What’s ahead for California wine industry with laws and regulations
More than wine, area lawyers specializing in the wine business have been forced in the past year to take on a number of critical issues.
That includes regulations were put in place to help the industry because of the pandemic. Will they be retained? (Answer: Maybe. It depends on lawmakers.)
Or that winery wildfire insurance is suddenly hard to find. Will it continue? (Answer: It is a whole new ballgame.)
Here’s a sampling of the thoughts of some attorneys on these topics and others. This content has been edited.
Regulation of winery events had been a hot topic in Napa and Sonoma counties until the COVID-19 inspired shutdowns. How will the economic losses suffered by wineries influence regulations, and when do you see this issue becoming front and center again?
Scott Greenwood-Meinert: The economic losses are shared between the counties and the wineries.
And the economic fallout from the wineries flows outward to the entire hospitality industry. When you add in the disastrous and seemingly endless fires… there should be a change in focus from wineries being a regulatory concern to wineries being supported by regulations.
A lot was done to help businesses survive COVID-19, and temporary regulations that helped wineries and other businesses make it through should be preserved so these businesses can move forward toward thriving.
Katherine Phillippakis: We expect to see a continued emphasis on outdoor events: outdoor tastings, vineyard tours, garden tours, and other outdoor hospitality. The United States in general has seen a surge in RV-related leisure activity, and we are curious whether overnight camping will become a feature at North Bay wineries.
The Sonoma regulations in many areas could likely accommodate overnight camping at wineries with only minor changes to the rules. In Napa the process would be a bit more complicated because of the Agricultural Preserve, but we believe it should be possible.
California beverage alcohol regulators on June 30, barring legislative action, planned to roll back many of the temporary allowances during the pandemic, namely virtual wine tasting and returns of unsold inventory from trade accounts. How legally challenging would it be for some these temporary measures to be made permanent?
Greenwood-Meinert: This is a matter of legislative wherewithal. Local legislators should be using virtual wine tasting and inventory returns as ‘common sense’ changes to alcohol beverage regulations that help wineries (which are just small businesses) continue to thrive. Virtual wine tasting is a piece of cake… this is the 21st century and the regulations are in the 19th century.
Michael Brill Newman: First and foremost, to make any of the temporary allowances permanent, it will take legislation. It is far easier in California to get legislation passed in California, particularly if there is industry consensus in support of (or at least not opposed to) the legislation than to petition the California ABC to go through a lengthy regulatory process.
Absent legislation or regulation, the ABC will not go out on a limb to extend temporary allowances that no longer have the Governor’s state emergency order behind it.
And, if vintners continue to act as if the temporary allowances are permitted, they will risk suspension of their licenses or, at the very least, significant fines.
This pandemic and resulting shutdown are hardly something any client could have adequately prepared for legally. What are one or two smart things you saw some clients have in place that softened the blow from this event?
Phillippakis: Wineries that had well developed social media presence and strong customer relationships definitely weathered the pandemic effects better than those that did not. I saw several clients pivot to online tasting activities, such as sending out tasting kits in advance and then having a guided online tasting via Zoom.