RULES & REGULATIONS
Author: John M. Olney, Founder and Chairman
Copyright June 1, 2007 by Wine Country Marketing & Promotions,
Web site: http://www.twccwcmp.blogspot.com/
1325 Imola West, #409, Napa CA 94559 Phone: 707-299-9548
Table of Contents
Purpose....................................................................... 1
Background ................................................................... 2
APPENDIX 1 THE POSSIBILITIES THAT ….THE CALIFORNIA LEGISLATORS AND THE........ 4
CABC MAY FACE RESTRAINT OF TRADE AND UNFAIR BUSINESS PRACTICE ISSUES
OVER TYPE 17/20 WINE LICENSES
The Issues.................................................................... 5
1. Regardless of the type of CABC License issues, both types of business
entities create essentially the same general consumer end product
– grapes into wine! ......................................................... 5
2. The existing California State Legislation and CABC Licensing structure
is essentially based on whether a wine producer uses equipment owned, leased,
rented or is contracted out to a custom crushing house to convert grapes a
nd/or fermentable juice into wine............................................. 5
3. The true unfair business practice is the result of the State legislative
acts that instruct the CABC to limit how a business can sell it’s product to
the consumer.................................................................. 8
ATTACHMENT 1 ALLOWABLE & DISALLOWED FUNCTIONS & ACTIVITES..................... 9
1. PROCESSING & STORING........................................................9
2. WINE POURING & TASTING......................................................11
3. ADVOCACY ASSOCIATIONS ..................................................... 12
ATTACHMENT 2 ................................................................. 13
Part One - Here are some generalized notes on restraint of trade and unfair
business practices.............................................................13
Part Two - Here are the definitions of winery operations by TTB and CABC ..... 16
Part Three - Here the initial articles reporting the violations of CABC 17/20 license Rules and regulations ................................................ 18
Part Four - Related Reference Materials .......................................20
PURPOSE
This paper provides the statement of issues and documentation to expose possible Restraint of Trade and Unfair Business Practices being perpetuated in the wine industry of the State of California by the following groups and organizations:
The California State Senate and Assembly who create the laws.
The Department of Alcoholic Beverage Control who enforce the Rules & Regulations of the laws.
The wine industry trade associations that exclude certain wine producers (Type 17/20) from joining their group because of type CABC license or manner by which they own land/equipment to produce wine.
Other lobbyists, winery organizations and individuals parties to be named at a later date.
It has been suggested that special interest groups within the wine industry have collectively conspired to influence state legislation to limit the rights of certain wine producers (Type 17/20) from selling their wine on an other than equal basis. It was also contended that the state legislators acted in cooperation with the special interest groups to create a restraint of trade on wine sales by one group of wine producers over another group of wine producers.
Presented below is background information and explanations of the issues that lead to the conclusion that possible restraint of trade and unfair business practices are being legislated, and continuing to be enforced, to:
-- Limit access to the consumer to a group of wine-makers to the benefit of another group of winemakers.
-- Conversely, these actions limit the consumer from being able to socially and economically review all wine products which is contrary to the stated mission of the Legislative Act that established the Department of Alcoholic Beverage Control.
If the above observations are proven valid, then the CABC statement, “OUR BASIC PRINCIPLE: In cooperation with local communities, we will meet our licensing, enforcement and regulatory mandates with honesty, impartiality, and the highest degree of concern for the people of the State,” is certainly a misstatement of their intentions and actions.
Additionally, the following CABC statement is questionable:
"Welcome. The Department of ABC wants to partner with and assist small
business.
A message from the 2006 ABC Director
The Department of Alcoholic Beverage Control is pleased to do our part to promote small business growth, expansion, and productivity within the State. Since small businesses comprise 98 percent of all businesses in the state, employ more than 50 percent of California's workforce and generate more than half of the State's gross domestic product, we recognize the significance of small business to the economy of California. We hope the following information will be helpful in developing a productive and profitable relationship with ABC.'
Jerry R. Jolly, Director."
BACKGROUND
We have developed a comprehensive data base on the wineries of Napa and Sonoma Counties. Our list contains over 1,000 wine producers distributed between the two counties. Our data base is derived from a number of sources plus our own distinctive research efforts. Within these wineries, we have developed an extensive sub-database of CABC Type 17/20 license holders numbering in the hundreds. We categorize these wine producers under the heading, “Napa Select Wines (NSW)” and “Sonoma Select Wines (SSW)."
We have been asked by wine consumers, "Why can't we taste any of the wines produced by these small, mostly unknown wineries?" (meaning the CABC Type 17/20 License holders) We referred them to the existing CABC Rules & Regulations governing wine production & sales.
They responded with more questions suggesting that the manner of wine production and its ownership does not mean anything to them as consumers. In their mind, no matter how it is manufactured or owns the equipment, does not change the fact that the end product available to be tasted and sold to them – the consumer – is grapes into wine!
These consumers asked us to look into their issue as a matter of unfair restriction from them knowing about the products created by the Type 17/20 license holder. The first thing we did was look at the purpose of the Department of Alcoholic Beverage Control to exist. We quote from their Website at http://www.abc.ca.gov/mission.htm
QuoteWe also reviewed the ABC Act, California Business and Professions Code: Again, we quote from their Web site: http://www.abc.ca.gov/cbnpc.html sections 23000-23047 of which the following paragraph is pertinent. (All highlighting is by this author)
“The mission of the Department of Alcoholic Beverage Control is to administer the provisions of the Alcoholic Beverage Control Act in a manner that fosters and protects the health, safety, welfare, and economic well being of the people of the State.
OUR BASIC PRINCIPLE: In cooperation with local communities, we will meet our licensing, enforcement and regulatory mandates with honesty, impartiality, and the highest degree of concern for the people of the State.
OUR VISION: Through our commitment to serving the people of California and one another, we will become the recognized leader in effective and efficient licensing and law enforcement, and a model of excellence in government."
Unquote
Quote
“Section “23001. This division is an exercise of the police powers of the State for the protection of the safety, welfare, health, peace, and morals of the people of the State, to eliminate the evils of unlicensed and unlawful manufacture, selling, and disposing of alcoholic beverages, and to promote temperance in the use and consumption of alcoholic beverages. It is hereby declared that the subject matter of this division involves in the highest degree the economic, social, and moral well-being and the safety of the State and of all its people. All provisions of this division shall be liberally construed for the accomplishment of these purposes.”
Unquote
The key wording is the text that is highlighted, and in particular the provisions “…shall be liberally construed… for the economic, social and moral well-being and the safety of the State and all of its people.”
This being the definition, then to deny the residents of California tourists and other consumers out of state, the opportunity to directly taste the wines of Type 17/20 License holders, while openly allowing Type 2 License holders almost unlimited opportunity to provide their wines for tasting to these same consumers, places the Type 17/20 holders in an unequal position to the wine market both economically and socially.
This is particularly true when considering that the difference in licensing has nothing to do with the final consumer end product – grapes into wine - but rather the manner of ownership of the equipment used to produce that wine.
Appendix 1 contains the results of our research and details our rational supporting the premise that there may be restraint of trade and unfair business practices legislated by state government at the non- “Brick & Mortar” owned wine producers. They are only issued CABC Type 17/20 licenses which prevents them from direct retail sales, except through the Internet, to the end user– the wine consumer.
Attachment 1 to Appendix 1 presents a side-by-side comparison of the wine processing route for each CABC license type and our comments.
In Attachment 2, Part One, we present general information on Laissez-faire, Restraint of Trade and Unfair Business Practices.
Part Two of Attachment 2 presents TTB and CABC definitions.
Part Three to Attachment 2 presents the original articles exposing the violations by three Napa Valley CABC Type 17/20 License holders and comments the newspaper received about the fairness of the CABC Rules and Regulations to these license holders.
Part Four to Attachment 2 presents a list of pertinent reference material related to custom crush houses, the economics of wine production and other related subjects.
APPENDIX 1
THE POSSIBILITIES THAT ….
THE CALIFORNIA LEGISLATORS AND THE CABC MAY FACE RESTRAINT OF TRADE AND UNFAIR BUSINESS PRACTICE ISSUES OVER TYPE 17/20 WINE LICENSES
State Assemblywoman Noreen Evans (Santa Rosa) recently held a meeting at the Napa Library that was attended by numerous representatives of charitable organizations, CABC Type 17/20 License holders, CABC officials, and Assemblywoman’s staff. The announced agenda was to discuss donations to, and wine tasting and pouring at, charitable organization fundraisers by Type 17/20 license holders. During this meeting there were inferences as to why there is a difference in the type license available to wine producers and the primary emphasis was on the amount of money spent and ownership title listed on production equipment and building facilities.
Recently legislation introduced by Assemblywoman Evans was passed in the Assembly that would remove the clause that disallowed Type 17/20 licenses to donate wine at no cost to IRS qualified charitable organization fundraising events and allow them to pour at these events. And, in June 2007 a similar action was approved in Senate committee. In July the Governor signed the bills to make statute changes.
However, these CABC Type 17/20 license holders will continue to be prohibited by other CABC Rules & Regulations from pouring directly to the consumer in any other event outside of charity fundraisers.
We have been developing a dialog with the winegrowers who hold CABC Type 17/20 Licenses. To the best of our knowledge, we have created the only non-government comprehensive data bank on wine producers in this category for both Napa and Sonoma Counties with 100's of such wine producers and growing.
In anticipation of the charity donation/pouring rules being revised in the near future, we sent out a request for wine donations to the Napa County Type 17/20 wine producers. We also asked them if they wished to participate in a charity wine tasting event.
We received one response which, along with other verbal inputs, appears to be the basic philosophy of those wine producers that hold a CABC Type 2 license and it is quoted below: (This wine producer was inadvertently still in our data base when we sent out our donation request. They formerly held Type 17/20 Licenses)
“Since 1999 however, we have held a Type 2 Winegrowers License. And since
2001 we have held a 1a Type 2 Winegrowers License. And since 2001 we have held a Duplicate Type 2 Winegrowers License for our off-site tasting room. Both our winery and our tasting room are bona-fide “bricks and mortar” facilities. We
have endured magnified scrutiny from countless bureaucracies and legions of
bureaucrats representing the City of Calistoga, County of Napa, County of
Sonoma, State of California and the Federal Government. We have acquired
numerous land entitlements, uncountable permits and have been grilled by
countless commissions, committees, design review panels and bureaucracies. We
carry pricey property and liability insurance, pay continually increasing
property taxes, endlessly layered flood control fees, mosquito abatement fees,
school district assessments in two counties, fire protection fees and
calendarized (sic) license and permit renewal fees.
We are ADA compliant
and must tolerate “pop” inpections (sic) by the aforementioned We’ve endured the
above to acquire and maintain our Type 2 Winegrowers License and Duplicate Type 2 Winegrowers License required for us to operate a true “bricks and mortar”
operation and allow the direct control essential for optimum quality realization.
Given this then, we are apparently are not qualified to participate in your exclusive 17/20 Napa Select “Wineries” (?) only events.
But thank you oh so much for keeping us in mind.”
It is easy to determine that this winegrower is not pleased with the WCM&P request for donations from CABC Type 17/20 licenses or that the Type 17/20 is able to sell his/her wine in competition with him while he, as a CABC Type 2 license holder has:
-- allegedly has to endure all these governmental scrutiny agencies,
-- and, has to expend much capital to buy/lease land, construct and operate his “Brick & Mortar” winery operation but the Type 17/20 license holder allegedly does not have to endure the same.
Attachment 1 represents a comparison of how both CABC license type wine producers make their wine, store it, sell it and are supported through mutual associations. It outlines the allowable and disallowed functions and activities for each license holder type and indicates how money is outlaid.
THE ISSUES...
THAT LED US TO BELIEVE THAT THE CALIFORNIA LEGISLATURE, CABC DEPARTMENT, CERTAIN TRADE ASSOCIATIONS AND OTHERS PRACTICE RESTRAINT OF TRADE AND ARE, ON A CONTINUING BASIS, PERFORMING UNFAIR BUSINESS PRACTICES AGAINST CABC TYPE 17/20 LICENSE HOLDERS.
1. Regardless of the type of CABC License issues, both types of business entities create essentially the same general consumer end product – grapes into wine!
a. The CABC 17/20 License holder uses customer crush houses or other wineries to process its grapes or juice. These “For Hire” custom crush wineries “…have endured magnified scrutiny from countless bureaucracies and legions of bureaucrats representing the …., County of Napa, State of California and the Federal Government.” They “... have acquired numerous land entitlements, uncountable permits and have been grilled by countless commissions, committees, design review panels and bureaucracies.” They “… carry pricey property and liability insurance, pay continually increasing property taxes, endlessly layered flood control fees, mosquito abatement fees, school district assessments…., fire protection fees and calendarized (sic) license and permit renewal fees.”
Like any other wine producer, the custom crusher must endure countless pop inspections and comply with all rules & regulations for beverage product processing, etc. Both federal and state law, rules & regulations require custom crush houses to perform just as a stand alone winery.
All of the above cost issues are passed through to the CABC Type 17/20 License holders by the custom crush winery as part of the contracted price to manufacture the wine for the CABC 17/20 License holders!
b. The only distinction to the consumer is the style nuances that winemakers use to produce the wine derived from each varietal.
In other words, the consumer, in the majority of cases , is unaware if a wine was produced by a winemaker via equipment owned, leased, rented or even if it is contracted out to a custom crushing house by that winemaker.
c. This writer is unaware of any other beverage producer who is restricted in its licensing, marketing and/or sales methods because it does or does not own, lease or rent its land, processing or storing facilities.
d. This writer is unaware of any other beverage product where the state legislative bodies enact laws that prohibit one faction of that industry to sell essentially the same consumer end product in the same manner as the rest of that consumer product industry is allowed to sell their end product, and all because of the way the ownership of the production facilities is titled.
2. The existing California State Legislation and CABC licensing structure is essentially based on whether a wine producer uses equipment owned, leased, rented or is contracted out to a custom crushing house to convert grapes and/or fermentable juice into wine.
a. If a wine producer does not own his/her own equipment that wine producer is only allowed CABC Type 17 & 20 Licenses. If a wine producer owns, leases, rents or shares equipment owned by that wine producer with others, they can receive a CABC Type 2 License.
b. No matter how one wants to determine the type of wine license that a wine producer is to be allowed, it is nevertheless true that essentially the same process is used to produce the final general category end product for the consumer - grapes into wine!
(1) Grapes must be grown and harvested.
(2) Grapes are crushed or otherwise processed to exposure sugar which will be fermented into wine.
(3) The resultant wine is aged in barrels, and/or tanks and stored.
(4) The wine is bottled, labeled, boxed and stored.
(5) The wine is marketed and sold to wholesalers, retailers and/or directly to the product end user - the consumer.
c. This writer has heard CABC Type 2 License holders use the rational that Type 17/20 license wine producers who do not have heavy investment in land purchase, grape processing equipment, wine storage space and tasting room/hospitality center facilities, if given a Type 2 license, would give them a great economic advantage over the Type 2 license holder because the Type 17/20 producer can sell their wine at the same prices as the Type 2 license holder without the burden of land and capital equipment costs.
This is simply an issue of how much money is or isn’t being spent to create essentially the same the end product for the consumer – grapes into wine!
The CABC license type is being dictated not by the type of equipment used but rather by who does or does not own it?
Under this condition, then the argument becomes one of the amounts of money and ownership being committed to the production of essentially the same general category end consumer product – grapes into wine!
d. Based on subparagraphs a. through c. above, then the case can be made that the CABC licensing structure (and therefore the legislative acts that create it) must be changed to reflect the difference between the amount of money that:
(1.) A giant 20 million cases per year CABC Type 2 producer manufactures and markets as compared to,
(2) a mid- sized Type 2 wine producer at 2 million cases per year,
(3) a small sized Type 2 wine producer at 20,000 cases per year,,
(4) and the above compared to say the capital outlay that is made by a small Alternating Type 2 operation at 2,000 cases per year, and finally,
(5) all of the preceding levels of CABC Type 2 License holders need to be compared to a 200 cases per year, Type 17/20 wine producer who buys grapes, has them crushed and processed by a custom crush house, and then proceeds to market to sell the finished consumer end product – grapes into wine: the same general category consumer end product as the CABC Type 2 and Alternating Proprietor Type 2 License holders market and sell!
e. It is very interesting to note that both the federal and state governing bodies speak so highly about encouraging more to enter the wine industry and to support small businesses survive and grow as their own doctrines stipulate and as quoted below. (Highlighting by this author)
FROM THE FEDS (under Alternating proprietorships)
"In most situations, the Host agrees to rent space and equipment to the Tenant proprietor. This allows existing wineries to use excess space and capacity and gives new entrants to the wine business an opportunity to begin on a small scale without investing in a winery building and all of the necessary winemaking equipment."
FROM THE STATE
"The Department of Alcoholic Beverage Control is pleased to do our part to promote small business growth, expansion, and productivity within the State. Since small businesses comprise 98 percent of all businesses in the state, employ more than 50 percent of California's workforce and generate more than half of the State's gross domestic product, we recognize the significance of small business to the economy of California. We hope the following information will be helpful in developing a productive and profitable relationship with ABC."
HOWEVER, the information contained in this paper seems to indicate that the State of California legislative bodies and CABC practice a different philosophy from what they proclaim in their policy statement.
3. The true unfair business practice is the result of the State legislative acts that instruct the CABC to limit how a business can sell it’s product to the consumer. [See Attachment 2, Part One for notes on Laissez-faire, Restraint of Trade and Unfair Business practices.]
a. The consumer end product is grapes into wine whether produced by a CABC Type 2 License holder or by Type 17/20 holders!
The consumer has the right to have any and all legally and commercially produced wines available to him/her from which to make a selection to purchase regardless of the ownership of the processing equipment and the route that grapes were processed from field to bottle of wine on the shelf.
A reasonable comparison would be the large beer manufactures compared to the micro brewers. There are no restrictions placed on the micro brewer’s sales market because of the amount of difference in capital outlay for or type of processing equipment used. Compare Shasta and Coca Cola – there are no restrictions on one over another.
b. Off-site tasting, and on-site tasting rooms are an extremely valuable tools [whether open for walk-in traffic or available By Appointment Only (BAO)] in that they provide the consumer the opportunity to experience a wine style to determine whether or not it is to her/his liking prior to purchasing the wine.
It is unfair to the wine consumer that they cannot have this experience with the Type 17/20 license holders.
It is unfair competition to the Type 17/20 wine producer who cannot offer such an opportunity to the wine consumer.
The type 17/20 license holders are at a distinct disadvantage as they cannot be afforded the same opportunity for exposure to the consumer to sell the same general category end product – wine - as those with a Type 2 license.
c. Trade associations are not only valuable to their members for the dissemination of updated industry information and to advocate the needs and interests of the members of that association before governmental agencies, but also for collectively marketing the consumer end product of their membership – grapes into wine. Attachment 2, Part 3 below provides two newspaper articles that describe how existing Type 2 trade associations permit mebership in their organizations.
For trade associations to deny membership to a wine producer because he/she does not own their own land or capital equipment to process grapes into wine is economic discrimination and implies some sort of a caste system is being perpetuated. Why? Because all are producing essentially the same end product - grapes to wine - with the only real difference being stylistic nuances.
d. There are over 800 CABC Type 2 and Alternating Proprietary Type 2 licensed wineries in the two Counties of Napa and Sonoma, and about 75 % belong to the major trade associations of Napa and/or Sonoma County, and/or the larger associations representing all of California.
The consumer can easily be guided to the Internet Web site of the member wineries of these trade associations through the respective Internet Web sites of these trade associations. This is a great advantage!
The CABC Type 17/20 license holders are mostly prohibited from joining such groups which essentially indicate that membership requires the wine producer to hold a CABC Type 2 license or own vineyard land. Therefore the CABC Type 17/20 license holders are being discriminated against and are unfairly denied the right to sell the same type of end product – grapes into wine - to the end user – the consumer – on an equal opportunity basis.
Unfortunately, the Type 17/20 wine producers have yet exercised their right to form their own trade association so that they can mutually market their products and advocate for their rights on a collective basis.
The economic and social well-being of the consumer is not being maintained as charted for the CABC to enforce, in that the consumer is not able to know about the full market of available wine because of the aforementioned licensing differences which are used by various trade associations to deny membership to the CABC Type 17/20 License holders.
ATTACHMENT 1
ALLOWABLE & DISALLOWED FUNCTIONS & ACTIVITES
1. PROCESSING & STORING
a. Operation: Grow and/or buy grapes and/or juice.
CABC Type 2 License -winegrower operating restrictions: Yes
Alternating Type 2 - winegrower operating restrictions: Yes
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: Yes, working with custom crush house who passes fees through to client wine producer
Our Comments: All spend money
b. Operation: If one is not a winemaker, then must hire staff or seek consulting winemaker
CABC Type 2 License -winegrower operating restrictions: Often both
Alternating Type 2 - winegrower operating restrictions: Often both
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: Use custom crush house but also use consultant winemakers
Our Comments: All spend money
c. Operation: Process grapes, ferment the juice and store in tanks and/or barrels
CABC Type 2 License -winegrower operating restrictions: Use their “own facilities,” however, not all. There are cases where wineries use shared facilities with others or lease or rent their entire site from another party. Please review Attachment 2, Part Two for the definition of shared facilities
Alternating Type 2 - winegrower operating restrictions: Rent space and equipment from primary who owns all and often calls itself a custom crush house
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: They contract with a winery and/or custom crush house to process their raw materials which include in their fee per barrel or case, the capital cost of land, equipment, etc.
Our Comments: All spend money. There is essentially no difference between a shared facility and using a custom crush house. See Attachment 2, Part Two
d. Operation: Gain Alcohol and Tobacco Tax and Trade Bureau (TTB) approval of their labels and work to protect that label.
CABC Type 2 License -winegrower operating restrictions: Yes
Alternating Type 2 - winegrower operating restrictions: Yes
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: Yes working with custom crush house who passes fees through to client
Our Comments: All spend money
e. Operation: Bottle the wine
CABC Type 2 License -winegrower operating restrictions: Most own and some use mobile bottling facilities or even combinations of each
Alternating Type 2 - winegrower operating restrictions: Rent space and equipment from primary who owns all and often calls itself a custom crush house
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: Yes working with custom crush house who passes fees through to client
Our Comments: All spend money
f. Operation: Store the wine
CABC Type 2 License -winegrower operating restrictions: Most can store on-site but many also lease and/or rent additional warehouse space.
Alternating Type 2 - winegrower operating restrictions: Lease and/or rent warehouse space from primary
CABC 17/20 Type -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: Yes working with custom crush house or bonded warehouse that passes fees through to client.
Our Comments: All spend money
g. Operation: Usually create an Internet Web site maintained by them or contract its creation and site maintenance out to Web Master companies.
CABC Type 2 License -winegrower operating restrictions: Yes
Alternating Type 2 - winegrower operating restrictions: Yes
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: Yes
Our Comments: All spend money.
h. Operation: Maintain records, pay taxes and license fees
CABC Type 2 License -winegrower operating restrictions: Yes
Alternating Type 2 - winegrower operating restrictions: Yes
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: Yes working with custom crush house or bonded warehouse who passes fees through to client
Our Comments: All spend money
2. WINE POURING & TASTING
a. Operation: Pouring tastings directly to the consumer
CABC Type 2 License -winegrower operating restrictions: Can pour at their own tasting room and can pour off site
Alternating Type 2 - winegrower operating restrictions: Can pour at their own tasting room and can pour off site
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: NO DIRECT pouring to the consumer
Our Comments: Type 17/20 NOT allowed to spend money on this market segment
b. Operation: Donate and pour wine at charitable fundraiser events
CABC Type 2 License -winegrower operating restrictions: Type 2 license holders have always been able to pour tastings at these charitable events.
Alternating Type 2 - winegrower operating restrictions: Type 2 license holders have always been able to pour tastings at these charitable events.
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: With the passage of the recent legislative actions introduced by Assemblywoman Evans, they will shortly be able to donate wine and offer tastings at qualified non-profit charitable organizations and their events.
Our Comments: All spend money
c. Operation: Trade Tastings
CABC Type 2 License -winegrower operating restrictions: May conduct tastings to people “in the trade.”
Alternating Type 2 - winegrower operating restrictions: May conduct tastings to people “in the trade.”
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: May conduct tastings to people “in the trade.”
Our Comments: All spend money
d. Operation: Direct sales to the consumer
CABC Type 2 License-winegrower operating restrictions: May conduct on-site at tasting rooms whether open to drop in or scheduled by appointment only.
Alternating Type 2 - winegrower operating restrictions: May conduct on-site at tasting rooms whether open to drop in or scheduled by appointment only.
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: DISSALLOWED FROM DIRECTLY POURING TO THE CONSUMER IN THEIR OWN FACILITIES OR OFF SITE (EXCEPT UNDER CHARITY SPONSORED EVENTS)
Our Comments: NOT ALLOWED TO PARTICIPATE IN AN OPEN MARKET PLACE ON A LEVEL PLAYING FIELD BASIS.
3. ADVOCACY ASSOCIATIONS
a. Operation: Joining a trade association
CABC Type 2 License -winegrower operating restrictions: Can join any general group and if resident within the perimeter of an AVA, they can join it.
Alternating Type 2 - winegrower operating restrictions: Can join any general group and if resident within the perimeter of an AVA, they can join it.
CABC 17/20 Type -17 -Beer and wine wholesaler operating restrictions /20 off-sale beer and wine: operating restrictions - Internet sales only: They cannot join most such groups because those groups limit membership to wine producers with a CABC Type 2 license or they must own vineyards.
Our Comments: Type 17/20 is discriminated against because of their type of CABC license.
These wine producers stand alone, and no organizations include them, in any significant number, in any “Association” structure.
They all don’t know of each other thus they have not formed their own trade association or advocacy group.
These facts works pretty much into the hands of those who do not like the concept of the Type 17/20 license.
ATTACHMENT 2
Part One - Here are some generalized notes on restraint of trade and unfair business practices.
From Wikipedia, the free encyclopedia: Laissez-faire
"..... is a French phrase meaning "let do" or "hands off". From the French diction first used by the 18th century physiocrats as an injunction against government interference with trade, it became used as a synonym for strict free market economics during the early and mid-19th century. It is generally understood to be a doctrine that maintains that private initiative and production are best allowed to roam free, opposing economic interventionism and taxation by the state beyond that which is perceived to be necessary to maintain peace, security, and property rights.[1] In this view, it is not the job of the state to intervene in the economy in an attempt to reduce inequality, poverty or protect worker's rights (except to the extent that they are covered under property rights). Free-market anarchists take the idea to its full length by opposing all taxation. Laissez-faire also embodies free trade, namely that a state should not use protectionist measures, such as tariffs, in order to curtail trade through national frontiers."
“Restraint of trade: n….
in antitrust law, any activity (including agreements among competitors or companies doing business with each other) which tends to limit trade, sales and transportation in interstate commerce or has a substantial impact on interstate commerce. Most of these actions are illegal under the various antitrust statutes. Some state laws also outlaw local restraints on competitive business activity. See also: antitrust laws monopoly trust”
“Any practitioner facing an issue that potentially involves California antitrust or competition law is advised to seek experienced counsel and/or to refer to California Law, a 450-page, regularly supplemented book published by the Antitrust and Trade Regulation Law Section of the State Bar of California. "
“There is considerable overlap between the California and federal antitrust and trade regulation laws. As a result, many legal problems in this area can be addressed under either or both sets of laws. California’s Cartwright Act resembles the federal Sherman Act, which prohibits combinations in restraint of trade. Both forbid offenses such as price-fixing, boycotts, and other unreasonable restraints carried out by two or more persons or businesses acting jointly.
• California’s Unfair Practices Act bears some resemblance to the federal Robinson-Patman Act, in that both limit the use of pricing practices deemed to be inimical to competition. The Robinson-Patman Act prohibits price discrimination. The Unfair Practices Act prohibits certain types of price discrimination, as well as sales below cost in certain circumstances.
• California’s Unfair Competition Law resembles the Federal Trade Commission Act. Both generally prohibit unfair business practices and methods of competition that unfairly injure consumers. Neither specifies the precise acts that are forbidden; both instead leave that to be determined on a case-by-case basis.
• California’s Unfair Advertising Statute is interpreted to prohibit the same advertising offenses as Federal Trade Commission Act "
”Trade associations …
can be positive influences. They disseminate useful information among members, which enables members to serve their customers better. However, a trade association is a combination of competitors. The antitrust laws - the Sherman Act, Clayton Act and Federal Trade Commission Act at the federal level, and similar laws in many states-prohibit contracts, combinations, conspiracies, and other agreements in restraint of trade, as well as monopolization and attempted monopolization.”
Part Two - Here are the definitions of winery operations by TTB and CABC.
QUOTE FROM TTB (Their Web site: http://www.ttb.gov/wine/regulatory_reponsibilities.shtm)
How do the regulatory responsibilities and financial investments differ?
Independent Winery or Bonded Wine Cellar: When a company qualifies as a stand-alone winery, it is responsible for all production activities that take place on the bonded premises and the recordkeeping that documents those activities and filing reports about the activities to TTB. This may include obtaining label approval for the wine prior to bottling and paying excise tax on the wine. The proprietor incurs expenses for all necessary winemaking equipment and premises.
Alternating Proprietors: When two or more wineries are approved by TTB to share the use of portions of the same bonded wine premises on an alternating basis, they are known as Alternating Proprietors. The wine company which owns or controls the building is known by TTB as the “Host,” and the other wineries which share the premises are referred to as “Tenants” or “Alternators.”
The Host and the Tenant wineries are each fully qualified as bonded wineries with TTB, and each company is responsible for its own production, recordkeeping, reporting, labeling, and taxes, independent of one another. The tenant proprietor must direct and be fully responsible for those that are usual and customary for the production, bottling, and storage of wine (as applicable) and the managing of the business. See TTB Industry Circular 2003- more information.
In most situations, the Host agrees to rent space and equipment to the Tenant proprietor. This allows existing wineries to use excess space and capacity and gives new entrants to the wine business an opportunity to begin on a small scale without investing in a winery building and all of the necessary winemaking equipment.
(OUR COMMENT: The above highlighted wording is important to a comparison with the CABC Type 17/20 license holders.)
Custom Crush Operations: Wineries are sometimes approached by a customer who would like to have wine produced. The customer often has access to grapes or other materials and would like to have them made into wine, but does not want to produce the wine. These customers are known as Custom Crush Clients.
The custom wine producer must be fully qualified as a bonded winery. The winery is responsible for all production, records, reports, labeling, and taxes, even though it is producing the wine for a customer. The wine premises that bottles the wine obtains approval from TTB for the wine’s label, and the wine premises that removes the wine from bond pays the Federal excise tax on the wine, regardless of who owns the wine. The producing winery incurs the expenses for winemaking equipment and winery premises.
In most cases, the custom crush client needs to qualify for a Federal Basic Permit as a Wholesale Liquor Dealer (Wholesaler) under the Federal Alcohol Administration Act. Please see TTB’s Frequently Asked Questions for further information and exceptions.
A custom crush client Wholesaler has minimal TTB recordkeeping requirements. The custom crush client Wholesaler has no production, labeling, tax, or reporting responsibilities. All of these matters are the responsibility of the bonded winery or wineries with whom the customer is working to have the wine produced, labeled, and taxpaid.
This table illustrates how the primary responsibilities differ:
Company Type..Premises..... Expenses...Recordkeeping...Label Approval...Excise Tax... Operations Reports
Stand-Alone Bonded ................Yes....................Yes.......................Yes...............Yes.................Yes
Alternating Proprietor Host…..Yes....................Yes.......................Yes...............Yes.................Yes
Alternating Prop. Tenant.....….Minimal.............Yes.......................Yes...............Yes.................Yes
Custom Crush Producer.....…...Yes.....................Yes.......................Yes...............Yes.................Yes
Custom Crush Client...........…....No.....................Minimal................No................No...................No
UNQUOTE FROM TTB
OUR COMMENTS: There is very little difference between the Alternating Tenant and the wine producer using a custom crush house. The alternate proprietor spends money renting space and equipment while doing the listed categories, and he/she could also use and pay tax, accounting and compliance consultants to accomplish much of it. The Type 17/20 License holder pays the custom crusher to do it all as part of the fee to produce his/her wine. WHAT’S THE REAL DIFFERENCE?
TTB fails to recognize that client of custom crush house is paying a service fee which includes the costs of the wine premises expenses, recordkeeping expenses, label approval expenses, excise tax and operations report expenses. WHAT’S THE REAL DIFFERENCE?
QUOTE FROM CABC (http://www.abc.ca.gov/mission.htm )
This is a CABC Type 2 License
23356. Any manufacturer's or winegrower's license authorizes the person to whom it is issued to become a manufacturer or producer of the alcoholic beverage specified in the license, and to do any of the following:
(a) Whether manufactured or produced by him or her or any other person, to package, rectify, mix, flavor, color, label, and export the alcoholic beverage specified in the license.
(b) To sell only those alcoholic beverages as are packaged by or for him or her only to persons holding wholesaler's, manufacturer's, winegrower's, manufacturer's agent's, or rectifier's licenses authorizing the sale of those alcoholic beverages and to persons who take delivery of those alcoholic beverages within this state for delivery or use without the state.
(c) To deal in warehouse receipts for the alcoholic beverage specified in the license.
23356.1. (a) A winegrower's license also authorizes the person to whom issued to conduct winetastings of wine produced or bottled by, or produced and packaged for, the licensee, either on or off the winegrower's premises. When a winetasting is held off the winegrower' s premises at an event sponsored by a private nonprofit organization, no wine may be sold, and no sales or orders solicited, except that orders for the sale of wine may be accepted by the winegrower if the sales transaction is completed at the winegrower's premises. For purposes of this subdivision, "private nonprofit organization" means an organization described in Section 23701a, 23701b, 23701d, 23701e, 23701k, 23701l, 23701r, or 23701w of the Revenue and Taxation Code.
(b) Notwithstanding any other provisions of this division, a winegrower who, prior to July 1, 1970, had, at his or her premises of production, sold to consumers for consumption off the premises domestic wine other than wine which was produced or bottled by, or produced and packaged for, the licensee, and which was not sold under a brand or trade name owned by the licensee, and who had, prior to July 1, 1970, conducted winetastings of the domestic wine at his or her licensed premises, is authorized to continue to conduct the winetasting and selling activities at the licensed premises.
(c) A winegrower who was licensed as such prior to July 1, 1954, and who prior to July 1, 1970, had, at his or her licensed premises, sold to consumers for consumption off the premises, wine packaged for and imported by him or her, and who conducted winetastings of the wines at his or her licensed premises, may continue to conduct the winetasting and selling activities at the licensed premises.
(d) The department may adopt the rules as it determines to be necessary for the administration of this section.
This is the essence of CABC Type 17 & 20 Licenses
17 - BEER AND WINE WHOLESALER - The following pertains to beer and wine wholesalers generally. This permits incidental sales to other supplier-type licensees. However, to qualify as a bona fide wholesaler, a licensee must sell to retailers generally (Section 23779)
20 - Off Sale Beer & Wine (Package Store) Authorizes the sale of beer and wine off the premises where sold. Minors are allowed on the premises.
Part Three - Here the initial articles reporting the violations of CABC 17/20 license Rules and Regulations
Source: “Three Napa wineries test a law saying small operators can't donate to
charities,”
Jack Heeger, Napa Valley Register, September 25, 2006
Laws Saying Small Napa Wineries Can't Donate to Charities!
Three
Napa Valley vintners face possible license suspensions or stiff fines Tuesday
when they come before an administrative law judge in Napa.
Their crime?
They poured wine for charity...
According to the California Alcohol Beverage Control Board, the licenses they hold don't allow them to pour wine at an event attended by consumers, nor can they donate wine to a nonprofit organization for use at fundraisers. The vintners are Eagle Eye Wine, Elkhorn Peak Cellars and Stonefly Vineyard.
They were invited to participate in the Tiburon Wine Festival in May. Shortly after the event they were cited by a representative of the ABC. They were offered an opportunity to pay a fine, have their license suspended or appear at a hearing. All three opted for the hearing at 10 a.m. Tuesday in the basement level Public Works conference room in the county building in Napa.
The problem for the trio of wineries is that state law bars wineries without physical plants -- or those that cannot otherwise obtain the right sort of license -- from pouring wine for consumers or providing it for wine auctions.
There are hundreds of such boutique wineries in California, donating to countless charitable causes. If the law being applied to the three Napa wineries were applied more broadly, the stakes would be very high for wine country charitable groups and wineries alike.
One Napa Valley producer of a charitable event, who declined to be named because he did not want to jeopardize his own auction and fundraiser, said if the law is
broadly enforced "it would be disastrous. ... It would devastate nonprofits and
affect untold thousands of people who depend on the money raised by these very
charities. They've got to change that law."
Paul Frank, owner of the small Gemstone winery in Yountville, said he donates 4 to 5 percent of his total production to charitable events. A 3-liter bottle, worth $450 if available to consumers, was sold for $9,000 at a recent charity auction.
"If we can give a bottle of wine to a charity, and sign it and it can bring $9,000, that's a lot more than we would be able to afford to give on our own," Frank said. "If we can't do that, and if others can't, then it will leave a significant deficit in social services in our community."
Multitude of licenses
The ABC issues more than 80 different types of licenses covering producers and sellers of alcoholic beverages. Of those, three relate most to vintners -- type 02, for
brick-and-mortar wineries; type 17, for beer and wine wholesalers; and type 20,
for off-sale beer and wine.
A vintner who makes wine but does not operate a physical facility qualifies for a type 17 license. A special type 20 license allows those vintners to sell to the public via telephone, fax or online.
There are more than 400 type 17 licensees in Napa County, including a few large wineries that also have 02 licenses and some wine shipping operations. But the vast majority of 17s are small producers, and according to a strict interpretation of the California Business and Professions Code section, they cannot pour for consumers or donate.
The citation against the three Napa wineries says they "conducted a wine tasting to consumers, a right and privilege not authorized under the licenses," and refers to B&P code sections 23300 and 23355.
The topics of pouring and donating are not mentioned in type 17 licenses. But Scott Warnock, supervising inspector for the Santa Rosa ABC District, said the law tells you what you can do, not what you can't. In other words, if it's not in the license you can't do it.
The penalty ABC imposes for violating the law is a percentage of the previous year's
revenues or a suspension of the license. In the case of Elkhorn Peak Cellars, the fine would be $7,000, or a 15-day suspension, a pretty stiff penalty for a producer of only 1,500 cases per year.
"I've been pouring and donating wine for the past 15 years, and I wasn't aware that you weren't allowed to pour," said Ken Nerlove, of Elkhorn Peak. "That regulation was never enforced by ABC."
It actually has been enforced, Warnock said. But he acknowledged that enforcement has been stepped up in recent years. He estimated that about 50 cases have arisen in the past year.
Bill Wolf, of Eagle Eye Wines, said he was told by an ABC representative the recent spate of citations was triggered by complaints from some large wineries in Sonoma County holding 02 licenses. Because ABC is complaint-driven, it was forced to respond, he said. Wolf said ABC officials told him the large wineries complained they had invested substantially in their facilities, while smaller operators had not. The small wineries, however, still enjoyed the same benefits -- the marketing
opportunities and tax write-offs of donating wine.
Warnock declined to discuss the source of the complaints, and Elkhorn's Nerlove doesn't think much of those arguments... "We're not big enough to compete (with the large wineries)," he said. "I don't have a brick-and-mortar winery, but I pay my
taxes, the same as they do, and then to say I can't donate wine to my favorite
charity is just plain wrong."
Wolf said in addition to being unfair to small producers, in his view the law might even be unconstitutional. "It's unfair to treat us differently," he said. "That's why we have to have the law changed so that all of us, regardless of the type of license we have, can be treated on equal footing."
Special permit neededA nonprofit organization must obtain a one-time license to conduct an event where alcoholic beverages are sold or poured. ABC estimates up to 300 of those are issued each month by its Santa Rosa District office overseeing Napa, Sonoma, Mendocino, Lake and Marin counties. The only wineries that legally can pour at these events or
donate to the silent and live auctions have type 02 licenses.
There are two ways around the problem, both severely limited. One involves the non-02 vintner selling the wine to the nonprofit conducting the event. A winery
representative cannot pour the wine, but under certain circumstances can be
present to talk about the wine, the winery and the vineyard.
Can boutique wineries merely sell the wine inexpensively to charities? No. ABC's
Warnock said the sale must be for not less than the vintner's cost plus 6 percent. Otherwise, he said, it is treated the same as if it were a donation. The other possibility is for producers to become what's known as a type 02-AP, or Alternating Proprietorship, described by the federal Trade and Tariff Bureau as an arrangement where two or more persons take turns using the physical premises of a winery. Type 02-APs have the same rights in this arena as 02s.
Perhaps the most high-profile such operation locally is the Napa Wine Company in Oakville, custom-crusher of wines for 25 alternating proprietors.
Alternating proprietorships, though, may not be not for everyone. From what Napa Wine Company managing partner Andrew Hoxsey said, it would not be worth pursuing such a license if the only reason is to pour at charitable events. Hoxsey estimated a startup cost of up to $5,000 for both parties, along with the extra paperwork to comply with licensing regulations.
Sacramento-bound?
Surprised by the legal limitation, some of those who hold type 17 or 20 licenses are talking to lawmakers. ABC's Warnock said he has suggested that affected wineries go to their assembly representatives and state senators for help. Wolf, of Eagle Eye, said he has talked with representatives for Rep. Mike Thompson, D- St. Helena, and Assemblywoman Noreen Evans, D-Santa Rosa.
Evans assistant Laurie Puzo said this week she hasn't had a chance to discuss it with Evans, who is on vacation, but she urged Wolf to get industry support. She also suggested organizations outside the wine industry, including the state Chamber of Commerce and the Napa Valley Coalition of Non-Profit Agencies, should try to mobilize.
Thompson's aide said the congressman, who has no direct say in state law, supports a change in the regulation. Some action has already started. The Napa County Farm Bureau board of directors voted Wednesday night to support any proposed change in the law. "The winegrape industry has a long tradition of supporting charitable
organizations, and fixing the law will continue that support," said Sandy Elles,
executive director.
Wolf has also been in contact with two of the most influential organizations in the California wine industry -- the Wine Institute and the Napa Valley Vintners, both active as legislative advocates for wine producers.
The Wine Institute's by-laws preclude anyone other than 02s as active members, so their members are not adversely affected by the law.
Napa Valley Vintners requires its nearly 300 member wineries either make donations to Auction Napa Valley or the trade-only Premiere Napa Valley auction,
or that they host a hospitality event at Auction Napa Valley. No consumers
attend Premiere Napa Valley, so type 17 or 20 licensees can participate. But at
Auction Napa Valley -- attended by consumers -- the rules could pose a problem.
Rex Stults, industry relations director for NVV, said the organization has asked ABC for a ruling on whether type 17 and 20 licensees can contribute to Auction Napa Valley. Stults said NVV also is pursuing the ability of 17s and 20s to donate to charities with a temporary event license.
One organization that would appear to be in the middle of the problem is Family Winemakers of California, with its two events per year, a trade-only gathering in Southern California and a consumer tasting in San Francisco. Because the consumer event is held at San Francisco's Fort Mason -- federal property -- it is exempt from
California law.
Zinfandel Advocates & Producers conducts several events yearly, including one at Fort Mason. In an e-mailed statement, executive director Becky Robinson wrote, "It's a shame that the very smallest wineries are disadvantaged in this way. But ZAP is different from other trade or community wine associations in that we are a 501(c) (3) educational-charitable organization, so we are blessed with privileges of our own when producing events. That makes us different from other trade organizations."
Eagle Eye's Wolf hopes to ignite a grass-roots campaign to call attention to what he
sees as the inequities in the current law.
"It has to start with the hearing, so I'm trying to get as many people, especially those who have 17/20s, to come to the hearing and give us support," he said. "I'd like to get some nonprofits to come to tell what happens to them if they can't have the support of these wineries, and what will happen to the people they help."
It is an odd circumstance that even the agency charged with enforcing the law
recommends taking a similar course.
Three Napa vintners suspended by ABC
10-day discipline hits producers who lacked license to pour
By JACKHEEGER, Register Staff Writer,Tuesday, December 05, 2006
Three Napa Valley vintners cited by the California Department of Alcoholic Beverage Control for illegally pouring wine at a consumer event have had their licenses suspended for 10 days. The three — Eagle Eye Wine, Elkhorn Peak Cellars and StoneFly Vineyard — were tagged in May at a fundraiser in Tiburon. They were charged with violating terms of their licenses. They appealed the citation and pleaded their case before an administrative law judge in Napa in September.
The case raises interesting questions for the many vintners in California that do not
operate their own wineries. The three vintners in the case all have their wines made at custom crush facilities and hold what are called Type 17 (wholesaler) and Type 20 (retailer via the Internet and direct sale to consumers) licenses. Those licenses do not allow them to pour at consumer events.
A Type 02 license, which is held by vintners with physical winemaking facilities, does
allow consumer pouring. In a letter sent to each of the three, the ABC said five days of the suspension are stayed, provided that no violations or disciplinary actions occur within the next year. The suspensions are to take effect Jan 18, 2007.In making his ruling, administrative law judge Robert Coffman acknowledged that the trio received no remuneration for their participation at the Tiburon event and that the motive for participating was to “gain public awareness of its wines and to donate to a civic organization.” He further said in his order that the three were unaware that participation in the event was a violation of ABC regulations. He also wrote, “The Department (ABC) has not always been diligent in enforcing the laws governing wine tastings, primarily because of staffing limitations and the lack of complaints about such events.” Nonetheless, the judge ruled that their participation violated two sections of the Business and Professions Code and constituted cause for discipline under two sections of the state constitution.
None of the principals at the three wineries was surprised at the decision. Ken Nerlove of Elkhorn Peak Cellars said when they decided to appeal the citations, “We hoped to get the penalty reduced, and we hoped to get this out in front (of the public), and we accomplished those.”
Bill Wolf of Eagle Eye Wine referred to the portion of Coffman’s decision that read, “Some licensees came to believe that the statutes dealing with wine tastings by non-profit organizations … authorized donations of wine to such organizations, and that conducting a wine tasting is a form of ‘donating.’”
Although Wolf acknowledged that Eagle Eye broke the law and expected an adverse
decision, he said, “I felt that the ABC should have given us a smack on the hand
and told us not to do it again. And then they should have sent a letter to everyone else (who hold the licenses under question) and warn them of the law.”
“They (ABC) have to do it and I respect that,” said Claudia Sansone of StoneFly Vineyard, referring to the suspension. “I’ll just use that time to be a little more domesticated,” she said with a laugh.
When they were originally cited, the charges included illegally donating wine as well as pouring. In October the ABC re-interpreted the law and said that holders of any
type of license were allowed to contribute wine to charitable organizations, but
emphasized that the change did not affect pouring at consumer events. The ABC
originally had recommended a 15-day suspension or a fine, the size of which is
determined by a formula involving last year’s gross revenues.
“I had no intention of paying the fine,” Sansone said. Instead she joined with Wolf and Nerlove in appealing the citations. For Nerlove, it would have meant a fine of
about $7,000. Wolf said he had not calculated the fine but would accept the
suspension. Another Napa Valley vintner, Tom Bardessono of Bardessono Vineyards,
also was cited at the Tiburon event, but opted to accept the 15-day suspension.
More than a dozen vintners contacted by the Register acknowledged that they had no knowledge of the restrictions on the Type 17 and Type 20 licenses and had never heard of any enforcement of those restrictions. But an ABC official said that about 50 cases had arisen during the past year and that enforcement had been stepped up in recent months. Wolf said he had been told by an ABC representative that the citations were triggered by complaints from some large wineries in Sonoma County holding type 02 licenses.
“My production won’t be a threat to a big winery,” said Nerlove, who produces only 1,500 cases yearly. “Their (large wineries’) ad budgets are bigger than our gross revenue.”
7 comment(s) were receivedKhowe wrote on Feb 15, 2007 10:30 AM: “For a winery to donate wine to a charitable organization, NOT for pouring, but for auction, does the organization have to have an ABC permit? or will a tax
-exempt ID suffice? “
Lois wrote on Dec 6, 2006 2:44 PM: " T.O. Merle suggested that Family Winemakers of California could take up this cause. First they need to take up the cause of allowing 17/20 wineries to be members of their own organization. Ditto for the Wine Institute! 17/20 wineries are really the poor relations of the winery world. And yes, this law really should be rewritten - I can think of no justification for it. "
Peter wrote on Dec 6, 2006 9:58 AM: " What is the logic of restricting people without their own production facilities from pouring? This seems an unfair restraint. Other than favoring the big and rich over the small and poor, what is the point? There seems to be no legal justification. "
John Farmer wrote on Dec 6, 2006 3:41 AM: " Yet another example of the little guy getting stomped on by the big guy as well as showing how inept and interferring (sic) the government is on the lives of its citizens.”
E. Ness wrote on Dec 5, 2006 5:49 PM: “I’ll be able to sleep much more soundly tonight knowing the ABC is on top of this high level threat to our community's vital interests.”
T.O.Merle wrote on Dec 5, 2006 5:01 PM: " Kudos to Jack Heeger for another excellent article on this issue. Napa is very fortunate to have a journalist of this quality writing in our small burg. The quote at the end by Mr. Nerlove leaves me a bit morose. The Big Guns should be supporting these events and the participation of boutique wineries. Such exposure increases the public's interest in this beverage of moderation. Surely, any modest competition from the small fry is more than offset by enlarging the pie. It should also be said that the non profit organizations that use wine tastings as fundraisers will have fewer wineries to draw from, wineries that
attract a larger crowd. Perhaps Family Winemakers of California can take up this
cause and get the law rewritten to allow a 17/20 winery to participate a few times a year in such events.
Brian wrote on Dec 5, 2006 7:50 AM: " Is it fair to an entire industry when the ABC admits its lax standards and enforcement and then has the gall to re-interpert the laws at their whim? What a crock. "
PART FOUR - RELATED REFERENCE MATERIAL
1. http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/05/04/WIG9BPGIR51.DTL Friday, May 4, 2007 (SF Chronicle) Tim Teichgraeber, Special to The Chronicle The wine mechanics/When there's a challenge, wineries big and small consult with a Mr. Fix-It
2. http://www.winebusiness.com/referencelibrary/webarticle.cfm?dataId=45036 http://www.winebusiness.com/ October 14, 2006 Wine Business Communications, Inc. , by Alison Crowe. How to Work With a Custom Crush Partner,
3. http://www.winebusiness.com/ August 01, 2000 Wine Business Communications, Inc., by Veronica Barclay. Fire Hits Frank-Rombauer Wine Warehouse
4. http://findarticles.com/p/articles/mi_m3488/is_n5_v75/ai_15500121 Wines & Vines: Custom-crushing: then and now
5. http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2004/05/31/story6.html?b=1085976000^946948&surround=etf http://www.bizjournals.com/! Wine, without the vine, Published: May 31, 2004
6. http://www.stoel.com//webfiles/winerycontract3.aspx A new trend in wine making in Oregon, following a similar trend in California, is wine production under custom crush agreements. Under these agreements, existing wineries crush, ferment, age and bottle wine for individuals who then market the wine under their own labels. Custom crushing presents an opportunity for a mutually beneficial relationship. But as more and more wineries and winemakers enter such arrangements, timely access to the proper facilities, which is of crucial importance to both parties, may become limited.
