Reality is that they need to find a way to track Sales in a simple and somewhat equitable way. This will be based on your quarterly BOE taxes.
Some regions have one percent and some have 2%. It all depends upon how much they hope to raise, projected revenues, and what the needs are.
I know that down here in Santa Barbara County, they started with 2% and backed off to one percent when they realized how much was going to be raised.
It really sounds like you guys are an early days and hopefully a lot more information will come out in the very near future. But I certainly understand all of the concerns.
Iâm also struggling to see how this could benefit smaller producers. The proposed program looks to mainly benefit large outfits who would be better equipped to leverage this program.
Making some assumptions here, but:
Large outfits are more likely to have dedicated marketing employees to reap benefits from this program, have greater capacity and revenues from visitation, and have a greater % of sales moving through distributors
Small producers on the other hand probably canât dedicate as much time/energy to specific initiatives around this effort, have less capacity for visitation, greater % of sales that are DTC. If they canât capitalize on greater visitation, then adding a fee onto DTC sales could negatively impact DTC sales and would take away valuable cash for smaller producersâ cash flows
Temecula is cited as a region that implemented a similar program in 2021:
Organizers believe itâs worth the capital outlay. Temecula established its wine district in 2021, and was able to grow its direct-to-consumer sales by 88% and its paid tastings by 75% between 2018-2023, according to an informational page published by the San Luis Obispo Coast Wine District.
Curious which producers reaped the benefits there, the demographics around the influx on DTC/visitation, and how well a program like this can generalize to more established regions?
IMO one of the best things Sonoma wine industry could do is raise awareness of how easy and inexpensive. It is to get to the heart of wine country there on Alaska airline flights from Los Angeles and San Diego. I constantly tell people about those flights and they frequently end up taking them. There is a lot of income floating around these places looking to be spent on conspicuous consumption. You can get up there for about 200 bucks round-trip. If you plan ahead, people are shocked to realize how easy it is to get there. I donât know if there are other direct routes like this to other large cities, but if they are, those should be promoted as well. Iâm heading up again next month to spread some money around and hang with. Some beserkers
The Temecula figures cited regarding DTC sales and paid tastings are misleading. These figures come from one paper that cites a 2018 report and a 2023 report. The 2018 âbaselineâ report on DTC sales was based on surveys from just 19 wineries. The 2023 follow-up included 21 survey responses but also added estimated sales figures from 24 more wineries. Increasing the number of reporting wineries by 236% unsurprisingly led to a large jump in total sales. â
Similarly, the touted increase in paid tastings reflects a broader industry trend during the COVID period, not a unique success of the WID. In fact, unpaid (free) visits dropped by 300,000, almost offsetting the paid tasting figure. That context matters.
Most concerning of all, a side-by-side comparison of the reports shows a decline of 40,000 overnight visitors to the regionâhardly an endorsement of the WIDâs effectiveness in promoting tourism.
It is illegal to pass on the assessment to the customer. It is a debt of the business owner. State-assessed businesses can do that under Government Code 13995-13995.118 but locally-assessed businesses under Street and Highways Code 36600-36671 do not have the option to charge the customer. Also, businesses in agricultural and residential zoning cannot be assessed because those locations are conclusively presumed not to benefit from the services funded by the assessments. SHC 36632.
I see this is the only thread you have commented on - care to share what you do for a living and where you live? Just curious what your interest is in this concept - and whether youâve looked into the hundreds of bids that currently exist for cities for hotels, etc
I wouldnât say hundreds. But then, again, here are also hundreds of bank robbers. Some get caught and some donât.
I have a vacation rental in Amador County where a Tourism Marketing District was just formed. It improperly included businesses in residential and agricultural zoning. When I brought this up to county counsel, do you know what he said? Oh! We canât exempt Ag zoning because we just made a wine district! Whoops!
My husband is from Ojai and we have friends with ranches in SB county. I lived in Sonoma County for many years, my family is there, I have many friends in various segments of the wine industry and as a real estate agent I represented some buyers and sellers of vineyard properties.
But mainly, I want business owners and consumers to understand he massive fraud that is being carried out by means of these districts.
It is a tax not a fee for both the customer and the winery. The marketing is designed to draw people to a region not to provide a specific benefit to each payor that is a violation of Prop 26 and the constitution. The assessment is illegally charged to the customer.
Between my family and my rental guests, we pay thousands of dollars to our local wineries. At least half my guests come here to visit local wineries or pick up their club wines. My friends from Nevada come to visit the wineries. I have a vested interest because my friends and my rental guests are being ripped off by local government. And all the money goes to nonprofits that pay 30% or so on salaries! Itâs disgusting. It is the antithesis of what a glass of wine means.
I suppose Sonoma County let Civitas Advisors examine the countyâs sales and use tax records before it wrote its âplanâ as Alameda County let them do before the TriValley Tourism District was formed. As Civitas wrote, it âwill help determine the various methodologies that could be used to form a district.â
I believe they have announced a board meeting for this Monday where they are taking public comment as well. It should be interesting to hear what comes out of that.
As I said, itâs strange that they did not start with Townhall meetings and a more clear understanding of what their plan is.
Itâs their regular meeting and public comments are always welcome. WID is way down on the agenda. Thereâs still been no WID themed public meetings.
Under Streets & Highways Code §§ 36600â36671, there is no statutory mechanism whatsoever that permits a business to charge customers a feeâwhether disclosed, undisclosed, itemized, or bundledâto recover a Wine Improvement District (WID) assessment. The law is unambiguous:
Statutory Authority: SHC § 36600â36671
SHC § 36615:
SHC § 36622(c): Requires a detailed benefit analysis for each assessed businessânot for consumers.
SHC § 36625(a): Authorizes assessments only after a formal protest and hearing process involving business owners, not the public.
Amador County Counsel actually said that business owners can charge the customer the assessment because the Board of Supervisors approved the Management District Plan that the nonprofit âownersâ associationâ has to follow and thatâs what the plan allows! What a jokester! As if the BOS can make up state law or override it. And of course the nonprofit is not a governmental entity of any kind nor does it have police power to enforce anything.
Statutory Authority: SHC § 36600â36671