Virginia Winery Question

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cenk57

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I am currently in the planning stages to open a winery in Virginia. There are a couple different state licensing options. Does anyone here know the difference between a "farm winery" and a "winery" license in Virginia? The state code is a little confusing and there is no guidance on the VA ABC website. Thanks!
 

Cynewulf

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It looks like the biggest difference is being a farm winery allows you to operate a retail outlet and sell direct to the public or a retailer while being just a winery you have to distribute through a state-approved wholesaler. You probably saw that to qualify as a farm winery you have to grow 51% of your fruit: Wine licenses (§ 4.1-207)—Virginia Decoded - Virginia Decoded

I started reading this too which provides some interesting history: https://www.strotherlaw.com/wp-content/uploads/2015/08/Wine-Law-CLE.pdf
 

VinesnBines

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You have to be a Class A farm winery first. That means you must also have a vineyard and grow 51% of your fruit. Otherwise you have to purchase an existing Class B farm winery and be grandfathered (I think). There is no such thing in Virginia as just a winery that buys all fruit. A Class B farm winery can buy more fruit but you have to hold a Class A license for a period of time. I think 5 or 7 years.
 
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Cynewulf

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You have to be a Class A farm winery first. That means you must also have a vineyard and grow 51% of your fruit. Otherwise you have to purchase an existing Class B farm winery and be grandfathered (I think). There is no such thing in Virginia as just a winery that buys all fruit.
My read is that a Class B farm winery has to first be a Class A for 7 years: Farm Wineries

And ABC and the Virginia code make it look like you can operate a winery to manufacture and sell wine without growing fruit, you just can’t sell direct:Wine and Spirits Industry Licenses

 
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If I'm not mistaking you don't have to own all of the land the 51% is on. Leases on other vineyards, even a portion of the vineyard are also acceptable to meet the 51% requirement. You don't even have to manage the leased vineyard although most do make the determination of when to harvest the grapes. Another benefit of the farm winery is you don't have to go through the building permits and inspection process. Your well and septic will have to be approved by the health department and depending on your location the well will have to be built as a public well. You will also need zoning and land disturbance permits if you're doing any improvements.
 
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I am currently in the planning stages to open a winery in Virginia. There are a couple different state licensing options. Does anyone here know the difference between a "farm winery" and a "winery" license in Virginia? The state code is a little confusing and there is no guidance on the VA ABC website. Thanks!
To be on the safe side I would recommend a meeting with your local jurisdiction.
 

Cynewulf

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You need legal advice. Mary Beth Williams-Williams Consulting is a good resource. I’ll use them if I get my winery established.
Btw, do y’all have a target date in mind? I need more people to live vicariously through plus it would be a good excuse to head down south.
 

cenk57

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Just to clear up a few things. There is definitely three license options in VA. Farm winery class A and B and just a “winery” license. Farm winery class B requires the licensee to have had a class A license for 7 years. That counts me out.

A class A farm license requires 51% of the fruit used to come from the licensees farm. It also allows up to 5 retail locations. It allows on premises and off premises retail sales.

A “winery” license allows the same as a class A license, but does not have the 51% requirement. It also allows the use of a still if you are using the spirits to fortify wine. It also allows retail sales and on premises consumption at the licensed winery as well as off premises sales of closed containers. The cost of the Class A Farm and the Winery license are essentially the same.

This is how I interpret it anyway. It is VA Code 4.1-206. Title 4.1. Alcoholic Beverage Control Act


I must be missing something because I don’t know why anyone would choose the Class A Farm winery over the regular “winery” license. I am interested to see the response from ABC.
 

VinesnBines

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Btw, do y’all have a target date in mind? I need more people to live vicariously through plus it would be a good excuse to head down south.
Very much in the future; at least 5 or 6 years. We are just establishing the vineyard; the first 1/3 acre is in the third year with a very small crop - cold springs have been rough. We have 1 1/2 acres now "under leaf". I'd like to have 3 acres before we think about winery.

Anyone is welcome to visit though. We have some other wineries in the area (okay, just one in the county). I'm happy to show my work so far. I won't have my own vintage until at least Spring 2022.
 

cenk57

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UPDATE. The special agent for VA ABC just called me. I was impressed by that fact and the speed of the response, lol. He stated the Class A farm license is exactly what has been posted here. You can have a retail tasting room and sell your wine at retail at your place of business. It also gives the option of adding five other retail locations under the license. He said most wineries using this provision add farmers markets and festivals to their list of other retail locations. 51% of the fruit used must be grown on the licensees farm or on a "leased" vineyard or orchard.

The "winery" license, he said, is a "commercial winery". Prior to 2019, a person operating under this type of license could only sell to wholesalers. The General Assembly changed that in 2019 - allowing the "winery" licensee to operate a retail location and tasting room. The 51% fruit requirement does not apply. With a winery license, you can also get additional retail location licenses at a small cost.

I will definitely seek further advise as I get closer to applying. I am not sure why one would tie themselves down to the 51% requirement. I also considered maybe there is a distinction in local zoning ordinances. I looked into that as well. Both a commercial winery and a farm winery are permitted by right on A1 (agriculture) zoned land in my county - which is what our land is zoned under. So, I am still a little confused as to why someone would choose a Class A farm winery over a commercial winery license. While the 51% requirement wouldn't be bad to overcome with the lease options (not sure how available they are, but I am sure a vineyard operator would be open to the idea), why not just opt for the commercial winery license with no requirements? Customers would never know the difference unless they asked or looked in to it. Your thoughts and suggestions would be greatly appreciated:)
 
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@cenk57, laws sometimes make sense when first passed, but over time amendments morph them into a hodge-podge that no longer makes sense. When the 2019 amendment was passed, no adjustments were made to the related laws, and it's unlikely the bill sponsors bothered to look at the bigger picture.

If it were me? I'd look into why the 2019 was passed, find out who lobbied for it. Find out further amendments are in committee, and if prior amendments were shot down. That may provide insight into possible future changes in the laws. If nothing else, it may provide insight into the overall grape/wine economy in VA. I assume your investment is not trivial, so more knowledge helps to protect your investment.

At this point there may be no important difference between the two, other than the 51% requirement, but I'd be cautious.

Good luck with this and keep us updated. You may prompt others to take the plunge, and this is useful information.
 

VinesnBines

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o, I am still a little confused as to why someone would choose a Class A farm winery over a commercial winery license. While the 51% requirement wouldn't be bad to overcome with the lease options (not sure how available they are, but I am sure a vineyard operator would be open to the idea), why not just opt for the commercial winery license with no requirements? Customers would never know the difference unless they asked or looked in to it. Your thoughts and suggestions would be greatly appreciated:)
Virginia is big on agritourism and MANY people that visit a winery in Virginia ask (first question I ask), what are you growing/which wines are estate wines. The reason most of us are looking at farm wineries is because prior to 2019, the farm winery was the only way to have a tasting room and as Fred pointed out, the zoning requirements are much less.

On the other hand, you may have trouble buying quality fruit. Of course you can just truck in juice or fruit and make non-Virginia wine.

Personally, I'm into growing and showing off what I can grow in my area. The winery will be more than just a production area, bar and retail area. Our winery will showcase our wine, our vineyard and our gorgeous area of Virginia.
 

cenk57

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Virginia is big on agritourism and MANY people that visit a winery in Virginia ask (first question I ask), what are you growing/which wines are estate wines. The reason most of us are looking at farm wineries is because prior to 2019, the farm winery was the only way to have a tasting room and as Fred pointed out, the zoning requirements are much less.

On the other hand, you may have trouble buying quality fruit. Of course you can just truck in juice or fruit and make non-Virginia wine.

Personally, I'm into growing and showing off what I can grow in my area. The winery will be more than just a production area, bar and retail area. Our winery will showcase our wine, our vineyard and our gorgeous area of Virginia.
Thank you for that feedback, very appreciated. I too plan to grow my own fruit and expand my vineyard. When I need to purchase any additional fruit it will definitely be sourced in Virginia. Our county zoning requirements are identical for both license types. I agree with you! I want folks to have the full experience when they visit my winery. I want to showcase my wine and farm. I am just talking about licenses. I will definitely use my own fruit and make my own estate wines. But concern goes back to the 51% requirement. Why be tied down to that? What the license is called is really irrelevant to me.

Regardless of whether we decide to go with the "Farm Winery class A" or the "Commercial Winery" license, we will still be a family operated farm winery.

I believe it is the local benefits of the farm winery as opposed to the federal regulations that makes the difference.
You are correct. In researching federal codes, I see no distinction between a "farm winery" and a "commercial winery". I work in local government and have researched local codes as well. Our local ordinances treat a "farm winery" and a "commercial winery" the same. I have not checked with the health department. But I would be willing to bet that their regulations make no distinction either. This has been an interesting topic to research.
 
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Cynewulf

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Very much in the future; at least 5 or 6 years. We are just establishing the vineyard; the first 1/3 acre is in the third year with a very small crop - cold springs have been rough. We have 1 1/2 acres now "under leaf". I'd like to have 3 acres before we think about winery.

Anyone is welcome to visit though. We have some other wineries in the area (okay, just one in the county). I'm happy to show my work so far. I won't have my own vintage until at least Spring 2022.
If I recall, you planted quite a few varieties to evaluate what works best at your site. What are you happiest with so far and do you have a sense of what your final focus will be across the three acres?
 

franc1969

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I am currently in the planning stages to open a winery in Virginia. There are a couple different state licensing options. Does anyone here know the difference between a "farm winery" and a "winery" license in Virginia? The state code is a little confusing and there is no guidance on the VA ABC website. Thanks!
It looks like 'winery' licensee can distill fruit for their own fortification use, can buy fruit anywhere, can sell wholesale or retail, no % limitations. Will need to buy separate location licensing, say for farmer's market or events. Cannot sell wine other than their own production for on-premise consumption but can sell them retail.
Farm wineries required to grow 51% A or 75% B of their own fruit, but can get an exemption. No distilling equipment or fortification mentioned, but I assume not as wines are limited to 21% alcohol. Can have 5 premises/ locations added as part of same license at no additional charge. Can sell wines produced on farm and elsewhere for on-premises consumption, including the five other premises. Can mix wine for consumption -might apply to sangria?
All this is regulation recently updated that takes effect in 2022. I'd decide what other revenue you're expecting from your farm to decide what license you might want, and likely find a consultant. Larger wineries and breweries near me have a large bar/ tasting room and a variety of other revenue streams- weddings, food trucks, music events, etc. Smaller ones don't have space or desire and use farmer's market and outside events, or smaller tasting room visits.
 
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