Craft Winery Development Act would do just that for small wineries. We look forward to pursuing the Craft Act during the longer session of the legislature in 2011.

Payment Parity Proposal

Our Payment Parity Act was also opposed this year by the large wholesalers and the WWI. Senator Kohl-Welles has indicated that she expects our bill will receive a hearing before her Senate Labor and Commerce Committee in the longer 2011 session.

The FWWS payment parity proposal extends exactly the same language to use of business checks as was proposed by the WWI’s “Coalition of Stakeholders” and drafted into law last year for Electronic Funds Transfers (EFTs). We believe the present situation to be outrageously unfair and discriminatory to self-distributed wineries. We will not rest until this situation is resolved.

Annual Tax Reporting

Over the last two years we have resolved issues surrounding our Tax Reporting Relief Act with both the Washington Wine Commission and the California Wine Institute. The Washington State Liquor Control Board has maintained a $250,000 fiscal note on the bill since its inception two years ago. This fiscal note is for changes to the State computer system that the Liquor Board claims will be required to implement our bill. We do not believe that changes to the computer system are necessary as reports still may be submitted manually. We fundamentally disagree that this change requires a technological rather than a clerical fix.

A key Legislator has asked us to work with the Liquor Board again this year to try and resolve the fiscal note administratively and the Board has agreed. We will explore that option in the coming year.

Special Occasion License Bill

The Washington Wine Institute has proposed a bill to provide two more exceptions to the broad “money’s worth” rules limiting your conduct as a winery. These changes would allow organizers of charitable tasting events to charge a “reasonable” fee for that service. Additionally it would allow you as a winery to extend credit to the charity/retailer and would do away with the temporary checks now required at the beginning of the event. Though this approach continues the legislative “whack-a-mole” process for dealing with the unintended consequences of the broad restrictions on wine trade, in the absence of a more comprehensive solution such as our Craft Act, we supported the bill. We also suggested two amendments to improve the bill.

Contrary to the WWI’s alarmist charges in the past week that our two amendments had “stalled” the bill, it passed out of committee in both the House and Senate on February 2nd. Though our amendments were offered in the House committee by representative Cary Condotta, and were vigorously debated, neither passed. We continue to support the bill, even without our suggested amendments.

It’s interesting to note that one of our proposed amendments suggested removing the word “reasonable” from the phrase “reasonable fees.” We don’t believe that regulation by the Liquor Board is necessary to protect wineries from “unreasonable” fees. Wineries are fully capable of deciding for themselves whether a fee is reasonable and communicating their objections to the event organizers. In America, prices should be set by the free market, not by government regulation.

In a rather ironic twist, the Senate version of the bill did not actually contain the word “reasonable.” As the House and Senate versions must be reconciled, we will seek to have the offending word removed from the House version rather than having it added to the Senate version. We may ask you to support that effort by contacting your legislator. Please stay tuned.

Sincerely yours,

The FWWS Board

John Bell
Paul Beveridge
John Morgan
Tim Narby
Alistair Sloley

Economic Impact and Costs of Small Wineries

Here's an interesting letter about the "Economic Impact and Costs of Small Wineries" by Karl Storchman, Managing Editor of the Journal of Wine Economics.

Friday, February 19, 2010

Blog E-Mails

The FWWS blog was integrated with Twitter today and now all posts can be sent to your mobile device if you follow us on Twitter.

Tonight we implemented another integration feature for blog posts - automatic e-mails courtesy of MailChimp!

Now you can stay up-to-date with FWWS in a variety of ways:
  1. Visit our website for web blog posts
  2. Consume our blog feed in an RSS reader
  3. Subscribe to our Twitter feed and get mobile device alerts
  4. Sit back and let blog posts get sent to your e-mail inbox
And of course don't forget our Bing Maps files you can download for Google Earth, your GPS device, or the GeoRSS feed.

We hope you like the new ways we can connect with our members!

If you find any bugs, please feel free to report them and our resident code-genius Alex Sloley will work to resolve them.

FWWS on Twitter

FWWS is now on Twitter!

Stay informed with FWWS Twitter posts. Join now to get updates sent directly to your mobile device.

In addition, our home page now boasts a Twitter widget that displays our current Twitter updates and our blog feed automatically posts to Twitter.

Enjoy the new features...

Tuesday, February 2, 2010

Response to WWI Legislative Update

Dear FWWS Members,

It has come to our attention that a recent legislative update report from the Washington Wine Institute (WWI) to its members focused entirely on Family Wineries of Washington State and our response to the WWI’s Special Occasion Events bill, a bill which we support. We regret that the text of this document, forwarded to us by a WWI member, is inaccurate and inflammatory enough to require a response.

The opening remarks contain the following statement: “Our bill to make it easier for wineries to participate in charitable events was stalled in the House Commerce Committee after The Family Wineries of Washington proposed amendments to the bill.” This is nonsense.

Here are some facts with regard to the WWI’s Special Occasion bill: First, we support this bill which we made clear in our comments to the Executive Director of the Wine Institute.

Special Occasion Bill Comments in Outlook format
Special Occasion Bill Comments in HTML format

Our support of the bill with or without our suggested improving amendments incorporated is contained in bold text to make it perfectly clear. This bold text statement was included in our written comments to both the House and Senate before which we testified, and was reiterated in our verbal testimony.

Second, we have been aware of this issue being in play not since last fall as the WWI claims, but in fact since last spring when the WSLCB determined that the existing business models for third parties offering organizational services to charities for licensed special occasions were an illegal violation of the money’s worth restrictions between wineries and the charity/retailers.

Third, since we became aware that the WWI was working with stakeholders and the WSLCB on this proposal, we repeatedly asked for an advance copy to review in order that our comments could be incorporated in the bill, and to ensure our unequivocal support. Regrettably, our first opportunity to see this bill was after the Wine Institute introduced it, which was after the start of the already short current Legislative session.

Absent the opportunity to review and comment on this bill in draft form we offered three suggested amendments to improve the bill:

The first amendment would have clarified that wineries could directly pay the third party organizer (which is the common current practice), rather than the charity as stated in the bill. We withdrew this amendment after the WWI stated in the record that it was their intent that the charity and the organizer be considered one and the same.

The second amendment seeks to delete the word “reasonable” from the text as it refers to payments to be charged for attendance or table fees. In their update the WWI criticizes this amendment by asking, “What’s wrong with requiring only ‘reasonable’ fees in the law?” This is best answered with another question: “What is ‘reasonable,’ and who decides?” FWWS believes that in voluntary transactions such as these, the free market should determine what price is reasonable, not government agencies. This is a matter readily and fairly decided in the marketplace. If wineries do not think the fee is reasonable, they will not attend the event and the organizer will have to lower the price. The imposition of “reasonable” in the bill is a solution in search of a problem.

Our final suggested amendment would allow one business day for payment to be processed and checks to be written. This would make the bill consistent with the language in our proposed Payment Parity Act and would make the bill more useful for larger charities. The need for this amendment was driven home last Sunday night after our successful Enumclaw Wine & Chocolate Festival event. It was fully three hours after the event that the last invoice was double checked and the last check written. The WWI said of this proposed amendment: “While we understand that it sounds like a simple convenience, WWI opposes this amendment because its acceptance would make it much more difficult for us to defeat efforts to allow credit terms for other retailers.” We believe that the “credit terms” they are referring to may be those in our “Payment Parity Act” which would allow you the option of delivering wine and having the retailer send you a check the next business day exactly like those terms extended last year to the wholesalers for Electronic Funds Transfers (EFT’s). We say “extended to the wholesalers” because they broadly use EFTs for this purpose and wineries rarely if ever do. The WWI vehemently opposed our bill and it did not receive a hearing this year. It’s worth noting that the Wine Institute’s “Coalition of Stakeholders,” which included the Washington Beer and Wine Wholesaler’s Association, not only was the source of the EFT exception to money’s worth but also drafted a bill, now law, which contained the allowance for wholesalers to extend credit on food and non-alcoholic beverages up to thirty days with Liquor Board sanction for non-payment. This is not only identical to the terms proposed as optional in our Craft Wineries bill that the WWI also strongly opposed, but puts the WSLCB in the current and rather bizarre position of regulating non-alcohol trade.

The notion that these proposed FWWS amendments have “stalled” the Special Occasion bill in committee" is silly. This bill is scheduled for “executive session” in both the House and Senate where we understand that our amendments will be introduced for consideration. We fully expect that by the time you read this the WWI bill will have passed either as a good bill without our suggested amendments, or as a significantly better bill with our amendments.

For the record FWWS has never opposed any bill that the WWI has put forward. For their part the WWI has never supported any bill the FWWS has put forward, nor have they offered any constructive criticisms or suggestions as to how to make our bills acceptable to them. The WWI’s comments on our legislative proposals, offered only after a request for comment from a legislator, are attached for your review in the link which follows, as is our rebuttal to their response.

WWI Comments on FWWS Legislative Proposals
FWWS Response to WWI Comments

We have offered no fewer than five times to sit down with the WWI and discuss these and other issues, to find areas of possible agreement, or accommodation of differences. Every offer has been refused. We will continue to extend the invitation, but in the interim we will not apologize for offering suggestions to the legislature to improve bills submitted by the WWI for which no other courtesy for comment is offered.

As always, we value your feedback and comments. Please email us at board[at]

Sincerely yours,

The FWWS Board

John Bell, Paul Beveridge, John Morgan, Tim Narby, Alistair Sloley