Officials find wine regulation a quagmire split among agencies

Wine is an alcoholic beverage. And a food item. And a manufactured item. Regulation of Oklahoma’s growing wine industry is a confusing thing, said representatives from a few of the state agencies with some jurisdiction over the industry.

Kurt Morgan, legal counsel for the state Alcoholic Beverage Laws Enforcement Commission, was barraged with questions during Tuesday’s meeting of the state House General Government Subcommittee on Government Modernization. Winemakers in Oklahoma may sell bottles of their wine at the winery, but the customer cannot drink from the bottle while on premises. The winery cannot ship wine purchased at the winery to the customer’s home, but the customer may leave the premises and ship the wine themselves. The winery may sell samples of wine at the winery, but there is no definition in law of the word “sample.” There is also no clear definition of “festival,” though the law allows wineries to sell their products at festivals.

To explain how Oklahoma lawmakers managed to craft such a bewildering set of laws regarding wine sales, Morgan went all the way back to the federal repeal of Prohibition laws in 1933.
When the 21st Amendment to the U.S. Constitution made alcoholic beverages legal once again in America, the Oklahoma Constitution continued to prohibit the sale of alcohol in the state. Over the years, Oklahoma’s liquor laws have never received a complete overhaul; rather, the Legislature has tweaked certain aspects of the law as needed. In 1959, voters repealed total prohibition. Bars in Oklahoma were not able to serve liquor by the drink until 1985, and even now some counties continue to adhere to the policy. But none of those law changes dealt with the unique circumstances experienced by in-state wineries.

“There has been an explosion of new wineries,” said Morgan. “I don’t think we could have anticipated that.” Thus, Oklahoma’s laws governing the wine industry have evolved in piecemeal fashion since the late 1990s.

“The Legislature passed laws to allow wineries to sell bottles at the winery, then that was expanded to allow them to sell samples,” Morgan said. “Then that was expanded to allow them to sell at trade shows and festivals. But there is no definition of a festival in statute.” Officials at Tuesday’s meeting questioned whether farmers’ markets in Oklahoma may be defined as a festival, which would allow wineries to sell wine at those events using their registration with the Department of Agriculture.

Jack Carson, spokesman for the Agriculture Department, said after the meeting the agency does not consider farmers’ markets a festival.

Because wine is considered a food item, wineries are subject to inspection by agents of the state Department of Health.

“All preparers of food must have a license,” said Kevin Pipes of the Health Department, adding that wineries are required to hold a manufacturer’s license as well. Andrew Snyder, owner of Sand Hill Vineyards and Winery in Calumet, said the state agencies work with the wineries as best they can.

“I have three locations, so I talk to three health inspectors,” said Snyder. “The same inspectors check tattoo parlors. There’s a big learning curve.”

Snyder said he would like to see the Legislature address the shipping issue in 2009. While intended to discourage wineries from shipping directly to customers – a freedom the wineries and many wine aficionados would like to have – the prohibition has unintended consequences as well, preventing wineries from shipping samples to one another and to retailers.

Voters will decide in November if wineries from Oklahoma and out of state will be allowed to sell their products directly to retailers and restaurants. If the measure passes, the Oklahoma Tax Commission will have to revise its methods for collecting taxes and conducting audits, said Dawn Cash of OTC.

Marta Patton of the ABLE Commission said members of the wine industry recently met with ABLE Commission officials and identified areas of law and administrative rules that appear restrictive and/or confusing, including the definitions of “sample” and “festival.” To resolve all of the issues raised, changes would need to be made not only in state law, but in the agency’s rules and possibly in the state constitution as well.