By Dawn Dolan
Garnering attention from such disparate online news sources such as Forbes, The Emerald Report and Homeschooling Guys, Wine Industry Network’s newest conference, the Wine and Weed Symposium, announced for August, 2017 in Sonoma County, CA, will be the first such pairing of these two industries. One, a tried and true luxury item for millennia, with 170-year old historical roots in California. The other an underground, cash industry coming to the light. How will this match-up work out?
Acting as MC for the day, Tina Caputo, long-time wine industry writer and editor explains the purpose of this new event. “The wine and marijuana session at the North Coast Wine Industry Expo [December 2016] focused on the tourism side of the cannabis industry. The Wine & Weed Symposium will be much more comprehensive, covering the topic in-depth from many different angles, from understanding regulations to dealing with competition for land and labor. The idea is for both industries to come together for an open discussion, and to identify challenges and opportunities surrounding wine and cannabis.”
An open forum to provide this meeting of industries was the brain-child of George Christie, owner of Wine Industry Network, the sponsor of this unique one-day conference. “We are facing a lot of uncertainty, and wineries don’t really have any one resource to turn to in order to ask all the questions that are currently circulating. We hope to provide a safe environment where the wine industry people walk away feeling like they know more facts about what the future may hold.”
Topics such as legal issues, collaboration opportunities, threats, environmental issues, and labor issues will all be introduced in the day-long symposium. One of the featured speakers, Tawnie Logan, the Executive Director for Sonoma County Growers Alliance, looks forward to the opportunity to address the wine industry. “We want to help with education and understanding the options open to our industries. How can you [wineries] work with the cannabis industry?” Logan says that the cannabis industry is a cash industry, earning three times as much as the direct-to-consumer wine industry in California, and about 20% of the annual 2016 US wine sales revenue. “It is imperative that the wine industry understand the nuances and how to collaborate with us. The wine industry has had one hundred years to develop, and now gives back to social and environmental causes. We are at year one. We need the wine industry to help bring us in, and show us what responsible industry practices look like.”
Asked what she considers to be the opportunities and the threats that face the wine industry with the implementation of the new laws, Logan replies,” There are many opportunities if the wine industry can get ahead of it. They have the opportunity to work with a new tourist attraction to Sonoma County. We have wine, food, ocean, biking, and kayaking. Craft beer tourism is a new menu item for tourists. Not all visitors are wine drinkers. Men are attracted to beer and spirits, and women want wine. But we are seeing a generational shift. We need to figure out how to incentivize a tourist target market. How many items can they pack into a trip? If you are over 40 years old, maybe you are angled toward the wineries, and you want to experience the vineyards. Kids in their 20’s want to hit Russian River Brewery and the dispensaries, so it’s a different kind of crowd. If we market this appropriately and make it collaborative, we can all do well.”
Rebecca Stamey-White, partner at Hinman & Carmichael will be a featured speaker at the Wine & Weed Symposium. She agrees with Logan about partnership opportunities, and says, “I think the risk of competition is being over-blown. It doesn’t have to be an either-or situation; there is room for collaboration, with consumers enjoying both industries at different points in time. For example, the food element is something the wine industry has done really well. Cannabis goes really well with food, so collaboration on the hospitality around food may be a great chance to work together.”
Problems are sure to arise, and one that Logan acknowledges is unique. Due to the hitherto prohibition status of cannabis, this is an industry that is not being newly created, but it is converting into a daylight industry. “Prohibition instigates black market activity,” she says. “The next five years are the most critical years for transitioning out of prohibition.” Many pot farmers don’t have a savvy supply-chain knowledge due to the underground nature of their agricultural product, and Logan notes that, “The level of business experience in the cannabis industry is almost non-existent.” She says they are looking to the wine industry to be a model for them.
Stamey-White goes further, “The regulatory issues that the cannabis industry is facing are daunting. Unlike the alcohol industry, where licenses are issued at the state level and localities can restrict certain operations but do not issue their own licenses, for the cannabis industry, you have to have a state and a local license, and there may be additional limitations and taxes at the local level. If localities choose to restrict cannabis operations, these businesses won’t be able operate in those communities, even if they would otherwise comply under state law.”
She also notes that banking is an issue, with most banks choosing not to work with cannabis businesses because of the federal illegality. In a February 10, 2017 online article in The Recorder, Cheryl Miller lays out the colossal issue for this industry; banking. Citing Julie Anderson Hill, a professor at the University of Alabama School of Law, Miller writes that Hill reports that attempts to skirt federal restrictions on marijuana banking usually only “work for a short period of time until everyone figures out what’s going on. The trouble here is, you don’t know at what point you’re going to provoke the federal government,” she said. “I can’t tell you where that enforcement line is. In fact, as a lawyer I’m supposed to tell you that marijuana is illegal under federal law.” Miller reports that in the state of Washington, a rigorous and transparent licensing process has led six state-chartered banks and credit unions to accept marijuana-business clients. This may perhaps be the wave of the future for California banking institutions.
Another impediment is the cost of operations of cannabis farming. Stamey-White asserts that is quite high, given the lack of business tax deductions, local and state taxation, and the overall cost of doing business being higher and more complicated in a regulated market. She says that people come to her wanting to get into the cannabis industry. She laughs, “You know the saying how do you make a million dollars in the wine industry? Start with ten million! That is becoming very true for cannabis businesses as well.”
Pointing out another huge impediment, Stamey-White calls out the tax issue. “Cannabis businesses can’t take normal business deductions on their taxes. IRS section 280E states that growers can’t write off business expenses. No other industry has that type of hardship.”
Stamey-White is excited about a full day of discussion of these important issues. “These people are extremely passionate about what they are doing; the plant, their craft, and the medical and lifestyle benefits. In that, it is very similar to the passion found in the wine industry.”
The Wine & Weed Symposium will take place in Santa Rosa, CA on August 3rd from 9 a.m. – 4 p.m. at the Hyatt Vineyard Creek.