The ABC’s of Wine Licensing

Author: Dusty Wetton

In California, in order to produce, sell, or distribute alcohol, you must first obtain a liquor license. For wine, this can mean many things. California's Department of Alcoholic Beverage Control, known commonly as “ABC”, is the governmental body that is in-charge of distributing the licenses. Through their control, they have several different license types.

Each license carries different basic privileges. For example, license type #02 is a winegrower (winery) license. It authorizes the sale of wine to consumer’s on premise, the sale regardless of the source for on premise consumption, and for on premise use in preparing food. It also allows for wine tastings, as described under the business code.

Another common license issued is for events that will sale wine. This special license authorizes type 02 licensees to sell bottled wine produced by the winegrower for consumption off the premises where sold and only at fairs, festivals or cultural events sponsored by designated tax exempt organizations. The license holder must notify the city or county where the event is being held

These are just two types of liquor licenses related to the wine industry. There are many different types, and the definitions of which license you should obtain is governed by the definitions given under the Business and Professions Code. To learn more about the various types and their granting abilities, go to the California Department of Alcoholic Beverage Control.

For legal services or questions regarding this blog, please contact me at dwetton@lauruslaw.com.

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Conjunctive Labeling

Author: Dusty Wetton

After writing last weeks article about American Viticulture Area’s, I found information about a much related area of wine law that I thought would be a perfect coupling to last weeks article. If you have ever, as I am sure you have, ordered a bottle of wine from the AVA Napa Valley, you would have seen on the bottle “Napa Valley.” Now if you have ever been to Napa Valley, you would know that there are many different parts to the valley, each with their own characteristics that may cause it to stand out on its own from Napa Valley. The reason that it must say Napa Valley is that this particular AVA is part of a conjunctive labeling law. This law passed back in the early 1980’s, and has brought fruition to the area, and has caused Napa to been known internationally since.

So what exactly is conjunctive labeling? In a general sense, it is the labeling of wine that requires the label of the “main AVA region” to be placed on the bottle. For instance, all wine grown in Sonoma Valley must say “Sonoma Valley” on the label. The law is governed as a recording with the Alcohol and Tobacco Tax and Trade Bureau, as well as the California Alcohol Beverage Control. If a bottle produced in one of these regions does not possess the proper labeling under the law, then the company could get fined and criminally prosecuted against for violating the conjunctive labeling law.

The opponents to conjunctive labeling believe that these laws infringe on the rights of free marketing. For instance, the Los Carneros region is not allowed to just have “Los Carneros” labeling, it must also state “Sonoma Valley.” Therefore, it could loose an edge over other regions in Sonoma Valley that are not yet developed or established in the wine industry. Proponents of conjunctive labeling of course bout against these arguments. They state that the conjunctive label is left open to style, font, and other design options. Also, the conjunctive label does not have to directly above the sub-region name, nor does it have to be the same sized font of the sub-region. The size of the conjunctive label must be no smaller than 2mm and must appear on the front of the label, but all other creativities are left open to interpretation and application.

Yet the debate continues, is it better for the region to have conjunctive labeling or to not have this regulation. I guess the answer would of course depend upon how the winery is established and what area they grow in prior to the law being enforced. For some it’s better, for others it may infringe upon their success. What is important is to understand when it applies to your wine and how to comply with the laws to best market your wine.

For legal services or questions regarding this blog, please contact me at dwetton@lauruslaw.com.

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¿De dónde eres? The AVA’s of Wine

Author: Dusty Wetton

When I used to work in fine-dining, I was often asked by customers what the difference was between a Merlot from Napa Valley from a Merlot from the Russian River Valley. I always answered that the grapes grew up in different neighborhoods and therefore had different experiences. While this was mostly meant as a joke, it was also comically wise. A grape is grown and experiences many different things depending upon its location of harvest. Things such as the weather, climate, moisture, soil, sunshine, temperature, and other factors can lead to very different wines, even if they are created in the same year and are of the same grape variety. To help consumers, and wine marketing, determine what wines should have similar experiences, the Alcohol and Tobacco Tax Bureau of the Department of the Treasury have created American Viticulture Areas (“AVA’s”).

AVA’s are designated wine grape-growing regions in the U.S. distinguishable by geographic features. There are currently approximately 200 AVA’s in America, which allow for certain wine producers to place the AVA designation on their particular bottle. To qualify your wine’s origin from a particular locale, it must have at least 85% of its grapes grown from that specific AVA. The size of the AVA is not limiting in any way, yet because they are defined by their geographic settings and similarities, it is difficult to create a miniature AVA. An AVA is also not limited by the variety of grapes that can be grown there, any methods on growing, or vinification techniques.

There are also sub-AVA’s and larger AVA’s. For instance, the Russian River Valley is an AVA in the larger North Coast AVA. Here in Southern California, most of our wines originate from the South Coast AVA. Within that are familiar sub-AVA’s such as Ramona Valley, San Pasquel Valley, and Temecula Valley. In order for each AVA to be created, its area must be evidenced that the area is locally or nationally recognized to hold such a name, have some sort of historical evidence proving the boundaries are accurate, and proof that the soil, climate, elevation, and other physical features are unique to this area.

Now as a consumer, you know the difference and you can use it as an ace in your pocket for your next wine mixer. As a producer, the AVA is also useful for certain marketing benefits, as if 85% of your wine is from a certain AVA, it may allow you to join a more prestigious and established group than you may have reached on your own yet.

For legal services, comments, or questions regarding this blog, please contact me at dwetton@lauruslaw.com.

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What exactly is Wine Law?

Ever since Father Junipero Serra planted the first vineyard at the Mission Basilica San Diego de Alcalá, wine has been a part of California. Today, wine from California vineyards account for almost 90% of all U.S. wine production. So naturally, with so much industry here in California, problems are sure to follow. Thus, wine law has developed to address such issues.

All things surrounding wine has its own particular set of challenges, such as heavy government regulation, fierce competition both locally and internationally, contractual relations with various persons, and intellectual property issues. Planned precautionary measures now can minimize or avoid a lot of legal troubles later on. Unfortunately, when running any business, disputes will arise between your business and others, and therefore, wine law can be used as both a preventive tool as well as a protection for certain needs that may arise.

Wine law covers more than what most people realize. Here are some examples:

• Business formation: vineyard owners, wineries, retailers, and more may have certain business decisions to make such as what type of business formation to use (S Corp, LLC, partnership, etc.), business tax, fictitious business names, FIEN, and more.
• Alcoholic beverage licensing: both State (ABC) and Federal (TTB) government regulate alcohol, including new legislation and regulations.
• Trademark law: wine bottle labels are much more complex than they appear. A thorough trademark search should be conducted for every new bottle in production, and a strong trademark should be filed.
• Contracts and License Agreements: Many types of contracts, such as custom-crush agreements, on-premise event contracts, material purchases agreements, sales agreements, bottling contracts, and distribution agreements.
• Assist in land acquisition: land acquisition for vineyards or other uses related to wine is quite a complex process.
• Environmental law: issues from water management, waste control, endangered species, and storm water discharges.
• Hiring contractors for building or repair: wineries are often in the need of change, and hiring an independent contractor can open wineries up for potential liabilities.
• Employment law: issues such as labor management issues, pensions, wrongful discharge, civil rights, federal and state occupational safety laws, wage and hour laws, and workers' compensation.
• Tax law: whatever their specific tax accounting and filing regulations may control.
• Business Governance and Maintenance: website privacy, business filings, trademark review, advertising, unfair business practice checks, and antitrust review.
• Shipping Laws: interstate direct-to-customer shipping laws, self-distribution to retailers, and ecommerce issues.
• Compliance: wholesale compliance and importation compliance.
• Litigation: wineries are sometimes sued for a variety of reasons, often though related to all of the above issues.

Of course, this list is not conclusive, but it does convey the variety of what a wine lawyer would practice. I hope that this snapshot of wine law has opened your eyes to the tangled obstacles and complexity that is behind a simple bottle of wine.

For legal services, comments, or questions regarding this blog, please contact me at dwetton@lauruslaw.com.

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