Napa County creating special blend of regulations for small wineries

As Napa County moves into place this year new standards for how the wine business operates locally, officials are hearing from vintners and grape growers about the how the bar for compliance seems to be getting too high to clear for small-scale operations to remain going concerns.

Moving on direction from the Board of Supervisors in the past few years to lessen the regulatory burden on smaller wineries, many of which are family-owned and -operated, county staff late last week was set to roll out the first draft of a such a policy on small winery permits, what would be considered major and minor use modifications, and whether restrictions on wineries operating in the business parks around Napa County Airport would be adjusted.

The goal is to have the policy back before the supervisors for consideration by November, according to planning Director David Morrison.

While the details of the draft policy weren't clear by press time, some of Napa County's small-scale wine producers say the help that's been discussed recently leaves them out.

Among them is Elise Nerlove, co-owner of Elkhorn Peak Cellars, which has been producing pinot noir grapes on a now 10-acre vineyard off Highway 12 in Jamieson Canyon south of Napa since 1987. The family started producing wine in 1993 and now bottles about 1,000 cases annually at a local custom facility. Elkhorn wants to invite consumers to visit the hillside property, try the wine and buy it.

“You see it in all the industry papers, like Silicon Valley Bank's wine report, that the trend is direct-to-consumer sales,” Nerlove said. “And we are asking for access to the millions of visitors who come to Napa every year.”

Trouble is, the wine side of the business started after the county's Winery Definition Ordinance (WDO) went into effect in 1990, the same year county voters approved Measure J, which restricted rezoning of local agricultural land to other uses without another countywide vote. In 2008, voters opted for Measure P, extending that protection through 2058.

Napa County defines small wineries as those that produce 30,000 gallons or less annually, equivalent to under 13,000 standard 9-liter cases, according to a county report. Of the 485 permitted wineries in the county, 461 are on agriculturally zoned land, and 57% of those (261) are small wineries.

Of those small vintners, 37% (97) were established before the WDO, and 34 of those received permits under the small-winery exemption policy that preceded that ordinance. But that exemption doesn't allow direct-to-consumer activities like tasting and sales, according to the report.

But for Napa County grower-vintners like Elkhorn, the option of ancillary marketing activities such as tasting isn't available, because they're not wineries. Rather, Elkhorn as an alternating proprietorship state license to make wine at a bonded winery.

So, Nerlove and her father, Ken Nerlove, founder of Elkhorn, are on the executive committee of a group of similar small grower-vintners who are asking for the Board of Supervisors to craft an ordinance for them. Save the Family Farms Napa Valley wants to be allowed limited wine tasting and direct-to-consumer sales at their vineyards - without having to build a winery.

The group's founder is Bill Wolf, who produces grapes for his Eagle Eye Winery label from vines in Gordon Valley east of Napa. He wrote on the organization's blog that a key reason for launching this campaign was the shift by the county in 2014 toward tougher enforcement with fines for wineries and growers that violated the WDO. What brought this out this year was the move by the Board of Supervisors in December to create a fix-it process for winery use permits that were out of compliance with winery use permits.

A March 29 deadline was set for wineries to apply for a status determination on what was allowed in their use permits or to apply for the code-compliance program, which would allow for bringing operations back into line with the use permit or pursue permit modifications. Fifty-two applications were submitted, 34 of which were for code compliance and 18 for status determination, according to Morrison.

On-site inspections for life and safety problems to correct have been completed, and applicants have been contacted about whether their applications are complete, he said. His staff have until July 17 to finish consideration of the permit-status applications.

But the original July 1 deadline for wineries to start reporting production volume and sourcing of grapes to comply with the 75% Napa County rule is being revised, Morrison said.

“We have developed an electronic reporting form and are working with our software vendor to finalize the reporting program,” he said.

Eagle Eye and Elkhorn ran into the brand-without-a-winery dilemma 11 years ago, when they were among a few vintners cited by the state Alcoholic Beverage Control Department for pouring tastes at a Marin County wine festival without the license available only to producers with their own production facilities, according to the Napa Valley Register.

Wolf recently took his campaign to the Board of Supervisors. At the May 21 meeting, Morrison asked the board for direction on how small wineries should be handled, given previous policy documents approved by the supervisors to protect family-owned businesses and small farmers. Those include the 2019-2022 strategic plan, most recent general plan, recommendations from the Agricultural Protection Advisory Committee a few years ago, county procedures for implementing the California Environmental Quality Act (CEQA) and a consultant's analysis last year of the county's permitting process.

Among the dozen-plus speakers before the board last month, Wolf asked for vintners who custom crush to be allowed limited tasting and direct-sales activities among the vineyards.

“All we're asking for very simply is a category that allows us to make a living,” he told the board, according to the Napa Valley Register.

The cost of pursuing a winery permit could cost $200,000 to $500,000 and take two to five years, with no guarantee that the county would give the green light to spend another $1 million to $5 million to build the facility, according to a position statement by Wolf.

“It is not only cost prohibitive for the small family farm, but also not cost effective to spend that much money to produce a few thousand cases of wine,” Wolf wrote.

His group is seeking a county ordinance to make allowances for small vintners without wineries. Morrison told the Business Journal that tasting is to be an accessory use to viticulture in the agricultural zones of the unincorporated areas. That was discussed at the supervisors meeting and has been a topic of policy discussion in Napa, Sonoma and other destination winegrowing regions of California in recent years.

“Allowing tasting without a winery would require changes in the General Plan and Zoning code, and would require a Measure P vote by the public,” Morrison wrote in an email.

Jeff Quackenbush covers wine, construction and real estate. Contact him at or 707-521-4256.

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