Vintner's 3rd Wine BID Fails

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By Stephen Pepe of Clos Pepe Vineyards

The SB Vintners have been working on a Wine Business Improvement District BID for two years.

Their first proposal was a 2% tax on all Direct to Consumer (DTC) wine sales which would include wine clubs, tasting rooms, wine merchandise sales, food sales, winemaker’s dinners, and weddings. The 2% tax would not apply to wholesale wine sales to grocery stores, wine shops, hotels, and restaurants (the Trade), despite the law's requirement that the funds raised be used for the “direct benefit” of those paying the tax. Wholesale sales to the Trade are mostly made by the large wineries. The funds raised would be used to promote SB Wines to consumers and sales to the Trade. In other words, the small mom and pop 10,000 case wineries would be paying for the large wineries marketing costs to the Trade.

This initial tax proposal was not met with a lot of enthusiasm. The Vintners to make it more appealing reduced the 2% to 1% saying the county had provided the Vintners with the wrong tax information and only 1% was needed.

This second proposal of 1% received push back from wine club members who said you tell us we are “special” and part of your wine “family” so why are we paying a 1% tax the same as someone who is not a wine club member?

The Vintners then conducted a “survey” which asked do you favor 1% on all wine sales or 1 1⁄2% on tasting room sales which would include food, wine merchandise, etc. sales but not Wine Club or sales to the Trade.

Noticeably, None of the Above was NOT a survey choice. Allegedly 60% voted for the 1 1⁄2% tax on tasting room sales. The Vintners have refused to report how many wineries responded. The Vintners then scheduled an “informational” meeting with the BOS on August 18th. The auditor-controller’s staff report which was issued around August 14th said the 1 1⁄2% “may not be practical or feasible.” Nevertheless, the Vintners went ahead with the BOS “informational” meeting on the 18th having their Sacramento Consultant make a presentation as well as several Vintner Board members. Some of the Supervisors expressed concern about the self-reporting and the inability to verify and audit the 1 1⁄2%.

Yesterday, Thursday, the Vintners announced they were scrapping their third Wine BID proposal- the 1 1⁄2% on tasting room sales and will next week propose 1% on all DTC sales which would include wine club sales but not wholesale wine sales to the Trade. So, the Mom and Pop small wineries will still have to pay for the large wineries’ promotion and marketing costs to the Trade.

What is the Vintners problem? It is structural. There are 270 bonded wineries in SB County. The Vintners’ website lists 78 wineries as members. Yet the Vintners want to tax the 192 wineries who are not members. Is there any surprise that the Wine BID’s taxation without representation is being opposed? Where are Sam and John Adams when you need them?


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RHS Sep 06, 2020 07:02 PM
Vintner's 3rd Wine BID Fails

As noted in earlier comments supporting Pepe's criticism of this scheme, the truth is that this is not a fee but a tax on out of town visitors (and now also on out of town consumers). The idea seemed to be "who would object to taxing them?" But of course no one will actually identify this fee on a bill sent to a wine club member or a receipt for a tasting. The money will be set aside on the gross receipts. Then the money will be given to a few people with their own ideas and used to lobby the legislative people in the county and others. The folks allegedly paying this cost will never know what they are supporting when these people get going. Based on historic abuses of such funds, bad things are absolutely going to happen when this honey pot is created. Do not let the Board of Supervisors fall fors it.

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