Is Maine Screwing Up its Wine Industry?
Maine’s up-and-coming wineries struggle against a dizzying array of convoluted laws.
- By: Edgar Allen Beem
Last summer, Maine became the laughingstock of the oenosphere (that’s the wine world) when the state legislature enacted a law that required wine shops and specialty stores to hang curtains so that children wouldn’t be able to see wine tastings. Ironically, the law in question, LD 498, was actually intended to liberalize Maine’s laws regarding complimentary tastings of distilled spirits, wine, and malt liquors in retail stores.
Representative David Webster (D-Freeport), who submitted a last-minute amendment to LD 498 stipulating that tastings “must be conducted in a manner that precludes the possibility of observation by children” has been explaining himself ever since that bill passed last June. His amendment originally had a square-footage requirement that would have targeted supermarket chains, he explains, but the size requirement was changed in committee. When the law was implemented, that alteration inadvertently swept up any retailer that carried “at least 125 different wine labels” into the no-child-left-in-sight provision.
“The enforcement people set extremely high standards,” Webster says. “That was not the legislative intent.” He and other legislators quickly submitted bills to undo the snafu, but as the legislature wouldn’t meet again until the special session in January 2010, LD 498 pretty much put the kibosh on wine tastings all over Maine during the festive Thanksgiving and Christmas seasons.
The tastings kerfuffle, an admitted regulatory miscue, got a lot of ink in the wine press, but it is just the latest in a long line of questionable rules regarding the manufacture, distribution, and sale of wine in Maine. The Pine Tree State is now home to sixteen wineries, each licensed to produce up to 50,000 gallons a year, yet all of them combined only managed to produce 36,000 gallons in 2008, barely a drop in the enticing bucket that is the state’s 3.9 million-gallon wine market. Winemakers and wine regulators agree that if Maine’s fledgling wine industry is to capitalize on the state’s growing reputation as a culinary destination, its wineries will need to become more productive and more competitive — and its liquor laws will need a comprehensive overhaul.
Any revisions to Maine’s wine laws, though, will have to deal with Title 28A, the law that governs alcohol in Maine. And that, winemakers say, is where the problems always begin.
“The legislation leaves it too vague,” says Steve Linne, proprietor of Blacksmiths Winery in South Casco, plopping a marked-up copy of the novel-length “green book” that is Title 28A onto the bar of his tastings room. “Too many of the regulations are open to interpretation. Liquor licensing has vague laws that have to be interpreted.”
“We’ve brought this up a couple of times to the legislature,” agrees Jeffrey L. Austin, supervisor of liquor licensing and compliance for the Maine Department of Public Safety. “It is confusing even to those who work with it every day. As laws get changed, people overlook the fact that other laws are affected by it. Title 28A has been morphing ever since it was put into effect [in 1987, when it replaced Title 28].”
A perfect example of the issues Title 28A can create is the problem winemakers face whenever they try to offer a tasting of their prized libations.
“Why can’t we charge for a tasting? I don’t know,” says Steve Linne. “In other areas of the country, wineries make significant money charging for tastings.”
Visitors to Maine wineries are often pleasantly surprised to find that tastings here are free, but they are just as often miffed to find that, if they taste something they like, state law prohibits the winery from selling them wine by the glass (vintners can only dole out a total of five ounces per person).
“That’s because a winery is licensed as a manufacturer and an off-premise retailer,” explains regulator Jeff Austin, adding that breweries and distilleries are allowed to have liquor licenses, but wineries are not. Why? “Because that’s the way the legislation they put in is written,” he says.
Yet even such codified situations seem to have exceptions. Winterport Winery, for instance, had a liquor license for three years by virtue of maintaining a restaurant next door (separate door, separate corporation) where it conducted wine pairings with meals and cooking classes. Owner Michael Anderson was surprised, therefore, when he was told that he would not be able to renew his license in 2009.
“Mike, we’ve got a problem,” a state liquor inspector told him. “I want you to become a brewery.”
It seems that Blacksmiths Winery in South Casco had applied to do what Winterport Winery was doing, and the liquor inspector in southern Maine had denied that application. “[Winterport’s] license was granted erroneously,” says Jeff Austin. “The inspector interpreted it as the same as a brewery.”
So, at the errant inspector’s suggestion, Mike Anderson purchased brewing equipment and added Penobscot Bay Brewery to Winterport Winery in order to keep his liquor license.
Anderson says the explanation for inconsistencies such as the one he experienced, as well as the other regulatory glitches Maine wineries have experienced over the years, has a historical origin. “I’ll explain all the liquor laws in the state of Maine in one sentence,” Anderson says. “Prohibition began right here.”
Maine enacted the nation’s first statewide Prohibition law in 1846 when it banned the sale of spirits for all but medicinal and industrial uses and enacted the more stringent “Maine Law” in 1851, prohibiting the manufacture and sale of liquor entirely. The Pine Tree State remained dry until the repeal of national Prohibition in 1934. There are still as many as forty dry towns in the state, but that is changing.
Last November, the town of Friendship voted to allow the sale of beer and wine, though not distilled spirits, for the first time since 1919. The Waldo County hamlet of Morrill, which already allowed beer and wine sales, voted to allow the sale of liquor as well. Some in the wine industry believe that today’s contradictory and problematic liquor laws are a hangover from the days when Maine was a hotbed of teetotal temperance.
Maine’s dizzying array of convoluted liquor laws may well embody the state’s historic ambivalence about alcohol, enabling its production and sale on the one hand, restricting its promotion and distribution on the other, but Maine is hardly alone in its confusion. In California, a state with a mature wine industry supporting 1,300 wineries, a San Francisco vintner was recently fined eighty thousand dollars for serving his wine at seven of his own restaurants. (California law, it seems, only allows a vintner to supply wine to two restaurants in which he has an interest.) And in New York, a state with more than 250 wineries, it is still not legal to sell wine in grocery stores.
Yet Maine undoubtedly has its own peculiarities. Wineries with tasting rooms and showrooms, for example, could greatly supplement wine sales and improve their cash flow by renting out their facilities for weddings, receptions, and meetings, but the Maine Farm Winery Law only allows rental of winery spaces for private events if no alcoholic beverages are served.
“It would be lovely to use this space off-hours for private events,” says Bettina Doulton, who purchased Cellardoor Winery and Vineyard in Lincolnville in 2007 and converted its spacious barn into an elegant tasting room. “People want to do weddings here, but we can’t do off-hour events. The trade-off is that I get to operate in all three tiers. I can manufacture, distribute, and retail my product.”
The Maine Farm Winery Law passed by the Maine Legislature allows wineries to operate as manufacturers, wholesalers, and retailers. Without that law, written by Robert Bartlett in 1983 so that he could start Maine’s first farm winery, Bartlett Maine Estate Winery, in Gouldsboro, there would be no wineries in Maine at all.
Among the other seemingly arbitrary wine regulations is one that only permits wine stores to conduct twelve tastings a year, despite the fact that they are in the business of selling wine every day. Representative David Webster will seek to appease irate wine merchants by increasing that number to eighteen when he introduces legislation to undo his controversial amendment to the tastings bill.
To give the legislature some credit, several alcohol-related bills that passed in the 2009 regular session did loosen up Maine’s liquor laws. LD 532, An Act to Clarify Allowable Practices Concerning Maine Farm Wineries, for instance, for the first time allows owners and employees of wineries to pour their own wines at off-premise tastings, as long as “an incorporated civic organization” is the beneficiary of the tasting. Until now, vintners have been prohibited from pouring their wines at tastings other than those at their own wineries.
According to regulator Jeff Austin, the pouring prohibition is a liability issue. “Who’s responsible if something goes amiss?” he asks. “Only an employee of a retail business may pour drinks.” Another law that drives wineries nuts is the prohibition against donating wine to charitable events. “It bothers wineries that we are not allowed to donate wine to bona fide charities,” says Winterport Winery’s Anderson.
There are, however, ways around this rule. First, in 1997 the Maine Legislature created a so-called “carve-out” for the Maine Public Broadcasting Network (MPBN), which allows it to receive wine and beer gift certificates for its annual auction. That exception aside, Jeff Austin declares matter-of-factly that while “no licensee can give alcohol away,” wineries can get around the law with a little fancy financial footwork. Essentially a winery has to give charities money with which to purchase wine, instead of giving them the wine itself.
“A winery,” explains Austin, “can turn around and say, ‘I’d like to give you wine, but I can’t. Here’s a check for five hundred dollars. Do with it what you may.’ ”
Probably the biggest hurdle facing Maine wineries seeking a wider market, though, is distribution.
“Our guests don’t understand the shipping laws,” says Cellardoor Vineyard’s Bettina Doulton. “They just don’t.”
And who can blame them? The laws that regulate the shipping of wine, both interstate and intrastate, are complex and confusing at best. Steve Linne at Blacksmiths Winery keeps a notebook behind his tastings bar that color-codes states he can ship to, can’t ship to, and might be able to ship to under the right circumstances. Every state has its own shipping laws and many counties impose additional restrictions of their own.
With the passage last year of LD 1008, An Act To Increase Consumer Choice for Wine, the last legislative session sought to ease the distribution burden by legalizing the direct shipment of wine to consumers.
“A Maine winery may ship in-state directly to a consumer and out-of-state directly to a consumer as long as they comply with all the statutes in the state to which they are shipping,” explains liquor supervisor Jeff Austin. “Prior to the new law, nobody could ship directly to consumers.”
Of the twenty direct wine shipper’s licenses Maine has issued so far, however, nineteen are to California wineries, with only one going to a Maine winery. Bettina Doulton secured a direct shipper’s license for Cellardoor Vineyard because her business is almost entirely retail sales directly to consumers.
“We do 90 percent of our sales through this tasting room and the tasting room at the Villa [a Cellardoor store in Rockport],”explains Doulton. “We have very little [wholesale] distribution. Bartlett, Blacksmiths, and Winterport all have a presence [in wine stores] around the state.”
Out-of-state shipping is a far more formidable task than in-state shipping. Blacksmiths, Winterport, and Cellardoor all use VinoShipper, a California-based direct marketing distributor, to get their wines to customers in the seventeen states to which the carrier ships. Purchasing licenses and keeping track of sales and excise taxes in individual states is simply too expensive and time-consuming for most small Maine farm wineries.
“It’s a nightmare to sell in other states, but that’s a national issue,” says Bob Bartlett of Bartlett Maine Estate Wine. “Eighty percent of our customers come from out of state. They’d like to be able to order in the winter, but it’s very difficult.”
One of the states that is most difficult to ship to is Massachusetts, a potentially lucrative market for Maine wines. Though the Bay State passed a direct shipping law in 2006, it imposes a limit on the number of cases of wine any individual can import. Because it is impossible to ascertain whether a customer has exceeded the annual limit, neither UPS nor FedEx will knowingly ship wine to Massachusetts. In the best Maine smuggling tradition, however, some Maine wineries have occasionally resorted to shipping wine to Massachusetts customers unmarked.
As the godfather of Maine wine, Bob Bartlett believes Maine could do better by its wineries and vineyards. But doing so will require fostering a regulatory climate that reflects contemporary cultural mores rather than those of the past.
“If you want to promote Maine wineries and Maine food,” he insists, “you have to get a little more modern in these laws.”
- By: Edgar Allen Beem