[r63] Making wine isn't all fun and grapes

Posted by: Zach Weismiller  | Friday, August 23, 2013

We may not be in session every day, but there is still work that gets done in the Legislature year-round. Every year after we wrap up session, the Legislative Council meets to assign topics for study during the interim. These committees are an integral part of the legislative process as they allow us to go into more detailed discussion than time allows for during session.

During session, the passage of House Enrolled Act 1017 assigned to a summer study committee the issue of allowing farm wineries to sell wine directly to retailers.  This was the topic on our agenda Wednesday as I attended the first meeting of the Interim Study Committee on Economic Development. In June, I was appointed to serve as a co-chairman on this committee, a role which I was honored to take on.

Before discussing the testimony we heard during this meeting, I want to first give a bit of background. When most people think of Indiana, they probably don’t think ‘wine.’ Yet, our state has over 60 wineries, contributing $70 million annually to our economy.  We even have our own state wine, the traminette. 

In 1971, Indiana passed the Farm Winery Act. This act allowed wineries to become producers, retailer and distributors all in one. In 2006, the General Assembly passed a law prohibiting farm wineries from self-distributing unless they obtained a micro-wine wholesaler permit. 

Representatives from the Indiana Winery and Vineyard Association as well as several wineries from across the state were in attendance this week to urge the Legislature to approve a partial re-instatement of a farm winery’s ability to sell directly to wine retailers and restaurants. It is their belief that this would help the industry, grow the economy and create more Hoosier jobs. They argued that despite the wholesaler permit’s $100 fee to the State, the actual end cost for a farm winery to get a micro-wholesaler permit is about $3,000- $4,000. For a small production winery, this is a very large expense, and is cost prohibitive for a small number of cases.

They also explained that unless a winery sells a certain number of cases each year, it is not cost effective for them for a distributor to handle their products.  Allowing them to self-distribute their wines to local grocery stores and restaurants would allow them to grow their business to a point that a micro-wholesaler permit or working through a statewide wholesaler becomes feasible. Farm wineries already pay the excises taxes on their products to the State, so tax collections would not be impacted by allowing them to sell directly to retailers. 

Representatives from the Indiana wine and spirit wholesalers were also present to testify from their standpoint. By utilizing a wholesaler, they believe it ensures that wineries can only sell to appropriate retailers. Without the wholesaler, they fear the product could end up in the wrong hands. To them, they are performing an important duty because after all, the product is alcohol. They are able to make sure that not only does the retailer have a license on the wall but that they also have good moral character. The main fear though of wholesalers is that they might lose sales from some of the out of state wineries that use current wholesalers to distribute their products.

This week’s meeting was not only informative but also extremely interesting as we got to hear about not only the financial aspect of farm winery ownership but also the process of making wine and the history of this industry in Indiana. I want to thank everyone who took the time out of their day to sit down with us for a few hours and help us make good, informed decisions. Testimony such as that which we received on Wednesday allows us to craft good public policy and keeps us truly connected to Hoosier citizens.

This committee will have five additional meetings to explore the 20 subjects which were assigned to us. Once these meetings are completed, we will report a summary of our findings and vote on a recommendation for the upcoming legislative session. The next topic up for discussion will be ways in which we can foster entrepreneurship, attract new businesses and promote gainful employment opportunities in the rural areas of Indiana. Our next meeting is scheduled for September 4 so stay tuned!