THE NATIONAL POLICY BULLETIN

NOVEMBER 2013

There are a number of issues we are following on our member’s behalf, with talking points, as well as a round-up of state issues from around the country. Please feel free to contact us with your questions and concerns.

WineAmerica members should make their voices heard. Whether it’s the Market Access Program, Specialty Crop Block Grants, the Specialty Crop Research Initiative, Value-Added Producer Grants, the National Clean Plant Network, or National Agricultural Statistical Service reports, wineries and state associations have made good use of the farm bill. Many of the conferees are in states with large and growing industries.

FEDERAL

Immigration Reform: A new version of the Border Security, Economic Opportunity and Immigration Modernization Act was introduced by U.S. Rep. Judy Chu (D-27th District) on October 8th into the House of Representatives. The bill includes the bipartisan bill passed by the Senate as well as a House measure known as the Boarder Results Act which gained support from both parties. The proposal would introduce visa reform and shorten the citizenship path for agricultural workers as well as providing extended protections for both immigrant and U.S. agricultural laborers.

TTB: With the end of the government shutdown, the TTB is now, once again, accepting COLA applications as well as new permit applications. With the severe back log of COLA submittals, please allow at least up to eight weeks for review and plan accordingly.

Farm Bill: In a meeting on October 9 with the state’s Interim Joint Committee on Agriculture, Kentucky Farm Bureau’s National Affairs and Political Education Director Joe Cain that a Farm Bill agreement is expected by the end of the year. He stated that the House and Senate are working closely to name conferees to negotiate a compromise. Though there is bipartisan agreement on the majority of the proposal, debate on federal nutrition benefits and assistance (the SNAP program) has held up action on the bill as a whole.

A congressional conference committee is now in the process of talking over the possible terms of a compromise five year farm bill. Both House and Senate committee members are publicly optimistic about finding common ground, but with food stamps likely the hinge around which everything turns, it’s hard to predict if a compromise bill passable by the full Congress is possible. Reportedly, there’s been some advance work to get easy language differences off the table. The President has made passage of the farm bill one of his top three priorities by year end. Whether this has a positive or negative impact remains to be seen.

Assuming a compromise is possible, there’s talk that the farm bill might get wrapped into a larger tax or budget bill. That could be a pretty good outcome since both Democrats and Republicans see the farm bill legislation as a way to trim the deficit and many in both parties looking for opportunities to show voters they can make work together.

Taxes: The big news coming out of the shutdown is a congressional budget conference committee. It’s been clear that Democrats want increased revenue as part of any final budget deal.

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It’s also likely that breweries, distilleries and cideries will be pushing tax priorities focusing on the small producer tax credit and alcohol by volume rate standards.

Immigration Reform: The third of the President’s top three priorities, immigration is also being pushed to the front burner by members of Congress. The stark reality is it’s hard to see a full compromise bill getting through the House and Senate. While there have been some hints at a standalone agricultural labor bill in the House, the Senate isn’t likely to pass anything other than comprehensive immigration reform. Despite the intensifying focus, unless there’s a serious shift in political dynamics, we’re unlikely to see immigration reform become law anytime soon.

Food Safety: WineAmerica has reported on the numerous Food & Drug Administration delays on rulemaking that would implement the Food Safety Modernization Act (FSMA). It appears a major FDA consideration is funding, i.e. , what’s the point of rules if FDA can’t carry them out? Now, FDA is asking for significant budget increases, arguing they need the funding to make FSMA work. Since they’re unlikely to get the funding, it remains unclear when or how FDA will finally implement the new food safety rules.

THE STATES

NEW YORK Industry Stats: The & Grape (The New York Wine & Grape Foundation) Foundation is sponsoring an updated and expanded Economic Impact Study conducted by Trade Practice: The large wholesalers Barbara Insel of Stonebridge Research in Napa (Southern, and Empire North) are gearing up for Valley, CA. The last study, based on 2008 data, “at rest” legislation in the next session starting showed that the grape and wine industry in January, and the State Government has generates more than $3.76 billion in economic commissioned a study of the issue by Ernst & activity annually for the State of New York. In Young. The vast majority of the wine industry, the 5 years since then, more than 100 new especially small and mid-sized wineries, are wineries have opened (New York now has 342), strongly opposed to this initiative. so the number should certainly exceed $4 billion. International Trade: With funding from USDA’s In addition, this time the study will include the Market Access Program (MAP), the New York craft beer, spirits, and cider industries. Wine & Grape Foundation continues its export Marketing & Promotions: “Taste NY” stores will programs in Canada, the United Kingdom, open in LaGuardia and Kennedy airports, as well Belgium, Germany, and Hong Kong. The as Grand Central Terminal selling New York are very well received in all markets, but wines, beers, spirits, ciders, and food. New York distribution remains a major obstacle. law allows any farm winery to have up to five Industry Infrastructure: Several wineries, “branch offices” which can operate like the breweries, distillers and cideries are already winery tasting room. collaborating on marketing and sales, and NORTHEAST offering consumers a wider choice of products. Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jim Trezise has assembled an informal but Hampshire, New Jersey, Pennsylvania, Rhode Island, Vermont active “Farm-based Craft Beverage Coalition” of leaders from the different categories to work on CONNECTICUT joint promotions and policy initiatives. Retailer Licensing: First Selectman William Stuart from Connecticut’s last remaining dry town, Bridgewater, announced his plans against

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seeking reelection and his support of rescinding MIDWEST the alcohol ban after the next municipal Arkansas, Iowa, Kansas, , Nebraska, North Dakota, elections. Local business owners oppose the Oklahoma, South Dakota, Texas current dry policy and raised the issue in hopes MISSOURI that they may soon be able to serve alcohol in (Missouri Wine and Grape Board) restaurants. Research & Grants: MWGB partnered with PENNSYLVANIA Missouri State University to expand environmental and economic sustainability by

Privatization: Though legislation has stalled on improving fungal disease resistance in the alcohol privatization in the state, Governor Tom grape through the development of the Corbett announced in a speech earlier this first genetic linkage map for the Norton that will month that the issue remains one of his top serve as a foundation for future breeding of new three priorities. Corbett argued that privatization cultivars - $59,976. will not only be convenient for the state, it will also provide a one-time funding of an estimated MWGB partnered with the University of $1 billion to schools throughout the state. He Missouri, Grape and Wine Institute to assist stated that his administration will continue to wine grape growers in making good harvest and push the issue until a negotiation is reached. management decisions to increase fruit quality by expanding basis analytical testing - $33,811. Privatization: As the debate over state privatization continues, new survey results have Marketing & Promotions: Missouri is now shown that the majority of citizens in the state home to nine wine trails and over 120 wineries. favor abolishing the state monopoly on liquor Bearing 1,700 acres of grapes our state sales. Roughly 66% of individuals surveyed claim continues to make strides in grape growing and they favor privatization, and cite increased job winemaking. We debuted a new website this opportunities and the conflict of interests in a year as well as an updated app for Android and state run system as major factors in their decision. IPhone users. We’ve seen great response to Though the proposal has majority support with our new ad campaign as well. citizens, it still faces obstacles with legislators who have yet to set a date for its discussion. NEBRASKA (Nebraska Winery and Grape Growers Association) GREAT LAKES Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin Land Use: LB 636, was introduced last winter at the request of the NWGGA and would place MICHIGAN restrictions the application of 2,4-D.The bill does not advocate for a ban on the spraying of

Retailer Licensing: Michigan has become the 2-4-D, but it does require sprayers to give latest state to allow wine to be purchased and notice of when and where they are going to delivered to citizens through the online retailer, spray 2 4-D between April 15 and September Amazon. Though customers must obtain a 15. Applicators in violation of these restrictions special license to receive deliveries, they will would be subject to fines. The bill was moved now be able to order wines from across the into Interim Study status, giving the legislature country in one online marketplace. Amazon has a chance to hold stakeholder meetings on the also taken steps to offer selections from issue. We do not anticipate passage of the bill, Michigan wineries and is in the process of but the process and discussion is opening the expanding their selection. avenue for formal educational collaboration between our industry and opponents of the bill.

International Trade: The NWGGA hosted an international business delegation. Sponsored by

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the US Commerce Department’s International COLORADO Trade Administration, the delegation was made ( Industry Development Board) up of 20 leaders of associations that support Regulation: The Liquor Enforcement Division businesses representing eight different Eurasian has focused so much recently on enforcement, countries including Azerbaijan, Georgia, such as confiscating a brew pubs's inventory the Kazakhstan, Kyrgyzstan, Moldova, Russia, day before the Great American Beer Festival Tajikistan, and Ukraine. They were participating due to a technicality of paperwork differences in the US Commerce Department’s Special between the feds and the state, that many in American Business Internship Training (SABIT) the beverage alcohol industry are drafting a bill program. SABIT is a short-term technical to create a liquor commission to replace most assistance program focused on best practices in of the authority of the Director of Liquor managing successful associations and Enforcement. AB InBev is one of the last supporting small business development. holdouts against this bill, although the CWIDB, Marketing & Promotions: The NWGGA an agency of the Executive Branch of contracted a marketing company to develop a government is not taking a position on marketing plan for the association. They are reorganizing another Executive Branch agency. currently finishing up industry assessments to Regulation: One Denver area winery that has determine how to best proceed. NWGGA is also taken the lead in canning and kegging its products preparing for Nebraska’s first state-wide wine is pushing a bill to allow Tax-Paid Bottling House festival, “Toast Nebraska – A Wine Experience.” permits from the TTB to be allowed under state It will be held in May at Mahoney State Park. law. Currently, the State says a manufacturing TEXAS license holder cannot perform any part of the manufacturing process for or on another Marketing & Promotions: The TX Wine manufacturer's product without taking Passport mobile app, launched in late ownership. The bill would allow packaging September, has 120 wineries listed, 50 paid operations (canning, bottling and kegging) to passport winery participants, over 1,000 unique occur outside of bonded premises and users who have downloaded the mobile app, consequently avoiding all the paperwork involved and over 6000 sessions on the mobile app by in transferring wine in bond for bottling. They are users since launch. looking at similar provisions for beer and spirits.

ROCKY MOUNTAIN Marketing & Promotions: Began a Colorado Alaska, Arizona, Colorado, Hawaii, Idaho, Montana, Nevada, Wine Specialist training and certification New Mexico, Utah program consisting of a 90 minute seminar led ARIZONA by Wayne Belding, Master Sommelier, followed by a test. To date the two dozen retailers and Retailer Licensing: Wine and beer will now be wholesalers who have taken the training are carried in Dollar stores across the state. thrilled with the information and receiving wine Dollar General and 99 Cents Only chain stores tasting advice from an MS. While events like have applied for 70 alcohol licenses since the this are very popular when people attend, Arizona Department of Liquor Licenses and getting the word out to liquor stores and Control began accepting dollar stores in restaurants without a network of wholesaler March. Though there is some backlash from sales reps has always been a challenge. community members who fear the potential effects of inexpensive alcohol, the trend could IDAHO provide an abundant new market for the local Privatization: In a speech given last week in wine industry. front of the annual convention of the Idaho Licensed Beverage Association, Governor Butch

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Otter announced that he will continue to if Alcohol Beverage Control would allow the oppose efforts to privatize alcohol sales. The Federal Reporting Form to be acceptable as the Idaho Licensed Beverage Association strongly Form for ABC. This would eliminate duplication opposes privatization and claims that extended of information and time spent by wineries filling access to alcohol would encourage underage out paperwork. A follow-up meeting will take drinking. Gov. Otter pointed to the increase in place over the next few weeks. Washington liquor prices as evidence that privatization negatively impacts the economy; CALIFORNIA he called on members of the Association to (Family Winemakers of California) come up with a plan for liquor license reform. California is closed for legislative business until ( Commission) January 6, 2014. The bill signing period was completed on October 13. There were 2,540 Retailer Licensing: Re-fillable containers to be measures introduced during the first year of the brought into retail outlets to fill up with wine two-year session. 1,003 were signed into law (container to be provided by the consumer). and 96 were vetoed. Only 4 actually died. The Oregon passed similar Legislation during the remaining 1,437 are considered two-year bills 2013 Session which allows a person to bring a and many face an uncertain future since they container and fill it up with wine, beer, or cidar must pass the house of origin by January 31, at a retail outlet. The container cannot exceed 2014 to remain alive. 2 gallons. The Committee will draft some Legislation for the Commission’s consideration. Regulation: The Assembly Agriculture The language will only specifically include re- Committee and Assembly Environmental fillable containers for wine. Safety & Toxic Materials Committee held a joint informational hearing this month on bee Winery Licensing: Renewal of Winery Licenses colony collapse. It was a balanced hearing (Notarizing) – The Committee wants to take a designed to illuminate the main issues with look at eliminating the requirement for a bee health. The wine industry’s interest Winery to have a license renewal notarized. relates to impacts on pesticides used to Many agree that a Winery License should just control the Glassy-winged Sharpshooter that be allowed to continue year after year if the spreads Pierce’s Disease, and forage crops for Winery is still in business and it has not violated bees. The only pesticide approved for use on any of the Statutes to have its license revoked, GWSS is one in the class of neonicotoids under suspended, or not renewed. A renewal fee new scrutiny. Loss of the pesticide would would still apply. imperil the control strategy for spread of PD.

Winery Licensing: 2014 Session – The Agricultural Labor: Even though a small Commission has two pieces of Legislation agriculture and business coalition, including already drafted for the 2014 Session. These Family Winemakers, was successful in include not shutting down the bottling and protecting J-1 visa programs for existing manufacturing operations of a winery if there is recruiting organizations with a series of late a violation by the winery and its license is amendments to anti-human trafficking bill the revoked, suspended, or not renewed. The Governor vetoed SB 516. The author will second is allowing private labels to be placed reintroduce the bill in 2014 to resolve the onto containers of wine for private events, funding issue identified by Governor Brown. restaurants, hotels, and non-profit organizations. The 2014 Legislative Session Regulation: Though broader reform of the begins on January 6. state’s chemical exposure warning law – Prop. 65 – have been shelved for the year the Recordkeeping & Reporting: Roger Batt has Governor did sign AB 227, which is a narrower been meeting with Lieutenant Wheatley to see lawsuit abuse bill supported by FWC. It

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provides relief for on-sale retail licensees, an have a right to know the contents of their food. amendment sought by FWC, that are accused of Opponents of the proposal claim that these a warning sign violation. It establishes a 14-day labels are extremely difficult to verify and cure period with a nominal $500 fine. Given the nearly impossible to test; in addition, they point current $2,500 per day fine, settlement costs to nearly 20 years of government testing which and legal fees this is a key improvement. have yet to find evidence of adverse effects of GMOs on public health. The issue will voted on Marketing & Promotion: AB 1116 (Hall), which by public ballot this fall and the decision will extends the current private event brand likely be influential in the future of GMO marketing legislation another four years and labeling requirements. allows events to be held in hotels and supported by FWC was also signed by the Governor. ( Institute)

Elections: The special election in Assembly The state Liquor Control Board just adopted District 45 to replace Bob Blumenfield will be rules regulating the growing, distribution and held on November 19. The two run off sale of marijuana, so they may have more time candidates are Matt Dababneh (D) and Susan now to address some wine issues that have Shelley (R). The special primary election in been on hold for a while. Assembly District 54 will be held December 3 to Retailer Licensing: WWI is working with the fill the seat vacated by Holly Mitchell when she state Liquor Control Board to draft legislation was elected to the State Senate. There are that will streamline licensing and process for three Democrats running. This is the final charitable events' alcohol service and sales. special election caused by multiple vacancies in These events have become a major marketing the Senate that spilled down to the Assembly. opportunity for the promotion of WA wines and OREGON classifying a charity as a retail license in order to serve wine is overly complicated. Working with Marketing & Promotions: In a new statewide a group of stakeholders, we hope to come up promotion, Oregon Wines Fly Free, Alaska with a proposal that makes sense to all. Airlines will allow a case of wine to be checked for free on flights through November 20. The Research & Grants: The Washington wine program hopes to promote local wineries and industry is excited to celebrate the inaugural expand the industry beyond groundbreaking of the new WA State Wine state borders. It is modeled after a similar Science Center at the WSU Tri-Cities Campus. program from Walla Walla, Washington that Having played an integral role in securing $5 has shown significant industry growth in the million in state capital funding, WWI is looking two years since it ran. forward to having in Washington a world-class facility for researchers and students. The Wine WASHINGTON Science Center will include a research and teaching winery, state-of-the-art research Labeling & Advertising: A new ballot initiative laboratories, classrooms, conference rooms, which would require specific labeling for all and a 3,500-bottle wine library. A dramatic food containing Genetically Modified Organisms central lobby will provide views of the research (GMOs) will be brought to vote in Washington. winery floor and outdoors toward the Columbia The proposal is supported by Whole Foods River. The $23 million project is designed to Market who also backed a similar initiative in attract world-class researchers and students California which failed to pass last year. Whole who will focus their efforts on the challenges Foods has already announced that all products and opportunities faced by Pacific Northwest in their stores will contain GMO labeling by grape growers and winemakers, and is expected 2018, and have taken a strong public stance in to be complete in early 2015. favor of such labels, stating that consumers

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