WWI News

All wineries with 10 or more employees shipping wine direct to California consumers, including Washington wineries, must comply with the health warning statements required under California’s Safe Drinking Water and Toxic Enforcement Act of 1986, known as Proposition 65 (“Prop 65”). As of August 30, 2018, the new “safe harbor” warning regulations are in effect, and the previous 2008 warning regulations are no longer available as a safe harbor compliance option.

Specifically, the new regulations require a Prop. 65 Alcohol Beverage Warning to be displayed on winery websites before any sale to a California resident, on catalogs sent to a California address, and on or in packages containing direct-to-consumer orders sent to a California address.

(NOTE: if a winery is a party to a court-approved settlement known as a consent judgment, it can continue to use the warning language provided for in that consent judgment, but only for the specific products covered in the consent judgment. Additionally, if the winery opted into the 2014 Proposition 65 Consent Judgment negotiated by the Wine Institute, it may continue to use the existing Prop. 65 alcohol warning).

The new requirements that apply to wine sold direct to California consumers are as follows:

• Warning statement:WARNING: Drinking distilled spirits, beer, coolers, wine and other alcoholic beverages may increase cancer risk, and, during pregnancy, can cause birth defects. For more information go to www.P65Warnings.ca.gov/alcohol.
• The word “WARNING” must be in all capital letters and bold print.
• The warning statement font size must be at least equal to the largest font used for other consumer information on the product. In no case shall a warning appear in a type size smaller than 8 point font.
• The warning statement should be placed on or in the wine shipping container or delivery package.
• The warning statement must be readable and conspicuous to the recipient prior to consumption of the wine.
• If the wine packaging contains BPA, the new Point of Sale BPA Warning must also be included on the website and catalogs, and the new Point of Display BPA Warning must be included in or on direct-to-consumer shipments to California addresses.

For general guidance on the new Prop 65 rules, see this legal alert, and if you would like to speak to a Stoel Rives attorney for specific advice, contact Melissa Jones at (916) 319-4649 or melissa.jones@stoel.com or Stephanie Meier at (206) 386-7546 or stephanie.meier@stoel.com.

In 2015 WWI worked with the Washington State Department of Licensing and the Washington State Patrol to come to an agreement that winery owners and their employees fall under the federal definition of “farmer” and therefore do not need to have a Commercial Drivers License while hauling their own grapes from vineyard to winery. Some important qualifications to this agreement are that wineries must still obey all traffic laws including not surpassing the 26,000 lbs maximum limit allowed as well as being a safe driver at all times.

If you are a current WWI member and would like us to send you the documentation we’ve created that will help you understand your rights under this exemption and how to talk to a State Trooper or other type of officer if pulled over, please send us an email at josh@wwi.wine.

UPDATE: (Thanks to the hard work of our national Association WineAmerica, TTB has agreed to extend the “alternate process” until 12/31/2019) As we reported in our March newsletter as well as direct email communication, the TTB released a notice (known as a circular) on March 2nd announcing that they are interpreting the new tax code in a way that prohibits bonded wine cellars (BWC’s) from taking tax credits, meaning all untaxpaid wine removed from a BWC will be taxed at the full rate. A winery that uses a BWC will now be forced to either cease usage of a BWC, or pay the full tax rate on their wine. In order for this to be “less burdensome” on small wineries, the TTB is allowing the credit to be applied to wine stored in a BWC until June 30, 2018 through an alternate paperwork process. As a reminder, The alternate process for claiming tax credits for wine currently in a bonded wine cellar (BWC) is done by the winery, not the BWC. The TTB is, for a limited time, allowing producing wineries to tax determine and tax pay, upon removal from bond, wine of their production stored untaxpaid at a bonded wine cellar (BWC), as if it were removed from the producing winery’s bonded premises. The full ruling, including how to utilize the alternative process for wineries, can be found by clicking on this link: https://www.ttb.gov/industry_circulars/archives/18-1.shtml

WWI is working with our national trade association WineAmerica on a myriad of solutions that range from TTB reversing their decision, to a short-term fix through extension of the “alternate process” for BWC’s to claim the tax credit for a winery, with a long-term fix through legislation the ultimate goal.