Litigation concerning the direct shipment of wine has garnered a significant amount of attention in the years since the United States Supreme Court’s seminal decision in Granholm v. Heald. Generally speaking, these disputes have played out in the federal courts, far removed from the typical family winery.
Although direct shipment will remain an important issue both for wineries and for the attorneys who represent them—indeed, it is one of the topics covered in Stoel Rives’ Law of Wine treatise—a winery’s long-term financial success may be just as likely to hinge on the outcomes of lower-profile controversies litigated in front of local government bodies. Depending on the state and locality, these local governments may have the power to prohibit the construction of new tasting rooms or restaurants—a growing source of revenue for many wineries1 —or to regulate the number and character of marketing events held by a winery.
County governments, in particular, have the power to affect wineries’ operations by relaxing or tightening permitting requirements. A few recent examples from California illustrate the continuing importance of these local laws and regulations. This is particularly true in areas where the wine industry has taken root relatively recently and where wineries may depend heavily on revenue from events:
- The Board of Supervisors in San Joaquin County—a burgeoning wine region that contains most of the Lodi AVA—recently considered enacting a moratorium that would have prohibited new marketing events.2 The Board delayed its decision after local winery owners, farmers and business leaders formed a task force to draft an alternative proposal.3
- On the other side of the county line, Sacramento County—home to parts of the Lodi AVA and the Clarksburg AVA—adopted its first winery ordinance in late 2011, granting wineries permission to open small tasting rooms and eliminating certain existing requirements for use permits.4
- Santa Clara County recently adopted a new winery ordinance that imposes a sliding scale of fees depending on the size and type of event.5 Santa Barbara County is soliciting public input regarding modification of its wine ordinance with a particular focus on the number and type of permissible events.
Regardless of their outcome, these local debates ought to remind all stakeholders in the wine industry to guard their interests at the local level, even as they watch high-profile federal litigation with interest.
1 See “2012 Tasting Room Survey Report,” Wine Business Monthly, May 2012.