September 26, 2013
Originally published in the Ukiah Daily Journal on September 26, 2013 by John Cesano
Because many folks in the wine industry and my friends that work at our area’s wineries read this column, this week I am writing to let them know about two things the California Alcoholic Beverage Control – CA ABC – would like them to know about.
It wasn’t that long ago that Sutter Home winery in Napa Valley first had to exclude Californians from entering their Build a Better Burger contest, and then had to move the contest out of the state completely to avoid breaking the laws that existed regarding what wineries could give away.
I wrote about the contest and the laws years ago, and suggested at the time that Sutter Home’s parent company Trinchero Family Estates use some of their substantial political power to see our legislature change the laws regarding contests for wineries.
Today, Californians can Build a Better Burger, and they can do so at Sutter Home’s winery location here in California.
Wineries may now have contests offering participants the opportunity to receive or compete for gifts, prizes, gratuities, or other things of value as determined by skill, knowledge, or ability rather than upon random selection. Skill, knowledge, or ability does not include the consumption or use of alcoholic beverages.
Similarly, wineries can hold sweepstakes whereas a procedure, activity, or event for the distribution of anything of value by lot, chance, or random selection where the odds of winning a prize are equal for each entry. Again, consumption or use of alcohol may not be part of the sweepstakes.
The legislature doesn’t make simple laws for the CA ABC to enforce, so read all the rules in the industry advisory at http://www.abc.ca.gov/index.html.
Alcohol cannot be the prize and use of alcohol cannot be part of an entry. There will be no “Win a case of wine” or “One entry with each bottle purchased.”
That said, a winery can give away olive oil, or pottery, or logo branded t-shirt through a Facebook contest; a winery could give away a boxed gift pack of organic herbs in a drawing of people who sign up for a monthly newsletter; or a winery could give away a Christmas Tree or holiday herb wreath to the person who sends in the best holiday food recipe.
There are many exciting opportunities to increase your marketing reach, and engage in fun new ways, that were once prohibited, with your customers.
Sometimes the cause is good, sometimes almost frivolous. They come in. Perhaps they call. Maybe they email. Sometimes, they do all three: “Hi, I’m calling because you were out when I visited, and I haven’t received a response to my email, but …,” they’re asking for wine. Relentlessly, they ask.
For small production winery tasting rooms like the one I work at, the requests for free wine can easily exceed production.
This year, representatives from the CA ABC, attended winery conferences to put the word out that while anyone can ask a winery for a donation of wine, wineries may only make a donation to a non-profit with a valid liquor license.
To keep from running afoul of state law, a winery should collect copies of both the letter from the Internal Revenue Service determining non-profit status with a tax identification number, and a CA ABC daily license authorization.
Whether charging an event ticket price where wine is poured, or selling wine, or auctioning wine, each non-profit organization must fill out a form ABC-221, and send the application at least three weeks before the event along with a nominal required fee to the closest CA ABC district office. In time, the CA ABC will sign, date, and stamp the application, and at that point it becomes an authorization.
When approaching a winery tasting room asking for a donation, it is best to have copies of both papers in hand. Again, the CA ABC does not make laws, but they enforce them and their recent public sharing of the requirements for tasting rooms when making wine donations may very well be the first step toward enforcement, with penalties against a wineries license for infractions.
To be clear, David Bailey who heads up the Santa Rosa district office of the CA ABC says that a winery making a wine contribution to anyone other than a non-profit with an IRS determination letter, holding a CA ABC form ABC-221 daily license authorization is, “exceeding their license privileges,” and subject to both, “suspension and a fine.” He said the penalty can vary, but the suspension could likely be 15 days and the fine $10,000.
If you are seeking a donation, be aware, we will not put our winery license in jeopardy, so spend a nominal fee and do things legally.
There are plenty of folks who we donate to, they have their paperwork in order and are a joy to work with. There are a couple of folks this year that I wish we could have donated to that did not have any paperwork at all and they could easily get their license, so I hope they do so next year. Also, working for a small winery tasting room, I must confess that the law actually helped us reduce the number of requests to consider.