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New Rules for Oregon Wineries

Easier access to Pinot Noir—state law allows more tasting rooms; critics complain it favors big wineries

Augustus Weed
Posted: August 5, 2011

Oregon winemakers are divided over a law that sets new rules on what types of commercial activities they can conduct at their wineries. The legislation permits wineries to operate tasting rooms and host events on properties zoned as exclusive farm-use land. Vintners estimate that 60 percent of Oregon wineries reside on this type of land. While it does not affect existing wineries in non-exclusive farm-use areas, winemakers within the designated zones may have to change how they run their businesses.

Gov. John Kitzhaber signed House Bill 3280 into law Aug. 2, after it passed both the House and Senate by a wide majority. The measure allows wineries to conduct unlimited events, such as wine tours and tastings, and sell merchandise related to the promotion of their wines. Wineries can also hold non-marketing events like weddings and concerts but they are limited to 25 days of events annually. One caveat is that revenue from events and merchandise cannot exceed 25 percent of the winery’s total on-site profits.

The bill revamps land-use legislation that was created in 1989. Proponents argued that Oregon’s wine industry has grown substantially since then. Sam Tannahill, co-owner of A to Z Wineworks in Dundee and president of the Oregon Wine Growers Association, said the original law was vague on what activities could occur on farmland. “We guaranteed the right for a winery to have a tasting room,” he said. “It was not guaranteed in the 1989 statute.”

The law also allows large wineries to have a full-service restaurant on farmland if they own at least 160 acres with 50 acres under vine, and produce 63,000 cases a year or more. The restaurant can only be open for 25 days a year unless the winery acquires a county permit as well. Tannahill said only four wineries in the state would qualify.

Some winemakers aren’t happy with the new law. The bill establishes separate rules for wineries according to how many acres of vineyards they own—larger wineries are allowed more leeway to host events and operate tasting rooms than smaller ones. “It’s making it harder for smaller wineries to establish themselves,” said Mohamad Ayoub, owner of Ayoub wines in the Dundee Hills. Wineries that own at least 15 acres of contiguous vineyards on their property can have a tasting room and host events. Those with less than 15 acres have to obtain a conditional-use permit from the county to open a tasting room and are limited to tastings by appointment only.

Ayoub, who owns 4 acres of vines, said he won’t be able to open a tasting room because he doesn’t believe his property would be approved for a permit. And he would need a separate permit to host events. “Basically, it’s weeding out people like me from the business,” he said.

Tannahill admitted that the bill isn’t perfect. “Did everybody get what they wanted? No,” he said. The Oregon Wine Growers Association pushed for some changes that the state wouldn’t support. But the bill does include a grandfather clause so wineries will not lose the permits they already have. And winemakers may still have a chance to change the law—the rules for small and medium-size wineries expire Jan. 1, 2014. “We are certainly going to go back to the drawing board when the law sunsets,” said Tannahill. “I consider this a work in progress.”

Troy Peterson
Burbank, CA —  August 6, 2011 4:56pm ET
Wow, that seems silly at first blush. Why should larger wineries be allowed more freedom than smaller ones? What am I missing here? Talk about killing small business.
Sorella Wine & Spirits
Minneapolis, MN —  August 8, 2011 4:20pm ET
Troy,
What you might be missing here is a view from the communities in which these small farm wineries reside. I spend a lot of time in Oregon and have friends who are making wine from a few acres of grapes on the quiet outskirts of small towns. It is easy to see how their neighbors might have an issue with the guy who owns the adjoining two acres having carte blanche to open a tasting room and restaurant on his "farm" zoned property. And this law doesn't forbid such activity, it merely requires smaller wineries to go to their counties, who are better suited to assess the impact on neighbors, for permits.
Timothy Ramey
Salem Oregon, USA Zenith Vineyard —  August 9, 2011 1:07pm ET
This new law did not take anything away from small wineries. It left the status quo on the rule to require 15 acres of land to build a winery, or get a conditional use permit to do so otherwise. Sorella Wine & Spirits comment is right on the mark. So Mr. Ayoub is mistaken about the impact of the legislation.

It did give small wineries with at least 15 acres the right to have a tasting room which, as Sam Tannahill points out, was not permitted outright before. And it allows wineries new revenue sources for conducting events, which is also a positive. The only people who opposed this legislation thought it was TOO permissive. Some would argue that this is a group of "Have" wineries that are already established and have their profitable business model. Thankfully, the Oregon Wine Board and the legislature went a different route.
Tom Miller
Vestavia Hills, AL —  August 10, 2011 5:04pm ET
Mr. Ramey,

I visited with Felice at your tasting room and winery last week after the 25h IPNC. Your tasting room and event facilities are absolutely stunning. Now I'm pretty sure I know why Mr. Vlossak has that perpetual grin on his face.

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