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How to start a winery
Apr 26, 2016
(TheCalifornian) - The questions get asked regularly: “I have several acres of vineyards in my front yard, what do I need to do to become a winery”? Or “I really want to start my own wine brand. How do I do this?” The answer to both is: “It depends!”
What is your vision? Do you dream of having an estate winery where you grow grapes and make wine on the same property?
Or becoming an expert in growing wine grapes (viticulture) and/or making wine (enology)?
Perhaps you envision yourself designing a very cool wine label and engaging others to grow the grapes and make the wine for you?
Do you see yourself having a tasting room and an extensive distribution system or simply solving your holiday gift giving dilemma?
Or do you like a lot of different wines and want to open a wine bar?
There are many options in the wine business.
First and foremost, the wine industry is a heavily regulated industry (and sometimes these regulations are antiquated and make absolutely no sense, sort of like playing a board game with a lot of arbitrary rules). The structure of your wine business will determine what sort of permits and licenses you need to obtain and will greatly influence how much ongoing administrative recordkeeping and reporting you are going to be required to do.
The answers to the questions above identify what type of license you need, how much work will be involved in obtaining the licenses, and what you will be able to do once you are licensed.
License types
The most common types of “winery” licenses and the primary differences in the types of activities that each is allowed to engage in are:
1) Bonded Winery (California Alcoholic Beverage Control [ABC] 02 license)
- a. Process wine grapes (grown or purchased)
- b. Make, bottle, label and sell (wholesale and retail) wine for selves and others
- c. Operate tasting rooms at the winery and one additional location
- d. Participate in certain types of tasting events (like the MCVGA’s Winemakers’ Celebration on May 7)
- e. Refill growler-style containers at the winery (but not at a secondary tasting room location)
- f. A bonded winery needs to obtain both federal and state licenses, must post a bond with the Alcohol Firearms and Tobacco Tax and Trade Bureau (federal entity affectionately referred to as the TTB), must do federal and state reporting on a periodic basis, and must pay federal and state excise tax on the wine that they intend to sell to anyone other than another bonded winery. They must also pay sales tax on any wine that is sold retail.
2) Wine Wholesaler/Retailer (California ABC 17/20 licenses)
- a. Purchase wine that has had the federal and state excise tax paid on it
- b. Sell wine at either the wholesale or retail level
- c. Participate in certain types of tasting events in a restricted fashion
- d. The 17/20 can make arrangements with the bottling winery to have their own (custom) label applied to the bottle. A wine wholesaler/retailer must register with the TTB and must maintain licenses with California ABC. They must pay sales tax on any wine that is sold retail.
3) Wine Bar (California ABC 42 license)
- a. Buy wine and beer at wholesale or retail, for which the federal and state excise tax has been paid
- b. Sell wine for consumption on the premise for which the license has been issued.
- c. A wine bar must keep careful records of quantities and types of wine purchased and sold. They must pay sales tax on their retail sales. In general, minors are not permitted on the premises of a wine bar.
4. Wine and Beer Store (California ABC 20 license)
- a. Buy wine and beer at wholesale or retail, for which the federal and state excise tax has been paid, in sealed containers
- b. Sell it for consumption off of the licensed premises.
- c. In most cases, a wine and beer store may not sell opened containers of wine or beer or sell them for consumption on the premises.
It is worth noting that all of these licenses are issued on a location-specific basis rather than being personally assigned to a business no matter the location. If you want to move or conduct activities elsewhere, then you must submit revisions to both TTB and ABC for approval before you stray from the currently permitted location.
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