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THE NATIONAL POLICY BULLETIN

OCTOBER 2013

In light of the federal government shutdown, WineAmerica will be releasing a special mid- month Federal Issues Policy Bulletin. This edition will address the status of taxes, the Farm Bill, appropriations, immigration reform, TTB funding, and food safety rulemaking. In the meantime, please review the limits of TTB operations during the shutdown, as well as our usual reports of issues from around the country.

Please feel free to contact us with your questions and concerns.

FEDERAL

TTB: Alcohol and Tobacco Tax and Trade with label reviews for quite some time now, and Bureau (TTB) has suspended all regulatory any suspension or services will only exacerbate functions, non-criminal investigative activities this problem. Meanwhile, all tax remittances and audit functions. This means that all reviews will continue to be processed by the TTB as of alcohol beverage labels, formulas and these functions are deemed necessary for permits will be suspended until funding is safety and protection of property. reinstated. The TTB has been bogged down THE STATES

NEW YORK and related processes for all manufacturers ( Wine & Foundation) (wine, beer, spirits, cider) on both farm and Marketing and Promotions: Governor Cuomo commercial levels. The bill will be introduced has created a major TV and print advertising after the legislature returns in January. campaign in support of the wine industry under NORTHEAST the State’s new “Taste NY” brand. The ads will Connecticut, Delaware, Maine, Maryland, Massachusetts, New be running from September through the end of Hampshire, , Pennsylvania, Rhode Island, Vermont the year to coincide with the peak selling season, and will largely be confined to New York MASSACHUSETTS

State (in terms of TV) given the preponderance Direct Shipping: Massachusetts legislators still of sales which occur right at home. have not scheduled a hearing on House Bill 294. Authored by Representative Theodore (Ted) C. : Licensing While New York’s wine, beer, Speliotis, H. 294 includes language similar to spirits and cider industries remain separate, wine direct shipping laws now in place in the they work closely together and now are able to majority of U.S. states. The bill requires the both produce in joint facilities and market them state to issue a permit to ship wine in shared tasting rooms. Several wineries, directly to consumers breweries, distillers and cideries are already collaborating on marketing and sales. PENNSYLVANIA

Winery Licensing : The & Grape Privatization: The PA legislature is scheduled to Foundation is working with the State Liquor come back to session next week. Movement is Authority on a proposal for the next legislative expected on Gov. Tom Corbett’s stalled plan on session that would greatly simplify the licensing privatization. In the Capitol Rotunda on Sept.

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23rd, John Morganelli, Northampton County founding statute applies to promotion and District Attorney and a possible Democratic research needs of the burgeoning hard cider candidate for lieutenant governor, delivered an industry in . anti-privatization message. In response the Commonwealth Foundation, a conservative Winery Licensing: Sale of wine at Farmers’ Harrisburg think tank, delivered the pro- Markets is now available for very small privatization message. producers and there is some legislative activity to raise the gallon limit from the 5000 gallon The CDC’s Community Preventative Services Task cap as passed in the initial bill in June. Force has taken a stance against the privatization of liquor stores in Pennsylvania. Their report Industry Stats: The Council is evaluating the claims that privatization will drive down alcohol widely varying Economic Impact models used prices, resulting in a greater availability for both by states to assess the wine industry’s legal and underage consumers. They recommend economic impact. continued government control as a means to Research & Grants: There are continued curb excessive consumption and manage discussions within the industry regarding a underage drinking. fund-raising mechanism for private sector RHODE ISLAND funds to collectively support research and promotional activities beyond that provided Taxes: A new law that eliminates sales tax on by the Michigan Grape and Wine Industry alcohol and replaces it with an alcohol excise tax Council. The initiative is known as the increase went into effect in early September. Collaborative.

SOUTHEAST MIDWEST Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Arkansas, Iowa, Kansas, Missouri, Nebraska, North Dakota, Carolina, South Carolina, Tennessee, , West Virginia Oklahoma, South Dakota,

ARKANSAS TENNESSEE

Retailer Licensing: A bill that would allow wine Beer & Spirits: A lawsuit was filed against the in grocery stores could reemerge in the Alcoholic Beverage Control Division claiming upcoming legislative session. that the restrictive laws on liquor stores violates the commerce clause and interferes with VIRGINIA interstate trade. The suit specifically targets the restriction against anyone owning interest in a Research & Grants: Virginia agriculture has liquor store from receiving a permit for their received a grant of over $450,000 through own store. The plaintiff argues that this inhibits the USDA Agricultural Marketing Service the free trade of stock for companies who deal Specialty Crop Block Grant. Wine are in liquor. The case will be heard before a US one of 19 agricultural projects that will District Court in October. receive funding estimated between $9,000- 30,000 per organization. MISSOURI

GREAT LAKES Distribution: The 8th Circuit Court of Appeals, Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin (one court below the Supreme Court), recently upheld a Missouri law that limits wholesale MICHIGAN licensing to Missouri residents. Two similar (Michigan Grape and Wine Council) decisions in Kansas (2001) and the 5th Circuit Marketing & Promotions: The Michigan (Texas) (2007) had struck down similar in-state Grape and Wine Council is reviewing how its restrictions as discriminatory and protectionist.

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Using the landmark shipping decision, Marketing & Promotions: The Grape and Wine Granholm v. Heald , the 8th Circuit decision Industry will hold these legislator tours in Sept- implied that states may impose protectionist Oct of next year, to help assist ’s elected residency requirements long as the laws don’t officials about the importance of the Industry restrict the flow of interstate goods. and the revenue it generates to help stimulate the economy. TEXAS ( and Grape Growers Association) Recordkeeping & Reporting: A meeting will be setup with Lieutenant Russ Wheatley with Regulation: At the 2nd Legislative Forum, Alcohol Beverage Control to streamline the hosted by the Texas Wine and Grape Growers reporting process by Idaho wineries. The Association on September 12, the attendees Industry will be asking if wineries can make a narrowed the issues generated previously to copy of TTB reporting and submit it to ABC, five key items. These items will be the focus of rather than duplicating reports and information. the forum to be held in November. Issues to address include: (1) The 35,000 gallon cap. (2) MONTANA The Retailers Inventory Tracking System (RITS) filed with the State Comptroller’s Office. (3) Direct Shipping: A new law will take effect on Wider use of Festival Permits. (4) Funding for October 1 that allows consumers to order wine wine and grape marketing and tourism directly from licensed wineries. Previous state development. (5) College winery permit. law required consumers to obtain a connoisseur’s license if they wanted to order Marketing & Promotions: The Smartphone directly from a winery. Now anyone will be Mobile App, TX WinePassport, sponsored by the allowed to purchase directly from wineries that Texas Wine and Grape Growers Foundation, are registered with the state and have a direct Inc., was fully launched for iPhones and shipping endorsement. Androids on September 23, 2013. The mobile app lists all TWGGA winery members and provides enhanced listing for paid participants. (Family Winemakers of California) There is also a Passport program for consumers Regulation: The Senate Budget Subcommittee to “check in” while visiting wineries and collect on Health held an informational hearing this points for rewards. month on Public Health Protections in a Free Market. One of the topics was minimum pricing ROCKY MOUNTAIN of alcohol. Dr. Thomas Greenfield from Alcohol Alaska, Arizona, Colorado, Hawaii, Idaho, Montana, Nevada, , Utah Research Group suggested that the British Columbia model should be pursued so that IDAHO prices on cheap alcohol be raised to lessen (The Commission) external impacts. The question of whether Labeling & Advertising: The Grape and Wine minimum pricing contained a tax component Industry has approved a second piece of for public health program support was asked. Legislation to be presented during the 2014

Legislative Session. This Legislation would allow Agricultural Labor: A small agriculture and a winery to place private labels of restaurants, business coalition, including Family hotels, individuals, and not for profit Winemakers, was successful in protecting J-1 organizations onto bottles or containers of visa programs for existing recruiting produced by that winery, if requested by organizations with a series of late amendments those customers. Current statute does not to anti-human trafficking bill. SB 516 is on the authorize private labeling. Governor’s desk.

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Regulation: Legislative efforts to reform the state’s chemical exposure warning law – Prop. (Oregon Winegrowers Association) 65 – have been shelved for the year. The Marketing & Promotions: Sept. 10 until Nov. Governor’s office announced that no consensus 20 Alaska Airlines passengers who fly in and out was achievable on litigation or warning sign of participating OR airports, or Walla Walla, can language reforms. California alcohol beverage check one case of as luggage for producers and distributors subsequently met free on their returning domestic flight. Alaska with Cal-EPA to pursue some chances to sign Airlines passengers will also receive a requirements and retailer sign maintenance complimentary tasting at participating wineries responsibility. Those talks will continue. AB when they show their boarding pass. More than 227, which is a narrower lawsuit abuse bill 220 Oregon wineries are participating in this supported by FWC, is on the Governor’s desk. promotion. Oregon Wines Fly Free is jointly Marketing & Promotions: AB 1116 (Hall), which sponsored by Alaska Airlines, Travel Oregon and extends the current private event legislation the Oregon Wine Board. The two-month another four years and allows events to be held promotional period applies to departures from in hotels and supported by FWC, is on the four OR airports - Medford, Redmond, Eugene Governor’s desk. AB 636, a narrow extension of and Portland - as well as Walla Walla, Wash. the bottle signing bill for on-sale retail locations, Regulation: The newly-appointed Chair of the was signed into law September 23. The bill was OLCC Rob Patridge is convening an OLCC Retail supported by FWC and the Wine Institute. Innovation Group to develop proposals for Water Rights: The State Water Resources modernizing alcohol distribution and sales in the Control Board is set to adopt emergency state. The intent is to head off a broader liquor water fee regulations that will raise waste privatization effort at the ballot in 2014. The 13- discharge requirement fees across the board member group includes one seat for the Oregon by 27%. Water enforcement and quality wine industry. Others representatives include: programs are growing and the Legislature agents; large manufacturer (spirits); small continues to create a fund deficit by manufacturers (spirits); on-premise; wholesale withdrawing general fund support, which distributor; wholesale broker; beer shifts the burden to water users. California manufacturer; moderation; local city will take the lead on hydraulic fracturing government; local county government; large off regulation with the Governor’s signature on premise; and small off premise. The group will SB 4. Oil and gas well treatments will require work on an aggressive timeline with six group a permit and full environmental review. meetings between October 4 and December 13 to produce a legislative proposal for the short Elections: The Senate District 26 special election 2014 Legislative Session, beginning in February. was won this month by Assembly member Holly Mitchell. It helps maintain the Democrats 2/3rds Research & Grants: Fermentation Sciences super majority in the Senate. The election will Funding: As the 2013 Legislative Session drew trigger another special election in Assembly to a close, legislators approved $1.2 million per District 54. Two more special elections in biennium in funding for Oregon State Assembly District 45 and 54 are also being held University's Ag Experiment Station and in the Assembly on September 24. The Assembly Fermentation Sciences and Value Added does not have a current super majority. Program. A portion of the money will go to support and enology research projects in addition to projects supporting beer, cheese, breads and distilled spirits. OSU will be the first university in the nations with a working research winery, brewery and distillery.

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