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

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