FISCAL NOTE

Date Requested: January 25, 2016
Time Requested: 02:34 PM
Agency: Alcohol Beverage Control Administration
CBD Number: Version: Bill Number: Resolution Number:
1909 Introduced SB374
CBD Subject: Alcoholic Liquors and Beers


FUND(S):

General

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


This bill would violate the Granholm, Supreme Court decision by permitting only farm wineries to sell to certain retailers in a dry county. In WV there some wineries located in the state that are not farm wineries and they would unfairly be excluded as well The bill uses terminology not defined in the code and language not used in the code to describe certain licensed entities that already are defined in the code. The bill refers to wine specialty shops in dry counties which do not exist in any dry county. The bill presumptively creates a suppliers license for only a farm winery for no license fee ($150 * 26 current farm wineries = -$3,900). This would violate the Granholm, Supreme Court decision. The bill permits only a farm winery to “supply” wine to a beer retailer in dry counties but not to sell the wine to the retailers, presumptively the wine will be supplied for free. The bill presumptively bestows a wine license on nonintoxicating beer retailers in a dry county without requiring a license application or qualification for licensure, and further it appears no payment of the wine retailer license fee. Currently in wet counties, a farm winery or winery may sell to licensed wine retailers. This would appear unfair to wet versus dry counties. This would be an additional loss of revenue and treat dry county wine retailers differently from all other county wine retailers. These licenses are either $150 or $250. For example, 30 such licenses with 15 at $150 = $2,250 and 15 at $250 = $3750, would be a loss of $6,000 to General Revenue. It is not clear if the farm wineries, acting as suppliers, would pay the taxes associated with the “supply” of wine.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues -10,000 -10,000 -10,000


Explanation of above estimates (including long-range effect):


These are estimated numbers: The bill presumptively creates a suppliers license for only a farm winery for no license fee ($150 * 26 current farm wineries = -$3,900). This would violate the Granholm, Supreme Court decision. The bill presumptively bestows a wine license on nonintoxicating beer retailers in a dry county without requiring a license application or qualification for licensure, and further it appears no payment of the wine retailer license fee. This would be an additional loss of revenue and treat dry county wine retailers differently from all other county wine retailers. These licenses are either $150 or $250. For example, 30 such licenses with 15 at $150 = $2,250 and 15 at $250 = $3750, would be a loss of $6,000 to General Revenue. It is not clear if the farm wineries, acting as suppliers, would pay the taxes associated with the “supply” of wine. Based on these rough estimates it is a potential loss of $10,000 which could be offset by some potential gains in tax revenue derived from sales in dry counties or perhaps such sales would merely be trade off sales already made from wet counties. The above estimates do not account for any gain or loss in wine liter tax or sales tax revenue.



Memorandum


This bill would violate the Granholm, Supreme Court decision by permitting only farm wineries to sell to certain retailers in a dry county. In WV there some wineries located in the state that are not farm wineries and they would unfairly be excluded as well The bill uses terminology not defined in the code and language not used in the code to describe certain licensed entities that already are defined in the code. The bill refers to wine specialty shops in dry counties which do not exist in any dry county. The bill presumptively creates a suppliers license for only a farm winery for no license fee ($150 * 26 current farm wineries = -$3,900). This would violate the Granholm, Supreme Court decision. The bill permits only a farm winery to “supply” wine to a beer retailer in dry counties but not to sell the wine to the retailers, presumptively the wine will be supplied for free. The bill presumptively bestows a wine license on nonintoxicating beer retailers in a dry county without requiring a license application or qualification for licensure, and further it appears no payment of the wine retailer license fee. Currently in wet counties, a farm winery or winery may sell to licensed wine retailers. This would appear unfair to wet versus dry counties. This would be an additional loss of revenue and treat dry county wine retailers differently from all other county wine retailers. These licenses are either $150 or $250. For example, 30 such licenses with 15 at $150 = $2,250 and 15 at $250 = $3750, would be a loss of $6,000 to General Revenue. It is not clear if the farm wineries, acting as suppliers, would pay the taxes associated with the “supply” of wine. This bill would presumptively violate the state constitution at W. Va. Const. Section VI, Article 46. This bill would violate the requirement of W. Va. Code sections §60-5-1 et seq.



    Person submitting Fiscal Note: Anoop Bhasin, General Counsel on behalf of WVABCA
    Email Address: Anoop.K.Bhasin@wv.gov