Washington Wine Licenses: No Change Yet

State legislature goes back to drawing board for new winery regulations

by Peter Mitham
marty clubb l'ecole 41
Marty Clubb, president of the Washington Wine Institute, says definitions of "on-premise production" are varied.
Olympia, Wash.—An executive session of the Washington State Legislature’s House Committee on State Government & Tribal Affairs this afternoon set back efforts to create two classes of wineries in Washington state.

The proposed legislation—House Bill 1641—was originally introduced last year, and had been in the works for several. It aimed to create two separate classes of wineries in Washington. Proponents said it would bring vintners that don’t produce wine at their own premises (virtual wineries) in line with federal permitting requirements that demand on-premises production.

“In recent years, there has been widespread confusion on the part of both licensees and regulators regarding how winery licensing laws are to be applied,” according to a backgrounder from the Washington Wine Institute, which spent years developing the bill in partnership with the Washington State Liquor Control Board, in consultation with stakeholders. “The federal Alcohol and Tobacco Tax and Trade Bureau has expressed concern to the Liquor Control Board that many Washington wineries may be violating the terms of their federal permits by failing actually to ‘produce’ at their bonded premises.”

The bill proposed two classes of wineries—domestic wineries producing their own wine, and so-called “nonproducing” wineries that sell wine produced for them. The bill defines production as “the creation of wine by fermentation in or on the premises.”

The WWI said the new license would apply “to operations such as custom crush customers, who do not produce wine at their own premises but who wish to distribute and sell wine produced for them.”

WWI president Marty Clubb, owner of L’Ecole No. 41 Winery near Walla Walla, Wash., said wineries commit to producing wine on-premises when they receive a federal license, but the requirement has been subject to various interpretations of what on-premises “production” really means.

But if a clash between rules and their interpretation means some wineries have unwittingly violated federal regulations, Clubb said confusion over the proposed legislation has legislators desiring more consultation from the bill’s proponents.

“There’s a whole lot of misinformation out there, even among some of the regulators,” Clubb told Wines & Vines this afternoon. “The direction we’re headed now is to work with the liquor control board to do a survey—get a better gauge and understanding of who’s doing what—to make sure we’ve got the whole thing aligned correctly.”

Family squabbles
A case in point is the Family Wineries of Washington State, which advocates for the elimination of restrictions on the wine business. The association had reservations about the bill, which it claims placed undue restrictions on the activities of Washington wineries.

The association’s secretary, John Morgan of Lost River Winery in Winthrop, Wash., outlined various concerns in an email to Wines & Vines. These include a proposed minimum threshold in one draft of the bill that would require domestic wineries to produce a minimum of 200 gallons annually, based on a rolling three-year average. That works out to approximately 760 liters (just 84 cases). The restriction was “unprecedented,” Morgan charged.

The draft bill legislators discussed this afternoon had eliminated that concern, allowing wineries that don’t meet the minimum production requirements in any given year merely to demonstrate that they’re “a viable commercial wine-producing operation.”

“We believe this addresses legitimate concerns that a winery may not produce 200 gallons in a year because, for example, they have inventory to sell,” Jean Leonard, WWI executive director told Wines & Vines. “This language makes it clear that all they need to do in that event is demonstrate that they are capable of producing wine in order to avoid having their license pulled.”

Other concerns also need to be addressed, but Clubb said the bill will be back in a future session. The current session ends March 8 and is too short for the broader consultation legislators have requested, or the return of an amended bill to the house.

“These are issues that the industry needs to resolve,” Clubb said. “They’re complex, and they’re complicated. We need to make sure we get it right.”

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