Compliance should fit right in here with all the fart jokes and stuff, right?
Anyhow, thought this might be a good place to start one of these Wiki’s, hopefully where we can all put tips on the terrible stuff that has happened to us in dealing with the gov’t in hopes that our brethren don’t fall into the same traps. I’ll start:
“So you want to start your own winery”
I’m going to cover the most typical start-up winery in this post, a 17/20. Perhaps at some point we can go back and cover a type 02 for either your own joint or an AP (quite a bit more complicated). For brevity, I will assume that the first thing you did after deciding you wanted to bottle your own wine but before reading this post is look into it with the ABC and get the proper wholesale license as well as get your stuff done with the TTB for the 17/20. This will relate more to how you actually produce your wine with another winery.
You cannot “produce” wine. You must have a bonded premises do this for you, typically a custom crush facility. A type 17/20 is not licensed to produce wine. It’s important to remember that, as far as the federal government is concerned, this is not your wine, but that facility’s. They produce it, they age it, they bottle it, they sell it to you (the wholesaler). The term “produce” has specific meaning to them in that it is a distinction we make in our monthly reports, when juice turns into wine. Everyone handles this a little bit differently, but it is an important note if you want to use “Produced and Bottled by” on your label. In that case, there are very specific rules about what you do if you crush one place, age in another and bottle elsewhere. Every winery will differ slightly on how tightly they follow the rules, but technically, you are NOT ALLOWED to (physically) work on your wine if you aren’t an employee of the bonded premises…if you had your own bond in an AP setup, or if you work in a place and make some wine on the side, you would be. I know some places that follow this rule as airtight, and others that don’t give a lick. Just be aware of it.
Trade names and the Basic Permit. Think of it this way: the government wants your bonded facility to prove that they are who they say they are. You can’t submit a COLA (label approval) with any old name on it and get it approved. The steps are this:
a. you figure out your brand name
b. do a trademark search and decide whether there is a reasonable chance that you are not infringing on anyone’s mark (or don’t, whatever - I would suggest to you that an ounce of prevention is worth 25 lbs of cure in this case, though. I know a guy who wanted a nice NV Cab label with a vineyard-scape in the background named after himself. The problem? His name was Joseph…needless to say, the Phelps folks weren’t thrilled)
c. have the bonded premises submit a dba to their County Clerk stating that they are operating as you (their county - not your home, not where your business is located, not where the vineyard is, but where they operate and bottle). Not you personally, not your ABC Corp, but your brand name. For example, Napa Wine Company operating as XTZ Cellars, even if the LLC that is behind XTZ is called 123 Partners, LLC. The brand name (as it appears on the label) is the key.
d. let that run in the paper (hopefully no one objects)
e. once it has run, have the bonded premises add your trade name to their Basic Permit (there is something called a letterhead exemption, which I highly recommend - rather than amending the permit and tracking down a lot of information, this allows one to simply write a letter on company letterhead to add or delete trade/bottling names). The order is important here…the feds will want to see the proof from the Clerk that this fictitious name statement ran for the allotted time.
f. have the premises submit for a COLA
g. when that gets approved, you’re in business
2a. This is not a quick process. I suggest you start as early as possible or you will be kicking yourself later. I can 100% absolutely guarantee that. Just doing the dba, basic permit amendment, and COLA will easily take 6 weeks at the very very least.
Shiners & You. If you don’t start this in time, you will probably have to bottle shiners, as no one interested in keeping their license will be particularly interested in bottling a wine without a COLA. The bonded premises can apply for a generic COLA to do this (but still needs a COLA!! Even for shiners!!) and then, when all the other shit’s in order, apply for the real COLA to label your wine. One important note, though: if you bottle shiners, you MUST store the wines inside a bonded space. This may be easy or it may cause you some headaches. Not every warehouse, or every part of every warehouse, is bonded. It is an imaginary line, but, if someone is interested in keeping their permit, an important one. This also means that they may raise some ruckus with you if you try to grab bottles to share with your friends before they are labeled. There is an area for that on the 702, but it is one that no one likes to put any numbers in, because it makes the eyebrows raise at the TTB…that bottle represents a wee bit of tax revenue that went down the drain for them: they begin to think, perhpaps we should go down there and make sure these guys are taking care of business…
There are plenty of services that help one manage compliance. Compli, Compliance Connection, I want to say there was one called Beer & Wine Services, etc.
If you have a family lawyer, they can usually handle it fairly easily. One must either be familiar with winery compliance or speak general legalese and be able to think like a fed, so lawyers can often do a nice job with it.
Personally, I think it can all be done oneself. They key is starting early…with everything. You don’t want to be worrying about your stupid fingerprinting or background check or whatever when you should be out sampling grapes. It’s like working with a contractor (or at least, back when they had plenty of work)…take his estimate and add 25% and take his timescale and add 6 months.
The ABC is actually quite helpful in getting you through their process (at least here in CA). You can walk into their offices in Santa Rosa, for example, and they are pretty adept at walking you through. The app, the postings at the business address, etc. The fed process is not actually something I have been through (I don’t have my own label) but I’d imagine it’s reasonably complex for 17/20s and very much so for type 02s.
Once those are in place, really, your CC facility should have a good grasp on all this other nonsense. I think the Wiki is cool so you can at least be keeping them on time…I know there have been cases when the CC facilities themselves neglect to get everything in place, posted, filed, and so on in time, screwing their clients over. If you don’t give them a brand name or label name until 2 weeks before you want to bottle, well that’s your fault.
Actually, I don’t think it’s really that tough here. You just need to know how to play the game, and the time you miss one of the rules is usually your first time. In typical government fashion, if you don’t follow their steps, they will let you skip to step 4 from 2, hold your application or whatever forever, and then send you a letter letting you know that you screwed the pooch without warning.
To understand the government, you must think like the government. I think Sun Tzu said that .
I’ve heard that the TTB is considering a rule that would require the “most specific” AVA be used on the label. For example, if you’re bottling Pinot that’s from Green Valley, then you’d have to list Green Valley on the label and you couldn’t list Russian River Valley or Sonoma Coast (even tho Green Valley is in both).
Seems like a terrible rule. For one thing, you might not be able to bottle shiners based on a Cola approved label that uses a large/generic AVA.
Anyone know the details on this…and if it’s likely to pass?
Nate- nice post, but I gotta call you out on the sugestion folks should use their "family lawyer’ for wine law issues. This stuff is pretty specialized, and I believe clients are served best when I refer matters outside my practice area to those who handle it (like criminal stuff- i wouldnt know where to start).
I am stunned by those lawyers who think they can handle wine law (the romance seduces them is my guess) just because they believe they have a palate, they can handle wine law. Maybe I’m a bit provincial- or overly sensitive- (not as sensitive as Landreth however!) but the relatve handful of us whose legal careers are largely devoted to representing vineyards and wineries see this as an area fraught with peril (and excessive costs) for the uninitiated.
Beer and Wine Services is an excellent referral however (see- still a lot of love for you). It is owned and operated by Andrea Anderson (707) 483-6510- who can do basic stuff in her sleep. She has downsized her staffing, but is on top of all complaince from licensing/bondng to compliance reporting. There are others who do this, but I routinely refer to Andrea without hesitation for basic licensing stuff- but I’d put her 30 plus years of compliance up against a lot of lawyers.
Nate and John,
Aren’t there some other rather esoteric rules about getting and being a 17/20?
Such as a requirement that the entity so designated make a wholesale sale every 45 days?
Things like that.
Best, Jim
john- you’re at least as sensitive as Tex. Don’t sell yourself short.
are you implying that all lawyers are not supermen such as yourself? I am shocked.
I was basing this recommendation on some experiences I have had with clients who have gone through this process and used their lawyers. Most were local, so perhaps firms here in Napa have a better understanding than the typical firm (their lawyers were from Coombs & Dunlap; Peatman, Dickerson & Fogarty, etc). I always thought that perhaps they could have done it for less elsewhere, but, hey, who am I to say? As long as they got it done.
so you are probably right. seek out the pros, folks.
Jim - I do not know the specifics of the wholesale license. That seems like a strange stipulation, but, honestly, a good portion of the regulations seem a little strange and nonsensical to me.
Thanks for starting the thread, Nate. With enough responses, maybe Compliance can become a forum in its own right.
I am just about finished going through the process for an 02 license. (I’ll also be getting wholesale privileges, but I don’t know whether that means I’ll have an 02/17/20, or what.) I struggled with the decision to do it myself or to hire help. In the end, and not least because my daughter came in the middle of everything, I am extremely happy to have shelled out some cash for professional help. Elaine Wellesley, of Wellesley on Wine, has been a tremendous help.
Nate- those are both top-notch firms who are exactly what I am referring to when I mention attys who practice in this area of the law. That is exactly the kind of firm (and there are certainly plenty of others) who fit this bill.
And I dont sell myself short- I’m a tremendous slouch.
Jim- yes there are obscure rules- I constantly learn new ones and ask myself “what in the hell were they thinking”?
The following is not legal advice, nor an opinion, and is utterly unreliable babble upon which no reasonable or unreasonable person should ever rely upon under any circumstance, and merely a broad generalization based on some loose talk at a bar one night:
The 45 day rule is to ensure if you have wine for sale that at least some of it is sold to wholesalers and not just to consumers- they dont want folks taking advantage (thier view) of the 17/20 by refusing to sell to wholesalers, so they have this rule. If you are sold out of wine, they are not concerned, but if there is wine, they want to see at least a token sale to wholesalers every 45 days. YMMV- you should, by all means, consult with someone who will charge you an arm and a leg because they are a self-professed wine lawyer before taking any action- including getting out of bed in the morning.
I thought with the “don’t sell yourself short” comment from Nate, amid a discussion of legal issues, who better to reference than Judge Elihu Smails (and Ty Webb).
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Man, you don’t want to know about setting something up in France… [suicide.gif]
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