RAY'S BOATHOUSE EVENT, NOVEMBER 6TH

Please Join FWWS for a harvest celebration and evening of great food and wine. 

When: Wednesday, November 6th, 6:00 9:00

Where: Ray's Boathouse Northwest Room. 6049 Seaview Avenue NW, Seattle (at Shilshole Bay)

Tickets: $55. Go to: fwws.eventbrite.com  Includes food, wine, Washington State sales tax, Riedel crystal tasting glass and all the fun you can handle.

Join 19 artisan wineries in a post-harvest celebration at famous Ray's boathouse on Shilshole bay.  Enjoy Fine wine, great food and great company.  An amazing array of silent auction items will be available to the very select bidder pool in attendance. Come join us and celebrate the 2013 vintage!

Important Changes to Wine Label Regulations

Dear FWWS Member

Many of you may already be aware of a recent TTB circular regarding liberalization of label approval guidelines.  However, based on conversations with TTB staff and member wineries, we believe this TTB circular is important enough, and was missed by enough people, to be worth re-visiting.  It’s not every day that a government agency takes action to significantly reduce the reach of regulatory requirements and this effort is both commendable and worth highlighting.

Here are just a few of many changes to labels that now are allowed without submittal of a new Certificate of Label Approval (COLA) application:

1)       Changing the alcohol content across the 14% alcohol tax class threshold (particularly important for those of us who haven’t yet labeled our reds from the cool, low alcohol 2011 vintage)

 

2)       Changing font styles, background colors, label shape, and label media (for example from adhesive backed to screen printed on the bottle)

 

3)       Deleting any non-mandatory information.

 

4)       Adding, changing or deleting web site addresses, UPC symbols or QR codes (Note: Please read our upcoming blog posting on TTB advertising requirements as regards QR codes and website references)

 

For a quick overview, this link:   http://www.ttb.gov/labeling/allowable_revisions.shtml#completeList

has a nice graphic showing some changes to sample labels that are now allowable.  There is also a concise table that will further clarify label requirements.

The full text of TTB circular 2012-2, together with its embedded links can be found at this link:  http://www.ttb.gov/labeling/ttb-g2012-2-updated-cola-form-allowable-revisions.pdf

                  
This is good news! We urge all of you to read the full TTB industry circular or, at the very least, to take five minutes to read the overview of changes at the first link above.  The first link has a printer friendly version available and is concise enough to use as a quick reference guide.

These changes are material, substantial, and positive, and not only increase stylistic flexibility for wineries but will also significantly reduce the need to re-submit COLA applications for existing wines.

Your FWWS Board

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.

 

The Year Behind, The Year Ahead

Dear FWWS Member.

An excellent proverb reminds us that while we are measuring our aspirations by looking forward we should remember to measure our progress by looking back. 2012 has certainly been a year to look back upon with some satisfaction.

FWWS Tax Reporting Relief Bill Passed
After five long years of effort our small wineries tax reporting relief bill passed the legislature in 2012! With signature by the Governor and rulemaking completed by the WSLCB, wineries selling less than 6,000 gallons of wine in Washington may now report and pay their liquor taxes as infrequently as annually (previously required monthly). Aside from drastically reducing the paperwork burden for in-state wineries, this bill also makes Washington one of the nation’s leaders in reducing the burden of interstate shipping of small quantities of artisan wine.

What is a Winery Bill defeated.
Sometimes what is prevented from happening is as important as what is affirmatively created. This was the case with a bill intended to drastically raise the bar for what it takes to be licensed as a winery in Washington. This bill, which was shown to the world five days before it’s first legislative hearing last session, would have made wine “production” synonymous with “fermentation” (currently any change in federal tax class of wine is production from the federal perspective and “crushing, aging in bulk or blending” are considered production in the state view). It would also have required that a winery “produce by fermentation” at least 200 gallons of wine per year on a rolling two year average in a facility owned and controlled by the winery (currently the standard is “more than zero gallons” at least every other year). The most bizarre aspect of this proposal was that, while it prohibited the smallest wineries from making wine under custom crush arrangements, once the 300 gallon threshold was reached the prohibition completely disappeared. This would have allowed business as usual for the state’s largest wineries that produce literally millions of gallons of wine annually through such custom crush arrangements. By shedding light on the logical inconsistencies of this bill and raising questions over its purpose FWWS was instrumental in preventing this misguided and unnecessary proposal from receiving a vote. We will remain vigilant should another attempt be made to introduce and pass such a senseless proposal on short notice.

Initiative 1183 Implemented
Initiative 1183 was implemented in 2012 through state rulemaking. As a result, a number of new businesses such as Total Wine and More and BevMo took up residence in Washington and significant pricing and distribution channel reforms were enacted. During the rulemaking process, some of the members of the pro-initiative 1183 coalition sued the WSLCB with regard to the Liquor Boards restrictive interpretation of the retailer to retailer sales allowed under I-1183. A discussion of the issues involved is beyond the scope of this re-cap.


Rulemaking, Some Good, Some Not so Much
FWWS was pleased that The WSLCB sided with our position in continuing to allow retailers to price wine below cost of acquisition in order to meet a competitor’s price. Prior to passage of I-1183 this aspect of state law was meaningless since all producer prices except close outs were required to be uniform. With delivery charges and volume discounts now allowed in producer pricing, it makes sense to allow a retailer to reduce their prices in order to meet a competitor’s price assuming the lower price they are meeting is due to the lower acquisition cost of their competitor. We argued that the allowance should remain. The Board agreed in a 2:1 decision

Less welcome was the WSLCB’s unilateral decision to eliminate enforcement of NSF checks used to pay for wine. While FWWS was willing to accept this suggestion by the Liquor Board last legislative session as part of a comprehensive reform of the credit ban, also allowing voluntary limited credit terms for checks similar to what is allowed for Electronic Funds Transfers, the elimination of NSF check enforcement by itself is not in our view a reasonable or fair outcome. While wineries are still required by law to receive payment on delivery and are subject to WSLCB sanction for failing to do so, if the check they receive on delivery bounces, no specific sanctions against the retailer remain in law.

Looking Ahead
FWWS will continue to tirelessly advocate for positive improvements in wine regulation and will remain watchful to prevent burdensome and unnecessary changes in the law such as the “What is a Winery” proposal. A couple of things we hope to advance in the coming year are:

• Allowing the sale of Wine In “Growlers”                                                                                                                      Federal Policy prohibits the sale of wine in re-fillable “growlers” the way beer may be sold, unless such containers are filled at a bonded wine facility. FWWS has been pursuing this issue for over two years now and will continue work with federal legislators on the issue. We believe the popularity of this most “green” of all packaging formats (studies show that 65% of a winery’s carbon footprint is in the glass packaging) will continue to grow.
• Allowing Multiple Licenses for the Same Premise                                                                                                              A number of our member wineries have expressed interest in having activities in their premises which require multiple licenses for the same premise (i.e. serving beer in their tasting room, selling another winery’s wine in their tasting room). The WSLCB has indicated that they do not believe that they have the authority to issue such multiple licenses for a singe premise, but has not identified a public policy reason why this should be prohibited. FWWS will seek legislation to affirmatively grant the WSLCB such authority.

With your help we’re making a difference! Happy holidays and best wishes for a prosperous New Year.

Your FWWS Board