Vermont Legislature SmartTranscripts:

[Rep. Matthew Birong (Chair)]: You're live.

[Unidentified Committee Member]: Today, June was born.

[Rep. Matthew Birong (Chair)]: Alright. Good morning, everyone. Welcome to house government operations and military affairs. Today is Wednesday, January 28. We're gonna spend the morning discussing a handful of bills in the alcohol department of liquor and lottery realm, and we do have some guests with us to discuss these things as we navigate through them. The first piece we're gonna be taking a look at today is h six four seven, an act relating to Vinus beverage manufacturers and for fourth class licenses. And we have some familiar faces kicking around. I guess, let's start with David Keck.

[David Keck]: Good morning, everyone. Can you hear me okay?

[Rep. Matthew Birong (Chair)]: Yes. We can. Good to see you, David.

[David Keck]: Outstanding. Likewise, sir. Thank you so much for for addressing this bill and for having us on for testimony. Really appreciate it. Thank you all also for your time. I know you guys are got a couple other very busy things going on right now, but thank you, Representative Boyden from the Great County Of Lamoille for introducing the bill. And I'll dive right in. I know Rob's in the room as well to add some, a few comments as well. The Council of Vermont, so I'm speaking on behalf obviously of Stella fourteen Wines, I'm David Keck, I own said winery and I'm the legislative liaison for the Vermont Grape and Wine Council. The council supports this bill because it will give small producers in Vermont the flexibility to responsibly showcase Vermont grown wine in the way that works for individual wineries through tastings, education, food forward events, and while also obviously maintaining clear limits and enforceability, which are obviously important to all of us. I really appreciate Mr. Anderson's overview last week, I think it was maybe a week and a half ago, the various licenses available. So I think that set up the groundwork for this discussion pretty well. The first section of this bill, and they're kind of addressing two different but related aspects. The first section increases the amount that a licensee is allowed to pour in a fourth class tasting room establishment, fourth class licenses being tasting rooms for manufacturers. This is important to me and my business and the members of the grape and wine council for some of the following reasons. Increasing that quantity that we can pour allows our guests to taste several beverages or enjoy a full pour of wine, beer, spirits, as it's addressed in the bill, depending on what they would like, giving us more options encourage return business and provide proper hospitality for whatever people might be interested in when they visit our tasting rooms. Frequently fourth class tasting rooms are in rural locations in Vermont. So acquiring first class licenses is not always a possibility. First class licenses are available for manufacturers when they manufacture on location, or if it's a full restaurant style setup where we're able to get a full health permit and all of that. So often being in rural areas, we rely on return business to encourage, help the financial stability. So not always just tourists coming in and doing a tasting, but also our local community coming in tasting the beverages that we produce, but then able to actually return and have a glass of wine and support the community in that way. As a quick reminder, servers for fourth class tasting rooms are also required to follow all of the same training that a server bartender in a full restaurant or bar is required with respect to liability and understanding how to monitor guest consumption. And I think that's mainly important to point out that frequently in this conversation, the concern about liability comes up and our servers are obviously at the same standard with respect to paying attention to guests coming in, their level of potential previous intoxication, things like that, that might be a concern. The difference in profit is pretty substantial. When we're able to pour full glasses of wine, our profit margins increase substantially, whether that be for wine, beer, cider, spirits, etc. And then this section of the bill would also greatly improve our ability as manufacturers to create spaces that encourage our business goals, contribute to taxes in the state, and also sort of generate community in the rural areas in which our tasting rooms exist. So, that's kind of the, at least from our perspective, the quick overview on the positives for changing this part of the legislation. I think before moving on to the next section, it might be worth pausing here for any questions or thoughts on that section of the bill. Any answer to

[Rep. Matthew Birong (Chair)]: this part? To the liability insurance question, I assume because you're serving poores, you're carrying the same style of insurance should an accident occur by someone, you know, operating a motor vehicle once they leave your premises?

[David Keck]: Yeah. We we're required already to have the same, liability even as the statute currently exists.

[Rep. Matthew Birong (Chair)]: Okay. Yeah. And I assume that. I just wanted to say it out loud for the sake of the conversation here. And so you're looking at, like, two different are these two different structures between the farmer's market location and the tasting room? Or is it the the same sting as I'm looking at the two ounces of malt minus ready to drink with a total of eight on the farmer's market, and then the fortified wines, one ounce, and then you're getting the ability to have some more pour capacity within the tasting rooms. Am I reading this correctly?

[David Keck]: That's exactly right. The comment was brought up, when this was discussed in the past that, there was concern that farmers markets pouring full glasses of wine or a full beer would be less safe, than people would like them. So they adjusted it so that farmers markets continue to follow the same poor requirements while tasting room establishments would, that that would change.

[Rep. Matthew Birong (Chair)]: Understood. Yeah. No. They're just structurally a different beast to contend with. So Yeah. I get I get why the structure is existing like that. Okay. Mean, I'm the nerd who's been doing this policy for eight years, so I get it. Any questions?

[Rob Napnick]: Well, just one comment on that.

[Rep. Matthew Birong (Chair)]: Yes, please. You can identify yourself for the record, please.

[Rob Napnick]: My name is Rob Napnick. I'm from Ellis State Junior. I'm also on the Demopoille, the Green Council, their education secretary. Just to point out the difference between farmer's market and other fourth class licenses, we have to apply for a separate license for that, so it's easy to distinguish between them. As a producer, you get a fourth class farmer's market permit, and then you also have to get a fourth class tasting room permit. It's easy to distinguish between those, and there's no confusion between just pointing that out. For whatever reason, they are both put under the headquarters of fourth class licenses, but this further just makes it a different entity, which they are different. You don't want people at fibrous markets walking around with full laps of wine. That's completely crazy. One really wants their companies.

[Rep. Matthew Birong (Chair)]: I'll leave it at that distinction. Think that's an important point of clarity, that they do function within the umbrella of access, so as a fourth class license holder. Appreciate that.

[David Keck]: All right, anything else? Back to you, David. Great. So the second part of this bill is addressing a second first class license establishment. So I think it's worth kind of articulating this a little bit more clearly because it can get confusing. As a manufacturer, we are permitted to apply for a first class license, which allows us to do full pours, buy from distributors, kind of operate in a different way, provided that that first class license exists at either our manufacturing facility or in a full restaurant format with three compartment sinks, etcetera. Currently, we're as producers, as Vinus producers in the state of Vermont, we're allowed to apply for one first class license, where the brewers are malt beverage brewers are permitted to apply for two of those. And so this just changes the statute to create parity between Vinus and malt beverage producers so that we can also apply for a first class license in a second location. The rationale behind this, other than the obvious parity that I know that DLL is working hard to kind of iron out a lot of the parody concerns in the statute as it exists right now. But it's important to us now really because of where Linus production is in the state of Vermont as a growing industry. And so it's really become important to have those first class licenses. One of the largest barriers to growth for Vinus producers is education and consumer understanding. And so by being able to have a couple of those locations, one at a vineyard and one maybe in a tasting room location allows us to do more winery visits, education, food forward events, etc. And all of that sort of experiential farm to market or farm to table programming gives us with a first class license, ability to do it in a little bit more event and structured format, wine dinners, things like that, where we can really display the beverages in the way that they're intended. So the hope there is just, again, to create that parity and give us the opportunity to produce to create two, but no more than that first class licenses.

[Rep. Matthew Birong (Chair)]: Right. And I'm just cruising this language because there's, like, a couple of older but familiar conversations buried in this text. So, operate two licensed establishments pursuant to this subdivision that are located or licensed, and it still has that contiguous with the parcel of land. So it's not like a satellite that's far removed from the location. It has to be linked.

[David Keck]: Exactly. No. And so this and Rob and I were just actually chatting about this. Really the two parts of this bill are complementary. Like I, for example, don't have a tasting room location that could get a first class permit. It's not in my manufacturing area. It's not and it doesn't have restaurant facilities. So this does, so that's why the fourth class, the first part of the bill really applies to my style of tasting room that we've had in the past. Whereas Rob and Kendra, for example, have their tasting room at the winery, or pardon me, at the vineyard, as well as their tasting room in Stowe, both of which have the potential for a first class license. So that part really applies to their situation specifically.

[Rep. Matthew Birong (Chair)]: Yes, please, sir.

[Rob Napnick]: To add further comments, to get a first class license, it has to be at a manufacturing site and getting a manufacturing site is like no easy task. You first have to get federal approval from the TTB. And then you also have

[Rep. Matthew Birong (Chair)]: to get state Acronym bust the TTV, for those of us watching at home.

[Rob Napnick]: Oh, it's Tobacco Trade Bureau. Yeah, something like that. Yeah.

[Rep. Matthew Birong (Chair)]: They're the ones that say yay to your labels.

[Rob Napnick]: They yay to It's a federal alcohol, and they also do firearms and tobacco. It's their federal DLL. So we have to get the federal approval to get a manufacturing location. And then once we get that, then we also have to get state approval, which includes town approval. So these first class licenses are actually cumbersome to obtain, but it makes a lot of sense in our industry because it's a very small industry, and we often have to have a location where we grow the grapes, and then we might have multiple locations where we're growing the grapes. And then we also have to have a production facility. In the ideal world, they would all be co located in a very tourist friendly town and everything like that. But the reality is that these get spread across the state. And so the flexibility of bringing people in, if we already have multiple locations to actually have this second first class license. It's just a great way for us to showcase our wines. A lot of you probably maybe are thinking Vermont and wine, what are we doing here? And that's sort of an uphill battle that we as producers, it's the reality. People don't associate Vermont with wine, and that's our biggest challenge, is getting people to just try our wine. Once they get to try our wine, we are proud of our product and it sells itself. But getting them in the door is the hardest part. And so a first class license gives us a lot more flexibility to do more wine pairing type events, bring in a local restaurant to do things. It's just more flexible and allows us to have more of an experience for our customers. And we've found already that that is extremely helpful, getting people to try our wine and fall in love with our wines. We're very proud of our product, but no one's going buy it off the shelf unless they've tried it and useful for finding out. Both these proposals will help give us producers flexibility for our business models, and that are going be different for all the producers. So we're not trying to do anything different. We're just trying to really just come up with ways to showcase our watch.

[Rep. Matthew Birong (Chair)]: And it's just the old adage, they got to try it before they buy it. Yeah. Yeah, and this just frees.

[Rob Napnick]: Yeah, and so I don't know the full history of how Vermont beer became a thing, but it is a thing. People come to Vermont for the beer, it wasn't like that thirty years ago. And so some of these changes, and there was this carve out for malt beverage producers to have two first class licenses. And so we're just asking for sort of parity for that, that would help us give us flexibility.

[David Keck]: Well, the great irony there is of course that you can actually brew beer anywhere, and we can only grow grapes where we can grow grapes and produce the wine as close to those places as possible, and so that bit of flexibility is probably even more important for wine producers than anybody else.

[Rep. Matthew Birong (Chair)]: Yeah. No, that's a very fair point. Yeah. Because you're gonna be attached to your actual agricultural aspect of your business, which is gonna be in a more rural and less traveled area more often than not, whereas you put a brewery in any industrial area with a denser population mass. Precisely. Okay. Questions on this one? Little bit out of schedule too, so feel free to poke away. Anybody else in the gallery tracking this stuff while I comment? Since

[Rob Napnick]: I'm here, I can add.

[Rep. Matthew Birong (Chair)]: Cool. I'll tell you what. Why don't why don't we drop you in the chair just so, like, keep it a little bit more formal? I wanna let you guys, like, a live and in person slash video duet.

[Rob Napnick]: I'm just I mean, we, as an industry, are it's a very small industry, and we're still getting just the word out that we would hear. And, some of you probably are still thinking, like Vermont, why can we grow grapes here? And what we're doing is we're growing new types of grapes that are called hybrid grapes. And so they're crossbreeds of North American varieties with the famous wine varieties that all originated in Europe, around the Mediterranean, which we have a much different climate than the Mediterranean here. If you go hiking in the woods here in Vermont, there's tons of native grapevines that just grow wild, they adapted to this climate. But we, we haven't done the crossbreeding, but the University of Minnesota and Cornell have made this big push over the last thirty or forty years to hybridize or cross breed, varieties that thrive in these cold climates. And so they're relatively new grapes to the world. Like some of the grapes, the first commercial vintage was only fifteen years ago. And so the flavor profile is something that's unique and it makes a really good quality wine, but it's a different flavor profile than stuff coming out California. And so really getting people to try it is something you really have to advocate for. And so just trying to come up with a flexible business model to adapt to that is really just what we're looking for here. And we really think that these grapes are growing really well in Vermont. Okay. That's been established. Like, for the last twenty years, we actually have vineyards that are over 20 years old now. Okay. The grapes are thriving, they're doing well. And it's a great use of some of the the land, for agricultural purposes that may be for the failing not failing daily industry, but declining dairy industry. Like, using some of that land for growing grapes is something that potentially could be a very forward looking thing for the state. So, again, I was just adding comments. No. No.

[Rep. Matthew Birong (Chair)]: No. Like, understanding the as to why from, like, your perspective is, like, really important for us when we started, like, teeing up this decision and how we're going to keep going. So I appreciate that.

[Unidentified Committee Member]: Yes, so that I can get a visual. I'm trying to I went to a wine tasting at the vineyard on Route 7, almost in Arlington, and there's a beer place on the left.

[Rob Napnick]: Yes, Shelburne Vineyards.

[Unidentified Committee Member]: Shelburne Vineyards. So would they be required to have a first class, because it's there on premise?

[Rob Napnick]: So they currently have a first class license at their location there. And then if

[Unidentified Committee Member]: they did wine tasting off premise, then they would be required to have

[Rob Napnick]: Well, they actually have multiple vineyard locations. And so at one of their other vineyard locations, like they have one down in Charlotte, they could open another first class floor. First class there.

[David Keck]: And so the conversation with Shelburne actually precipitated part of this move for the bill because they previously owned the vineyard at Lincoln Peak as well. They were the first purchasers after Chris Gransrom sold it. And they could not get a first class license at that location, regardless of the fact that they owned the vineyard, owned the tasting room, owned the production facility, but they already had a first class license at their other And so that was actually the first case in which it was challenging because they were like, we would like the same business model here where we've jumped through all the hoops from a federal and state regulation perspective, but we still can't do it because it's not in the statute.

[Unidentified Committee Member]: Gotcha.

[Rob Napnick]: And when we on the council, like, we're we've got a lot of momentum actually in the last few years, and we're trying to push that, and we hope there's a lot of growth. But growth isn't we're still not gonna build a $10,000,000 facility anywhere. Like, that's just not where the industry is. And most likely, what will happen for growth is individual winery will actually actually have to start somewhere else brand new. And so they'll almost having multiple manufacturing facilities is something probably the way it's going to evolve. And so having this flexibility again is something that we're looking for.

[Rep. Matthew Birong (Chair)]: Okay. Anything else for our guests? If not, we'll hit the pause button until we take up the next bill. But, no, thank you for your time.

[Rob Napnick]: Yeah, you're welcome.

[Rep. Matthew Birong (Chair)]: What we're doing right now is we're just really getting a little bit more granular on some of the proposals that we're gonna, like, bundle into a bigger piece of alcohol policy. Okay. Okay. Appreciate the time. So much. Really appreciate you taking the time. Yeah, no problem, David. Good to see

[David Keck]: you. Likewise.

[Rep. Matthew Birong (Chair)]: Alright, with that, we got twenty two minutes till our next order of business, so we're

[David Keck]: gonna hit the pause button.

[Rep. Matthew Birong (Chair)]: Go ahead and take us off.