Reference Toolbox – Wineries Business/Financial
In Oregon, the four typical ways to produce wine are through winery licenses, grower sales privilege licenses, wholesale malt beverage and wine licenses ("custom crush"), and alternating proprietorships. The privileges and requirements can be found in this OLCC guide. For additional information on the allowable uses of the winery and grower sales privilege licenses and a listing of licensing and registration requirements, please refer to Davis Wright Tremaine's Regulatory Reference Guide.
A "winery" is a premise that principally produces wine or cider in Oregon. A “winery licensee” is an entity that either possesses a TTB Producer and Blender Basic Permit or a TTB Wholesaler Basic Permit and has a written contract with a licensed winery, and has control of the wine brand. “Control” means that the applicant either owns the brand, or has at least a 3 year trademark license with the brand owner. Note that an applicant should file an OLCC Liquor License Application (as a winery) and a TTB Winery Producer and Blender Basic Permit at the same time.
Grower Sales Privilege License (GSP)
“Grower Sales Privilege” is a license given to entities that grow all of the grapes or fruit used for wine or cider in Oregon on land they “control” (e.g., land they rent or own). A GSP cannot purchase grapes or fruit from other growers in order to supplement its own stock. A GSP cannot produce the wine themselves, but may have their grapes custom crushed and bottled by another licensed winery. An applicant should file the GSP license application and the TTB Wholesaler Basic Permit application at the same time.
Wholesale Malt Beverage and Wine License (WMBW)
A custom crush facility is a federally bonded, state-licensed winery that crushes and/or produces wine for other wineries. "Wholesale Malt Beverage and Wine" licenses may be obtained by custom crush customers who do not produce all their own grapes as required by the GSP license, nor have their own premises as required by a winery license. A “custom crush” arrangement involves an agreement or formal contract under which a customer pays a wine producer to produce wine to order, after which the customer markets the wine. In a custom crush arrangement, the wine producer is authorized by TTB to make wine and is entirely responsible for producing the wine and for all related processing steps and regulatory requirements, which may include tax payment. Please note that there are no retail privileges for WMBW Licenses except limited dock sales. Although specifically paying for the producer’s services under a custom crush agreement, the TTB treats this as if the grape grower has purchased wine at wholesale for resale. All wine received must be tax paid by the producing winery. Wine may not be received in bond.
- OLCC WMBW Overview
- TTB Wholesaler Basic Permit (producers or manufacturers need to apply for a Wholesaler's Basic Permit only if they intend to sell beverage alcohol products which they did not produce or manufacture)
- TTB New Wholesaler Application Checklist
- TTB Wholesaler Application Packet
Alternating Proprietorship refers to those that would like to make wine for commercial purposes, but are not interested in building or buying a winery of their own. These companies find that sharing a winery facility with other companies will suit their purposes, and will qualify with TTB as an Alternating Proprietor winery. An alternating proprietorship is when two or more federally bonded, state-licensed wineries take turns using the same equipment, located at the same premises, following the federal regulations set for alternating proprietorships. It is not a custom crush arrangement. Each entity must qualify as a stand alone winery, obtain their own TTB Winery Basic Permit, and other TTB requirements as well as maintain their own records. Each entity would hold their own OLCC Winery License and maintain their own state reporting requirements.
Currently TTB requires a bond for a minimum of $1,000 for wineries. As of Jan. 1, 2017, a winery that files its TTB excise taxes annually (owes <$1,000 in excise taxes/year) or quarterly (owes ≤ $50,000 excise taxes/year) will be exempt from the bond requirement. The TTB bond exemption will not be automatically granted. Existing qualifying wineries must notify the TTB that they believe they are eligible for a bond exemption and request a bond termination by filing an amended Application to Establish and Operate Wine Premises form, and checking the box in question nine stating the winery is not required to hold a bond. Per temporary rule 27 CFR 24.160, TTB will require that all reports, returns and tax payments are filed in order to determine if a bond exemption is in fact available.
The Food Safety Modernization Act (FSMA) put into place a number of new food safety requirements that apply to wine grape growing and the production of wine. Fortunately many of the new FSMA rules specifically exempt alcohol companies from their requirements. However a number of requirements still apply and are being brought to your attention in case of compliance audits. Learn more in this FSMA overview for the wine industry. Wineries must register biennially as a food facility with the Food and Drug Administration and must follow current good manufacturing practices under the Preventive Controls for Human Food Rule. Although winegrowers can qualify for a processing exemption for the Produce Safety Rule when the grapes grown will be turned into wine, winegrowers are still subject to certain record-keeping requirements. The requirements for winegrowers under the Produce Safety Rule can be found in this FSMA Produce Safety Rule Compliance Guide. The related compliance dates for the written assurance requirements have been extended by two years and will not take effect until at least Jan. 27, 2020 depending on the size of business.
Vineyard and winery owners should consider a variety of insurance options to mitigate risk and protect their business and workers. Types of insurance winery owners might consider include property, general liability, auto, farm equipment, transportation coverage, crop, umbrella, workers' compensation, health/life, earthquake, flood, cyber and employee protective liability, among others. Discuss your particular situation with an agent familiar with the dynamics of the wine business to determine the right level of coverage to meet your needs and mitigate exposure for your business. Consult this presentation from Hagan Hamilton on top liability questions for wineries.
The OLCC requires $300,000 in liquor liability insurance for operations involving on-premises alcohol service, such as a tasting room. Wineries with on-premises consumption must provide a certificate of liquor liability insurance. If there is no on-premises consumption, complete the exemption form.
If you employ workers in Oregon, you probably need workers' compensation coverage. The Workers' Compensation Division provides several tools to help employers with their workers' compensation coverage and to enable the public to find information on coverage and claims. Oregon has a voluntary competitive market with more than 400 companies approved to sell workers' compensation insurance.
Some ways to buy coverage include:
- Contact an insurance agent. You may first want to contact the agent who handles your business, home owner, or automobile insurance. Your agent may be able to place your workers’ compensation coverage with the same company or write a business package that includes workers’ compensation coverage.
- Call the Small Business Ombudsman.
- Use the Oregon Division of Financial Regulation Company Search Look-up. Select "active" from the company status drop-down menu, and select "Casualty (including workers' compensation)” from the line of the business drop-down menu.
If an insurance company denies you workers’ compensation coverage, you may apply to the Assigned Risk Plan. Oregon's Assigned Risk Plan is administered by the National Council on Compensation Insurance (NCCI) at the direction of the Oregon Department of Business and Consumer Services (DCBS).
All employers in Oregon that are required to provide workers' compensation coverage must display a Notice of Compliance poster in a central gathering area, such as a breakroom. Employers should automatically receive a Notice of Compliance poster when they first get coverage or change coverage providers.
If you host special events like weddings and corporate retreats, consider asking the event organizer to obtain their own event liability coverage.
State Privilege Tax
Winery license holders must pay privilege tax to the OLCC for wine sold. All wine exported from Oregon is exempt from privilege tax. There is an exemption for small producers producing fewer than 100,000 gal/yr. In this case there is no privilege tax on the first 40,000 gallons of wine intended to be sold in Oregon. Consult the DWT Wine Tax Guide for more information, including filing deadlines.
Grape Tonnage Tax
All licensees who hold a winery or GSP license are required to file an annual Oregon Wine Board report with the Oregon Liquor Control Commission. These license holders must pay $25 per ton of grapes or other agricultural product used to make wine. The winery pays $12.50/ton and the Oregon vineyard supplying grapes is required to pay half of the grape tonnage tax (does not apply to out-of-state wineries). The winery receiving the grapes deducts $12.50/ton from amount due to the grower and remits the tax to the OLCC. There is a $12.50/ton charge for Oregon grown grapes sold outside Oregon. Custom crush facilities are responsible for paying the grape tonnage tax. Reports for the calendar year are due on Dec. 31 of that year. Contact OLCC for more information: Debbie Amsberry, Financial Services, 503-872-5162 or firstname.lastname@example.org.
The Oregon Legislature enacted HB 4002 putting into placed overtime pay for agricultural workers. The bill allows employers to claim a tax credit equal to a percentage of the overtime pay. The credit covers a percentage of overtime wages, starting in 2023, and decreases incrementally through 2028. Total tax credits permitted are capped at $55 million per calendar year for all eligible taxpayers combined. If applications exceed that amount, allowances will be proportionally reduced among all qualifying applicants. To claim tax credits, employers must file applications with the Department of Revenue by January 31, 2024, based on overtime paid in 2023.
The tax credit is not available to farm labor contractors (FLCs). However, an employer using the services of a licensed FLC may apply for the tax credit. Each agricultural employer’s share of the overtime paid for actual hours worked will be determined between the employer and the FLC. See examples here
To offset financial hardships posed by delayed credits and proportional allowances, the Oregon legislature also provided a one-time allocation of $10 million. These funds establish a grant, loan, or lending program designed to offer financial assistance for agricultural employers impacted by increased wage costs related to new overtime pay regulations. Apply here
Federal Excise Tax
Winery license holders must pay federal excise tax to the TTB for wine sold in the U.S. Wine exported from the U.S. is exempt from excise tax. There is an exemption for small producers producing fewer than 150,000 gal/yr. In this case there is a $90 tax credit for the first 100,000 gallons removed from bond. The credit decreases for a winery producing up to 250,000 gal/yr. Consult the DWT Wine Tax Guide for more information, including filing deadlines. There is also a webinar that includes information from TTB and DWT on changes and updates to the excise tax credit. In addition, the TTB provides a reference rate sheet for taxes and fees, though actual rates will depend on a persons circumstances.
The OWA continues to suggest vineyard and winery owners seriously consider protecting their businesses through trademark registration. Your brand name is a valuable asset. It's a symbol of the goodwill you have built with your customers, and that goodwill is critical to your ongoing success and value of the business. Consult DWT's Trademark Basics: Five Things Everyone Should Know About Trademarks for more information. Please visit the U.S. Patent and Trademark Office website for filing instructions.
The TTB developed a set of federal wine labeling laws to assure the integrity of alcoholic beverages in the marketplace and to accurately inform customers. The TTB has created a list of requirements to learn about these federal regulations. You can also review a TTB presentation on wine labeling from the 2017 Oregon Wine Symposium. It includes useful tips on submitting correct COLAs and allowable revisions when updating COLAs.
CERTIFICATE OF LABEL APPROVAL
In addition to the TTB federal regulations, Oregon has enacted an additional set of stricter regulations to ensure the integrity and quality of Oregon wine. Oregon has stricter laws than other US regions when it comes to labeling the varietals used in a wine. Consult this DWT Wine Labeling Guide for more details.
The most influential additions to the TTB wine labeling laws in Oregon are the provisions about declaring the wine’s appellation of origin. Federally, if a wine label lists a country, state, or county as an appellation, 75% of the wine must be produced from grapes grown in the place named, 85% if the label lists a more specific American Viticultural Area. In Oregon, if the label claims or implies "Oregon," an Oregon county, or an AVA wholly within Oregon, 100% of the grapes must be from Oregon and 95% from that appellation of origin.
In addition, federal regulation states that 75% of the grapes used to make a wine must be of the declared variety. In Oregon 90% or more of the wine must be from the named variety, including Oregon’s most widely produced wines: Pinot Noir, Pinot Gris, Chardonnay, Pinot Blanc and 50 other varieties known to grow in Oregon. There are 18 grapes in Oregon that are exempted from the 90% minimum requirement for varietal labeling, and are allowed to be blended with up to 25% other varieties. These varieties include: Cabernet Franc, Cabernet Sauvignon, Carmenere, Petite Sirah, Grenache, Malbec, Marsanne, Merlot, Mourvedre, Petit Verdot, Roussanne, Sangiovese, Sauvignon Blanc, Semillion, Syrah, Tannat, Tempranillo and Zinfandel. These varieties have a long history of being used for blending in their respective European regions so they have been exempted primarily to follow in their historical tradition.
Declaration to Protect Wine Place Names and Origin
In addition to the implementation of stricter labeling laws, Oregon is also an original signatory of the Joint Declaration to Protect Wine Place Names and Origin, a set of principals shared by 19 wine regions across the world aimed at educating consumers about the importance of location to winemaking.
In December 2021, the European Union amended previous regulations and removed the longstanding exemptions for wine and aromatized wine regarding ingredient and nutrition labeling in the Provision of Food Information to Consumers (FIC) regulation. Thus, starting on December 8, 2023, the ingredient and nutrition labeling requirements as set forth in the FIC will apply to wine. Wines produced and labelled before December 8, 2023 may continue to be placed on the market until stocks are exhausted.
- Any wine sold in the EU which was produced and/or labelled from that date will be required to declare any ingredient added during the winemaking process and which is contained in the finished wine.
- Full nutritional information will be required: salt, sugar, carbs, proteins, in a specific bottle of wine, as well as total calories in the standard Kcal/100ml format.
- Alcohol content, potential allergens, bottle size, and energy value must be listed on the label
- Ingredients and nutritional information can be stored online with a QR code on the wine bottle (note that there can be no marketing or data tracking through the use of a QR code).
- Wine Institute FAQ
- How to use QR codes to comply
- Wine Institute webinar recording from Sept. 14, 2023 discussing certain compliance aspects of EU ingredient labeling
- Wine Institute webinar recording from June 14, 2023 focused on EU regulations and options for digital platforms available to assist with off-label QR codes