Legislative Committee Hears Bill to Expand Nevada’s Commercial Winery Business

State lawmakers are considering a bill to expand the scope of Nevada’s wine business and pave the way for custom crush facilities. Assembly Bill 375 would also double the current case limit for wine made with no Nevada fruit content.

Artesian Cellars winemaker and co-owner Tim Burke made a brief presentation about AB 375 last week to a panel of mostly southern, urban legislators. The bill amends the section of Nevada law requiring production and aging to take place in the same premises where the tasting room is located. Under the new law, wineries would be allowed a second facility.

Burke explained that tasting rooms would be able to accommodate more customers and generate more revenue if they were not required to devote valuable real estate for production and storage.

He fielded skepticism from a few legislators about a provision granting commercial wineries the ability to sell other alcoholic beverages. Assemblywoman Maggie Carlton wondered if the wineries are trying to become bars. She recalled the 2015 legislative session where the ban on urban wineries was lifted, subject to a variety of restrictions.

“It seems every session now we’re coming back to get a little bit more, and a little bit more,” Carlton said. “It seems as though you’re trying to get out of the winery-distillery boutique niche we set up for you, and become full fledged bars. And I think Nevada has a lot of bars.”

Burke explained the dilemma wineries face when wine-loving customers have companions who want something else.

“We find it hard to believe, but maybe not everyone wants to drink wine all the time,” he said. “Maybe they want a glass of beer, or something like that.”

Several lawmakers wanted assurances that the commercial wineries are not trying to circumvent Nevada’s three-tier law with a provision allowing bonded wineries to transfer wine and juice among themselves.

Some legislators were also confused by the requirement for 25 percent Nevada fruit, and its relationship to the current annual case limit. AB 375 raises the limit for wine made with out-of-state grapes to 2,000 cases from 1,000. Under the revised law, the Nevada fruit quota would kick in after a winery reaches 2,000 cases.

Nevada’s winemaking community has been split over the in-state fruit quota and related case limit since 2015, when the case limit was established based on origin of the grapes. Although Nevada still has no wineries with production topping 1,000 cases, the two factions have squabbled for six years over whether the limit stifles their growth.

Great Basin Winery owner Adam Hand was the lone opponent of AB 375. Hand, whose wine is made entirely with California grapes, began his testimony noting there’s “a lot of good in the bill,” but said he is pushing toward the thousand case limit, and wants to grow his business beyond 2,000 cases annually.

“I would love to be able to purchase fruit near Reno to satisfy the requirement (for Nevada grapes),” he said. But Nevada doesn’t produce enough grapes to meet the demand of all its wineries.

Hand said that under the law, wineries are able to generate less than two percent of the annual sales of a Nevada craft brewery, and less than one percent of annual distillery sales. He  offered calculations for distillery and brewery income based on their higher case limits, and shorter growing time for the agricultural products used in spirits and beer.

But a vast majority of wineries in the nation are small, producing less than 5,000 cases, according to the lobbyist for Nevada’s largest alcohol distributors, Southern Glazer’s Wine & Spirits.

“The idea that this is a small amount is simply nonsensical,” said Alfredo Alonso, whose testimony on the bill was designated “neutral,” meaning he limited his remarks to providing additional information. He said the 25 percent quota was intended to encourage grape production in the state.

The distributors wield significant political influence, and have in past sessions been able to kill case limit increases for Nevada wineries. Alonso took no stand on the bill.

“The thing we’re trying to avoid is large producers, someone that brings in pre-fermented or pre-bottled juice (from out of state) and calls it Nevada wine,” Alonso said. He added that he hopes Nevada’s winemakers are able to expand grape production and find success with wine made from Nevada grapes.

The Assembly Commerce and Labor Committee did not vote on AB 375. To move forward, it must get committee approval, and then have a successful hearing at the Senate Commerce and Labor Committee. Additional provisions of the bill can be viewed here.