Pennsylvania winery question

[wxtrendsguy]

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Did you edit the post? In my mobile app I was able to see the interpretation you posted, but all I see now is the "1".

I think you missed an important preceding sentence in your reading of (a)(2), but perhaps you figured that out.

reposted my comment accidentally deleted it when copying and pasting...see the long legal garbage above...

 

[Redbird1]

Good God we have one convoluted system in this state! So according to Act 166 of 2016 which amended Act 39 of 2016 which corrects the unconstitutionality of Title 47 P.S. Liquor § 5-505.2 § 5-505.2. which had been nullified by the Supreme Court decision of Granholm v Heald and the federal court ruling in Cutner v. Newman, the following is the law of the land.

Section 505.2.a (1) "Produce...wines...subject to exceptions provided under this section, only from agricultural commodity grown in Pennsylvania"

Section 505.2.a (2) "Sell ... wine ... produced by the limited winery or purchased in bulk in bond from another Pennsylvania limited winery ... Provided, That a limited winery shall not, in any calendar year, purchase ... wine produced by other limited wineries in an amount in excess of fifty per centum of the ... wine produced by the purchasing limited winery in the preceding calendar year. In addition, the holder of a limited winery license may purchase wine in bottles from another Pennsylvania limited winery if these wines undergo a second fermentation process. Such wine may be sold in bottles bearing the purchasing limited winery's label or the producing limited winery's label. ..."

Below are the exceptions for using non PA grown fruit .

Section 505.2.a (6) (i) "Secure a permit from the board to allow the holder of a limited winery license to use up to twenty-five per centum permitted fruit, not wine, in the current year's production. Each permit is valid only for the calendar year in which it is issued."

Section 505.2.a (6) (iii) "The purpose of this section is to increase the productivity of limited wineries while at the same time protecting the integrity and unique characteristics of wine produced from fruit primarily grown in this Commonwealth. Prevailing climatic conditions have a significant impact on the character of the fruit. Accordingly, "permitted fruit" shall mean fruit grown or juice derived from fruit grown within three hundred fifty (350) miles of the winery."




OMG what a freaking nightmare

I agree that the wording is very difficult to follow, but it is written that way for a reason. People will do everything they can to skirt the law. Lawyers must write rules and regulations that attempt to account for as many variables as possible.

My quick interpretation.

If it grows in PA, you can make cider, mead, wine and wine coolers out of it.
You can use up to 25% fruit from outside PA, but that fruit has to come from within 350 miles of your winery (to preserve the unique characteristics of local produce).
You can buy up to 50% of last year's production from other Pennsylvania limited wineries (who have the same restrictions regarding sourcing of fruit).
Plus, you can buy wine in bottles from another Pennsylvania limited winery if these wines undergo a second fermentation process.

So, it doesn't look like you can use grapes from anywhere further than 350 miles from the winery or buy finished wine from outside the state. This would allow for the North Central PA winery mentioned earlier to use Finger Lake NY grapes, but I'm not sure how the other example regarding the Napa wine would be allowed. Perhaps the winery was selling as something other than a PA limited winery.

 

[jgmann67]

I agree that the wording is very difficult to follow, but it is written that way for a reason. People will do everything they can to skirt the law. Lawyers must write rules and regulations that attempt to account for as many variables as possible.

My quick interpretation.

If it grows in PA, you can make cider, mead, wine and wine coolers out of it.
You can use up to 25% fruit from outside PA, but that fruit has to come from within 350 miles of your winery (to preserve the unique characteristics of local produce).
You can buy up to 50% of last year's production from other Pennsylvania limited wineries (who have the same restrictions regarding sourcing of fruit).
Plus, you can buy wine in bottles from another Pennsylvania limited winery if these wines undergo a second fermentation process.

So, it doesn't look like you can use grapes from anywhere further than 350 miles from the winery or buy finished wine from outside the state. This would allow for the North Central PA winery mentioned earlier to use Finger Lake NY grapes, but I'm not sure how the other example regarding the Napa wine would be allowed. Perhaps the winery was selling as something other than a PA limited winery.

Your read is spot on.

The statute previously required all fruit to be obtained from within the Commonwealth. This limitation was deemed unenforceable as a result of the U.S. Supreme Court decision in Granholm v. Heald, 544 U.S. 460 (2005), and the Pennsylvania federal court decision in Cutner v. Newman, 398 F. Supp.2d 389 (E.D. Pa. 2005), both involving legislative distinctions between in-state and out-of-state wineries.

Once the statutory limitation was struck, limited wineries could purchase their grapes from anywhere. The legislature came back and amended it to the to say "from within 350 miles," and added a justification to try to explain the statute the next time someone challenges the law. I'm not so sure it holds up to another challenge.

 

[wxtrendsguy]

Your read is spot on.

The statute previously required all fruit to be obtained from within the Commonwealth. This limitation was deemed unenforceable as a result of the U.S. Supreme Court decision in Granholm v. Heald, 544 U.S. 460 (2005), and the Pennsylvania federal court decision in Cutner v. Newman, 398 F. Supp.2d 389 (E.D. Pa. 2005), both involving legislative distinctions between in-state and out-of-state wineries.

Once the statutory limitation was struck, limited wineries could purchase their grapes from anywhere. The legislature came back and amended it to the to say "from within 350 miles," and added a justification to try to explain the statute the next time someone challenges the law. I'm not so sure it holds up to another challenge.

Actually in PA Prior to 1995 it all had to be produced in PA. They changed the law in 1995 allowing for up to 350 mi from the winery to source fruit. In 2005 the law was deem unconstitutional and unenforceable, from 2005 to 2016 you could source grapes from anywhere. The law was updated once again in late 2016 and the 350 mi limit was reinstated. So for all growers in the west it is now illegal to sell grapes to a winery in PA. Problem in the east is that there is not enough spare vineyard capacity to source from in a bad year and we are already paying in excess of $2000 a ton for grapes.

 

[zadvocate]

There are wineries that buy their fruit from California, Washington etc... beyond the 350 miles. I have link to an opinoin from the Office of General Counsel dated 2014 stating affirming that you can by fruti from anywhere and it doesnt mention the 350 miles.
"
Therefore, as the law presently stands, a licensed limited winery may produce wine from agricultural commodities without regard to the source of such commodities. Thus, you would be permitted to import and use fruits and/or juice from out-of-state."
https://collab.pa.gov/lcb/Extranet/Advisory Opinions/14-636.pdf

 

[wxtrendsguy]

There are wineries that buy their fruit from California, Washington etc... beyond the 350 miles. I have link to an opinoin from the Office of General Counsel dated 2014 stating affirming that you can by fruti from anywhere and it doesnt mention the 350 miles.
"
Therefore, as the law presently stands, a licensed limited winery may produce wine from agricultural commodities without regard to the source of such commodities. Thus, you would be permitted to import and use fruits and/or juice from out-of-state."
https://collab.pa.gov/lcb/Extranet/Advisory Opinions/14-636.pdf

Sorry Z that is no longer applicable law in PA. In Nov 2016 they passed a new law which amended the liquor law and specifically wrote that requirement back into effect. Wineries that import grapes from more than 350 mi away are breaking the law and eventually the LCB will catch up with them.

 

[wxtrendsguy]

Sorry Z that is no longer applicable law in PA. In Nov 2016 they passed a new law which amended the liquor law and specifically wrote that requirement back into effect. Wineries that import grapes from more than 350 mi away are breaking the law and eventually the LCB will catch up with them.

The funny thing I can see this requirement being once again dragged before the courts based on the interstate commerce clause. Preventing a business to engage in interstate commerce to produce a product using raw materials from another state pretty much goes against every other sector of business in the entire country which can source materials from anywhere in the USA. Seems like our legislators in PA are trying to thread the needle here by saying you can go to other states thus no interstate clause applies but blocking out states beyond the 350 mi limit probably still will result in a limitation on interstate commerce. Should be thrown out.

 

[Redbird1]

The funny thing I can see this requirement being once again dragged before the courts based on the interstate commerce clause. Preventing a business to engage in interstate commerce to produce a product using raw materials from another state pretty much goes against every other sector of business in the entire country which can source materials from anywhere in the USA. Seems like our legislators in PA are trying to thread the needle here by saying you can go to other states thus no interstate clause applies but blocking out states beyond the 350 mi limit probably still will result in a limitation on interstate commerce. Should be thrown out.

You hit on the big issue I see with that provision. Unless the same restriction is in place across all similar industries, it will surely be challenged and be revoked.

Edit to add: The provision prevents the production of any type of wine, cider, mead, or wine cooler from fruit that isn't grown within 350 of the PA border. I can't see that holding up to a challenge on those grounds, much less the other angle on interstate commerce.

 

[zadvocate]

Thought I would take a look at this again. wxtrendsguy, Where was the law updated? I looked at the current statute


(iii) The purpose of this section is to increase the productivity of limited wineries while at the same time protecting the integrity and unique characteristics of wine produced from fruit primarily grown in this Commonwealth. Prevailing climatic conditions have a significant impact on the character of the fruit. Accordingly, “permitted fruit” shall mean fruit grown or juice derived from fruit grown within three hundred fifty (350) miles of the winery.

47 Pa. Stat. Ann. § 5-505.2 (West)

and the previous versions going back to 2004(I got tired of looking). The definition of "permitted fruit" (fruit obtained within 350 miles of the winery) has been in all version and is the same. So the Supreme court case that made it illegal for the State to discriminate against other states would apply and the PLCB opinion I cited would have had to contemplate that limitation. So unless there is another section I am missing, it seems to me that you can make wine using fruit from anywhere in PA. This makes sense because I see many wineries doing it. If i am missing something please let me know and thanks for the responses.

 

[wxtrendsguy]

Hi Z, In the good ol peoples republic of Pennsylvania we have a wealth of legalese to navigate...

Act 39 is a piece of legislation that updates the Liquor laws in Pennsylvania, passed in August 2016. It was also quickly amended by Act 166 later that year to fix some errors.
The Pennsylvania Liquor Code is the actual liquor law in PA and was last updated in January 2017. To incorporate the changes brought about by the legislation.

Yes you can use fruit from anywhere within Pennsylvania to make wine because there is no way that you can travel 350 miles in PA and not reach every part of the state as the crow flies. The longest line across PA is about 330 miles. Using Google Earth and my winery's location near Allentown means I can source fruit from parts of or all of the following states MA, CT, RI, NJ, NY, DE, MD, VA, WV, NC and OH.

Now again the ruling raised by the Supreme Court's decision and the PLCB opinion of that ruling per the state's attorney General guidance is that limiting the sourcing to just 350 miles is again going to be unconstitutional. So basically if they try to enforce it they are going to lose and then everything is tossed in the air again...so instead they may let it sit like that for many years as unenforceable and just let sleeping dogs lie. SO yes legally as the law stands today you cannot source fruit from California, however, there is no way to enforce it and if they did it would be unconstitutional. Somewhere down the road this is going to come up again probably when some local town board tries to shut down a winery and pushes and pushes the fact they use imported grapes....

 

[zadvocate]

My point is that the 350 requirement has been in the statute for a long time. It was not inserted in 2016 or 2017 as a result if the Supreme Court case. Therefore the later would control I.e you can make wine in PA as a limited winery with out of state fruit regardless of the 350 rule. I am lawyer but I don’t practice in this area. I finally consulted a liquor license lawyer who agreed that the case has made it so that you may use out of state fruit from anywhere to make wine as a limited winery in Pennsylvania.

The updates you mention did not affect the permitted fruit definition.

 

[Hokapsig]

we are using Mango juice from Cali as well as Cab Sauv. Our blackberry and pear are from NY. But if anyone asks, our wines are made in PA, where the fermentation takes place.

 

[wxtrendsguy]

Hi Z, I misunderstood your question, you are correct the 350 mile limit had been in effect long before, then the court ruling basically threw it out but it remained in the actual code, The legislature in its infinite wisdom kept it in there when they rewrote the law in 2016. So of course the law was fixed but it wasn't actually fixed kind of like our highways in PA...lol

 

[wxtrendsguy]

we are using Mango juice from Cali as well as Cab Sauv. Our blackberry and pear are from NY. But if anyone asks, our wines are made in PA, where the fermentation takes place.

Yes made in PA but if your wine is called Cabernet Sauvignon you had better be using "American" as the Appellation of Origin.

 

[Wineassistant]

My point is that the 350 requirement has been in the statute for a long time. It was not inserted in 2016 or 2017 as a result if the Supreme Court case. Therefore the later would control I.e you can make wine in PA as a limited winery with out of state fruit regardless of the 350 rule. I am lawyer but I don’t practice in this area. I finally consulted a liquor license lawyer who agreed that the case has made it so that you may use out of state fruit from anywhere to make wine as a limited winery in Pennsylvania.

The updates you mention did not affect the permitted fruit definition.

I've read this thread over and over...looked at the Court Cases mentioned in the thread, reviewed Act 39 and Act 116... and I'm still confused on what we can and cannot do. Could you direct me or help me understand (inlayans terms) how making wine from grapes outside of PA is legal. I would greatly appreciate it.

 

[zadvocate]

I've read this thread over and over...looked at the Court Cases mentioned in the thread, reviewed Act 39 and Act 116... and I'm still confused on what we can and cannot do. Could you direct me or help me understand (inlayans terms) how making wine from grapes outside of PA is legal. I would greatly appreciate it.

I contacted a liquor law attorney a while back. the case that made it unconstitutional for Pennsylvania to treat out of state fruit differently than in state fruit still applies. That’s how all of these wineries in Pennsylvania are able to make wine with out-of-state grapes and sell it in state. I’ve reviewed the regulations and statute over and over but I’m going with what this guy says because this is his area of expertise.

 

[pgentile]

"How do you make a small fortune in the wine business? Start out with a big one"

Article in NYT about micro wineries: https://www.nytimes.com/2018/09/06/dining/drinks/enfield-wine-company-john-lockwood.html

 

[pgentile]

"How do you make a small fortune in the wine business? Start out with a big one"

Article in NYT about micro wineries: https://www.nytimes.com/2018/09/06/dining/drinks/enfield-wine-company-john-lockwood.html

Sorry posted in the wrong spot.

 

[wxtrendsguy]

The really fun fact and law of unintended consequences is now restaurants who cannot afford or acquire one of the restaurant liquor licenses are trying to create their own wineries within the restaurant. A limited winery license in PA only costs a few hundred bucks compared to 100s of thousands for a restaurant license. Since PA limited wineries can now sell craft local beer and mixed drinks using PA craft distillery spirits and make wine using inexpensive central valley CA grapes or just buy bulk wine and bottle and according to Act 119 specifically sell food they can now essentially be a tavern, or in other words a restaurant that sells alcohol. So the legislature has really opened a can of worms and created several new business models along with bad weather and spotted lanternflys now makes owning and operating a traditional vineyard & winery in PA far less viable. I strongly urge others looking into it to rethink it once again.

 

[CK55]

The really fun fact and law of unintended consequences is now restaurants who cannot afford or acquire one of the restaurant liquor licenses are trying to create their own wineries within the restaurant. A limited winery license in PA only costs a few hundred bucks compared to 100s of thousands for a restaurant license. Since PA limited wineries can now sell craft local beer and mixed drinks using PA craft distillery spirits and make wine using inexpensive central valley CA grapes or just buy bulk wine and bottle and according to Act 119 specifically sell food they can now essentially be a tavern, or in other words a restaurant that sells alcohol. So the legislature has really opened a can of worms and created several new business models along with bad weather and spotted lanternflys now makes owning and operating a traditional vineyard & winery in PA far less viable. I strongly urge others looking into it to rethink it once again.

I wouldnt go fully along with telling people not to open a winery if they want to. BUt yeah it might not in most cases be smart.