Tim Schmelzer is vice president for state relations at the Wine Institute, which represents exclusively wineries based in California. He spoke with Agri-Pulse recently on how the industry occupies a unique space in Sacramento.
Wine faces “a very busy regulatory agenda,” due to it falling within both agricultural and manufacturing policymaking, intersecting with environmental, Alcohol Beverage Control (ABC), labor and many other areas of law.
Schmelzer has been lobbying for the institute since 2008, having previously worked for the California Energy Commission during the energy crisis years and then for public utility. His team tracks a whirlwind of both legislation and regulatory policies on the state and regional levels.
1. Can you give a snapshot of how alcohol is regulated?
The funny thing about alcohol is when prohibition ended, it wasn't a free-for-all. You need to have permission for virtually every aspect of your business. It makes for some odd legislation.
Bills we've sponsored seem like everyday things and not a big deal. In one of the first years I was here, the Wine Institute sponsored what we called the “Picnic Bill.” It would allow you to enjoy drinking a glass of wine at a winery. Previously, you were only allowed to taste very small sips.
One piece of legislation we're currently working to get passed would extend wineries’ ability to open tasting rooms. Under current law, you're allowed to have a tasting room at your winery and then one off-site. We've been working on legislation to allow for one additional tasting room. That's especially important for smaller wineries, who are much more likely to do business through their tasting room than deal with the expense of getting into retail channels.
2. What stands out from the legislative year as a whole?
California famously has a supermajority of Democrats in both the Assembly and the Senate, and then we had a new governor this year. An interesting observation was just to see the Legislature consciously testing the new governor. Jerry Brown, for example, took a relatively moderate approach on a lot of labor employment laws. Many bills that Gov. Brown vetoed the legislature put right back on Gov. Newsom’s desk to see what he’d do.
This year was more notable for us for the bills that didn't pass than did.
We supported legislation that extends a program run by CDFA to fight Pierce's disease and glassy-winged sharpshooter, SB 449. That was passed and signed and obviously of huge importance to the industry.
But then there were quite a number of bills in the alcohol space that didn't pass. Some barely moved. Some have had some interesting paths over the years. We worked with our friends in the beer industry to make sure a bill dealing with the definition of beer didn't accidentally impact wine, which it would have as originally introduced.
We thought it was notable that legislation to reduce the blood alcohol content for a DUI to .05 failed to get a hearing in the legislature.
Senator Scott Wiener from San Francisco has, for a few years in a row, tried to extend the hours of sale for alcohol beverages. He got a bill all the way to Gov. Brown last year, which Brown famously vetoed saying that “there was enough mayhem in the world without that bill.” This year, the bill didn't even make it to the governor.
On the environmental front, the Legislature got very serious about looking at reforming the state's recycling systems. We've had a bottle program focused on beverage containers. But the Legislature moved legislation (AB 1080 and SB 54) most of the way through this year to extend the program to all single-use packaging, with an especially acute focus on plastics. The bill covered virtually every product type you could imagine that was in a single-use container and included wine. We felt the bill was very rushed at the end and overly broad. We actually worked to stop that bill, and we are able to do so successfully at the end of the session.
We believe it's likely that this bill is going to move forward. We, as an industry, very much want to be part of any new recycling regime that we put together in California. So, we are working hard in trying to reimagine California’s recycling systems. Our focus will be on trying to improve the curbside collection of our products, for example.
3. How would you compare the Brown and Newsom administrations?
A governorship needs to be into their second or third year until you really get a feel for how it's going to operate. That being said, two of the high-level administrators within the Brown administration were able to continue over to Gov. Newsom’s administration, Jacob Applesmith, who’s the director of ABC, and Karen Ross, the secretary of CDFA. We were pleased both of them were able to continue in their roles.
It's been friendly so far. Obviously, we're aware Gov. Newsom has some history in our industry. (He is a partner in the Plumpjack winery corporation.)
4. With so many battles on so many fronts, do you feel legislators and the administration are aware of the cumulative challenges adding up for the industry?
I actually feel they are. Both the Assembly and Senate have select committees specifically dealing with the wine industry. They have taken a special interest on these international pressures, like the trade issues that have been challenges for us, for example. I think that is taken into account as legislation moves through.
A lot of legislators are proud of the wine industry and what it means for California. There's a certain amount of wanting to protect that at the Legislature.
5. What are you expecting to work on next year?
The recycling measure is going to be front and center.
The manner in which emissions from fermentation tanks is regulated has been a challenge to us. We are working to develop a solution to that. Our concern is that if certain controls are required to be put on our tanks, it could impact the quality of wine we're able to make, which we would obviously see as a bad outcome. There's a lot of work yet to do on that one.
On the regulatory front, the State Water Board has a draft Winery Order, which would regulate winery waste discharge emissions all throughout the state. It'd be very impactful regulation. We've been engaged with Water Board staff over what's now been a several-year effort to refine that regulation in a manner that gets them the environmental protections they are seeking and is manageable for our industry.
There's a lot of attention being paid to sedimentation issues in the North Coast area. In Napa and Sonoma, there was a Vineyard Order adopted by the regional water board a couple years ago. We're still heavily engaged in trying to ensure our members are able to comply with it in a cost-effective manner.
We've been supportive of the environmental goals and consider ourselves very environmentally forward as an industry. When you work through these issues, it's just a matter of making sure we get to that end goal in a way that's sustainable for the industry and still protective of the environment. We're able to achieve that 99 times out of 100, fortunately.
6. Can you explain the industry’s efforts in staying ahead of the curve on sustainability when it comes to Sacramento policymaking?
Well before I joined the Wine Institute, our incredible members had the foresight to develop a program called the California Sustainable Winegrowing Alliance. It's a partnership between the Wine Institute and the California Association of Winegrape Growers. They developed a great workbook that members can voluntarily choose to follow, and fortunately they have. It's a list of something on the order of 250 practices to improve your environmental footprint and even to engage your community and your employees.
Some of the regulatory programs coming down through the regional water districts, for example, have provided regulatory relief if you're participating in a sustainability program. When a regulator sees they're getting the environmental impact their regulation was searching for, it's a win-win situation.
7. Anything else to add?
Just drink California wine, please.
