Wine Commission Openings

Dear FWWS Member,

There are currently two open positions on the Washington Wine Commission, these being positions two and four. Both of these positions must be held by wine producers, one of which must represent a winery producing less than 25,000 gallons of wine annually. Position two is currently held by John Bookwalter, and position four by Chris Sparkman. Mr. Bookwalter is not seeking another term.

I accordance with RCW 15.88, the State Director of Agriculture appoints the members of the Washington Wine Commission. The Agriculture Director is currently seeking nominees to fill these positions and has specifically requested input from FWWS in that regard. If you would like an endorsement by FWWS for nomination to either position, please send a short email to the FWWS board with the following:

• Your contact information
• A brief description of our background in the Washington Wine Industry including the name, location and current annual production of your winery in gallons,
• A brief outline of your background including any aspects of your professional or community service history together with any other pertinent facts you would like considered such as public relations and leadership skills.

FWWS must make recommendations to the Agriculture Director by Friday May 10. If you wish to seek an endorsement from FWWS for your candidacy for either of these positions, please respond with the requested information no later than Monday, May 6^th.

Thank you,

The FWWS Board

2013 LEGISLATIVE UPDATE

Farmer’s Market Sampling Bill Passes Senate, Moves to house

At the time of this writing, of the wine related bill FWWS has supported in the 2013 session a few are still alive, the most important of which is the bill to make the farmer’s market sampling pilot program permanent.  This bill has passed the State senate and has moved on to the house.  The Board appreciates the quick action of FWWS members in calling their Senators to help move the bill this far and we anticipate a similar call to action in the House process. An update and post mortem on the other various non FWWS sponsored bills will follow after the session and once we know the fate of the Farmer’s Market and other bills.  The following is a discussion of the two bills that FWWS ran this year.  Though neither passed, we are optimistic about the future chances of both of these bills and plan to pursue them.  Read on!

FWWS Proposal to Allow Sale of Wine in Growlers by Retailers

Though this bill had broad support for its environmental benefits, it did not pass out of committee in either house of the legislature. Two stakeholders, the Washington State Liquor Control Board and the Washington Wine Institute spoke with concerns about our bill.  The testimony of both parties was more or less the same and essentially amounted to expressing the view that, while this is a fine idea, it appears to be illegal under federal law.

 This understanding of federal law is wrong.

We encourage you to read the Memo written by FWWS Board President Paul Beveridge to legislative committee members which follows this posting and lays out the actual federal regulatory issues.  Here is the condensed version:  The federal TTB views the filling of growlers by retailers as “repackaging of tax paid wine at other than a bonded wine facility.” We believe that even this viewpoint is incorrect, that filling of customer owned growlers by retailers is simply retailing, and that this does not constitute repackaging of wine any more than a customer filling a bag with dried apricots from a bulk bin constitutes repackaging of apricots.  As intrastate retailing we do not believe that federal rules should apply to this transaction.  That is our viewpoint. What is not in any doubt and something that the TTB in no way disputes is that filling of growlers in a facility licensed as a tax paid wine bottling house is entirely legal under federal law. In fact the retailer Whole Foods is currently offering wine in growlers in the state of Texas under just such a licensing scheme.    At the time of this writing a wine growler bill has passed both the Oregon Senate and House and is awaiting signature by Governor Kitzhaber. 

Considering that at least one Washington retailer offers up to twenty beers for sale in growlers at a single store location, the value of a Washington state law allowing wine growlers is obvious even under the current federal interpretation. Furthermore we believe that, should the TTB be faced with a flood of tax paid wine bottling house license applications by retailers wishing simply to fill growlers, something for which the tax paid bottling house statute was pretty clearly not intended, the TTB leadership will likely either change their interpretation of the statute or seek to change the statute as a time saving expedient. In the meantime, we intend to work to clarify federal law to state lawmakers and the Liquor Control Board Staff, and to bring this bill back next year.  We hope that with the above additional information regarding federal law, the WSLCB and the WWI will support the wine growler bill next year.

 

Multiple Premise Licenses

The other bill that FWWS ran this year was a bill to empower the WSLCB to allow the granting of more than one type of alcohol license to the same premise. The list of possible applications for such a law is too long to include here.  A few obvious possibilities with benefits to the wine industry include:

·         Allowing for sales of beer in winery additional tasting room locations (presently allowed by statute at winery premise tasting rooms but not at additional tasting rooms)

·         Allowing wineries to rent space in another winery premise tasting rooms (presently allowed at secondary tasting room locations but not at a winery production premise)

·         Allowing for brewery or distillery operations at a winery premise (presently allowed under federal “alternating premise” licensing but not by WSLCB staff interpretation).

While the bill drew broad support it was opposed by the Washington Beer and Wine wholesalers Association and the WSLCB.  The bill did not pass out of committee.  However, WSLCB staff indicated to us that they are willing to work on regulations this summer to fix the problems.

We fully intend to take the WSLCB up on their offer to discuss specific goals and business models that we wish to see made possible including all of the above cited examples.  However, we are aware of numerous examples of multiple licensing that would benefit other industry members and we strongly believe that a broader, not narrower, solution is precisely what our industry needs in order to unleash the entrepreneurial creativity of industry members.  Since this is very much in line with our new Governor’s often cited approach to encouraging business and economic development friendly regulatory reform, we intend to discuss this bill directly with the Governor’s office in order to try and enlist support for next year.

You may be assured that we will not rest until we achieve success on both of these issues. Stay tuned!

 

Full Text of Board President Paul Beverage’s background MEMO to Legislators Regarding the Legal Aspects of Wine in Growlers Follows:

From: Paul Beveridge, President, Family Wineries of Washington State

To: (Various Legislative Committee Members)

Subject: [FWWB] Wine Growlers

Dear members and staff of the Governmental Accountability & Oversight Committee,

Thank you again for holding a hearing on HB 1742, the wine “growler” bill. As you will recall, the only concern over the proposed legislation expressed during the hearing was that wine growlers may not be considered legal under federal law by the Tax and Trade Bureau (TTB). As we discussed at the hearing, Family Wineries of Washington State and organizations in other states have been working on the federal question for several years. In the past, TTB has indicated that wine may only be bottled in a federally licensed winery or bottling house. Our compatriots in Oregon, however, have pointed out that federal law does not extend to the retail sale of wine and therefore should not apply to the refilling of growlers, just like federal law does not restrict the filling of carafes at restaurants. Further, growlers are sold locally, not in interstate commerce, so federal law should not apply. Once the federally approved label is placed on the wine keg and all the federal taxes are paid by the manufacturer, the TTB has no jurisdiction over the wine as it travels through local retail channels. On this basis, Oregon wineries are pushing a wine growler bill in Oregon, HB 2443 (copy attached). See the following article for more information: http://www.winesandvines.com/template.cfm?content=110673&section=news.

Further, wine growlers are currently being sold in Texas with the approval of TTB and the agreement of the Texas ABC. For instance, Whole Foods in Texas has installed wine and beer “growler filling stations” at its Texas grocery stores. (See: http://www.examiner.com/article/weekend-pint-craft-and-growler.) We understand that the Texas retailers like Whole Foods have obtained federal licenses from TTB for wine bottling houses at their retail establishments. This is an example of the good things that can result if “multiple licenses at the same physical premise” are allowed -- which is the subject of our other bill, HB 1711, that was also reviewed at the hearing last Tuesday.

Here is a link to a New York Times article that discusses wine growlers in other states such as California and South Carolina: http://dinersjournal.blogs.nytimes.com/2011/03/30/growlers-for-grapes.

Therefore, if HB 1742 is passed, retailers in Washington state would have two options: Follow the lead of Oregon and argue that federal law does not cover the local retail refilling of growlers; or, if TTB objects, obtain a wine bottling house license from TTB for their retail premise where the growlers would be filled. Either option is acceptable to FWWS.

Since it appears that the potential TTB issues can be resolved, and since everyone agrees that wine growlers are great for the environment and the economy, we hope you will move HB 1742 through executive session as soon as possible.

Thank you for your continued support of small Washington wineries.