Winery And Vineyard Compliance And How To Approach It


We were happy to do an interview with Pacifica Commercial Realty regarding winery and vineyard compliance.


Originally published July 2014.

As wine industry compliance consultants, Cyndee Smolik and Nancy Headland of Uncorked Compliance have over nine years of combined experience assisting their winery clients through the maze of mandated licensing and reporting requirements. Along with their fellow staff members, they provide a one-stop source for a host of alcohol compliance services and hands-on management throughout the process.

What does it mean for a winery to be in compliance?

In the wine industry, “compliance” means conforming to and following the rules of the various federal, state and local-level wine laws and regulations. These include:

  • Licenses and permits to produce and sell wine
  • Wine shipping licenses for each destination state
  • Keeping accurate, up-to-date records of all winery-related activities and filing compliance reports monthly, quarterly or yearly, depending on the agency

What are some of the agencies a winery deals with in gaining and maintaining compliance?

Local: County Planning and Building Commission for land use permit

State of California: State Board of Equalization (BOE)

  • Resale Permit registration
  • State Excise Tax registration

Department of Food & Agriculture (CDFA)

  • Grants Processor License for wineries and grape wholesalers. California law provides that no winery can legally buy or contract for grapes unless it has a valid processor’s license. The CDFA is a state agency that protects the growers if they have an issue with a buyer such as non-payment. If the winery has its own vineyard it’s not necessary to have this license. But it’s required if they’re going to buy anybody else’s grapes.

Department of Alcoholic Beverage Control (ABC)

  • Grants liquor licenses for wineries and importers and wholesalers, as well as off-site tasting rooms

Federal agencies:

Department of the Treasury, Alcohol & Tobacco Tax & Trade Bureau (TTB)

  • Grants basic permitting to initiate operations in the wine industry based on the type of business/activity you wish to perform
  • Wine label submission and approval. Once approved, you’ll receive your federal Certificate of Label Approval (COLA)
  • Federal Excise Tax registration

Food & Drug Administration (FDA)

  • The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 states that wineries must register with the FDA to protect against bioterrorism threats. If there’s ever a bioterrorist attack involving tainted wine, they need to be able to find the person who made it and everything that went into that bottle.

How does a compliance consulting firm help a winery operation?

We compare our services to that of a CPA in that anyone can prepare their own taxes, but most prefer to work with the person who knows all the ins and outs of their unique business processes. Since we deal directly with the federal and state agencies required to gain compliance from the various alcohol agencies, we know who to contact, what forms need to be filled out, what order they go in and how the different agencies want them filled out.

What are the initial steps in achieving compliance to produce and sell alcohol?

You first need to obtain your land use permit from the county Planning and Building Commission. Once you have that permission secured, you can proceed to gaining the necessary licensing to produce and sell alcohol from the federal and state agencies.

At our initial meeting, we provide clients with a checklist of documents needed to secure their new winery and vineyard compliance licensing. The amount and type of documentation needed is based on how the business is structured and requires full disclosure on the part of the winery’s principals. If an individual owns the winery, it’s a fairly easy process as far as gathering everything we need including bank statements, drivers license and mother’s maiden name. If owned by a company or corporation it becomes more complicated because not only does each individual who owns a stake in the winery need to provide their personal information, but we also need to gather all relevant business documents including stock certificates, corporate paperwork and even meeting minutes.

Since alcohol is regarded as a serious drug by both state and federal authorities, it is highly regulated and monitored. To obtain licensing, your life is pretty much an open book to us including any criminal history. Fingerprinting and passing a thorough background check from the Department of Justice and the Federal Bureau of Investigation are also required.

Once we have the necessary documents, we populate all the forms for all the agencies at one time. Then we sit down with our clients and review the forms so they understand what they’re signing. We submit those forms and any back-up documentation to the agencies and follow them through all the way until the license issues. Ultimately, most people are approved and receive their new winery licensing within four to six months.

What are the costs involved for new winery licensing?

For a new winery it will cost approximately $3,000 minimum to start (our agency fees included). It depends on the company structure, how many people are involved in the winery, how many shareholders there are, etc., because they each have to be finger printed and qualified with the state to receive an alcohol license for the winery and vineyard compliance.

Are there additional compliance issues that need to be addressed before I can bottle and sell my wine?

Yes, once you’re completely licensed and ready to make wine you’ll need to get TTB approval for each wine label. Wine bottle labels are closely regulated by federal and state laws and require more information than just the type of wine and producer. Though requirements can vary from state to state, there are mandatory elements to a wine label including, but not limited to:

  • Brand name of the wine
  • Class and type of wine (varietal)
  • Alcohol content.
  • Bottler’s name and address (the location where the wine was bottled)
  • Net contents
  • Sulfite declaration
  • Health warning statement

There are additional requirements, as well as optional language, that can be used on a wine label. We employ a checklist of rules and requirements to use as a guideline and make sure those are all there before submitting the label to the TTB for approval. It typically takes about a month to get label approval.

Timing is the biggest challenge throughout this process because you cannot print the label or bottle your wine until you receive TTB approval. In the meantime, the bottling truck needs to be scheduled and you’ll want to have all your bottling supplies on hand. You also need to schedule with your printer to have the label produced once approval is granted. If the label is not approved on time, everything else has to be put on hold.

What are the compliance requirements for a wine club?

Your California alcohol license allows you to make sales within the state. Your bookkeeper will handle remitting your California sales tax to the state. However, if you’re selling outside of California there’s additional licensing for each state that allows direct-to-consumer shipments. Each state is different as far as the type of licensing, what the requirements are, what the fees are, what you’re allowed to ship and how often; we can help the client obtain those licenses. The ongoing compliance associated with those licenses is reporting the sales. Depending on the state, reporting is done monthly, quarterly and/or annually.

Wholesale/Out-of-State Distributor is a whole different set of licensing and reporting.

What additional information does a winery need to know about compliance?

People are often unaware of the compliance process. They assume they can just buy a winery and start producing and selling wine. Some think they can buy an existing winery and simply transfer all the existing licenses to the new operation or they think they’ll just buy all the existing licenses from the seller. But in reality, it doesn’t work like that. You can transfer the TTB and the ABC but all the out of state licensing doesn’t transfer unless you buy the entire business. Even then, you still have to update all the new ownership information.

We also like to explain to our clients that when they decide to buy a winery, they are taking responsibility for everything that happens in that business. From the minute grapes come in the door until the day they pay their taxes, they have to track everything. That’s a service we’ll either train them on, or we’ll sit down with them once a quarter and gather all the required information including: How many grapes did you bring in? How much wine did you make? How much did you bottle? How much did you spill? Because it becomes a tax liability with the TTB the minute they produce wine. So, until the excise taxes are paid, they have to track everything that happens.

Depending on the agency, monthly, quarterly and/or yearly reporting is part of remaining in compliance. Meticulous record keeping is highly recommended and will make staying in compliance much easier for the winery owner.

California Alcoholic Beverage Control Website