Drive through Napa Valley’s main thoroughfares, lined with impressive estates and endless acres of picturesque vineyards, and it seems like the entire region is one glamorous wine playground. But peel back the curtain and you’ll see small farmers, many of whom have been around for generations, growing grapes and selling their fruit. Many also make their own wine — and want to promote it and sell it. However, current winery laws make it nearly impossible for these micro-producers to participate in the booming Napa tourist economy.

A new piece of legislation called the Micro Winery Ordinance, which passed in March 2022 and went into effect May 5 of the same year, should have been a saving grace for these producers and allowed them to take part. But, now it’s becoming apparent the ordinance isn’t the answer small wineries need. Unable to bypass requirements that go beyond their current resources, these vineyard owners are trying to find a way for their businesses to fit into the Napa landscape. What does that mean for the future of small farmers seeking a bigger presence in the valley, and what is the right way for Napa to move forward?

At the Root of Napa’s Wine Industry

In 1990, the Winery Definition Ordinance was put into place by Napa County with the aim of protecting land for agricultural production and curbing commercial development. Under it, multiple articles must be followed: 75 percent of grapes must be grown in Napa Valley, for example; only 25 percent of the property can be developed for the wine-producing facility, as the rest is reserved for growing grapes; and an estate must be at least 10 acres, just to name a few. There are exceptions: Wineries that have been operating since pre-1990 may have some practices or current standards grandfathered in. However, if they come to the county requesting changes to a current permit, such as to increase production, they’ll need to fall in line with the current regulations.

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Anyone who’s visited one of Napa’s grand tasting rooms lately may be surprised to learn that hospitality is meant to only be an accessory for a winery. Under the Winery Definition Ordinance, production must be the primary usage of the facility, and hospitality can take up no more than 40 percent of the square footage. “That hospitality use is an educational component,” says Charlene Gallina, supervising planner of the Napa County Planning, Building, and Environmental Services Department. “We want the public to come and learn about the wine production process,” she adds. “[But] we are agriculture first.” What this also means is that without an on-site production facility, a winery cannot have a tasting room.

“There’s no reason that a micro-winery wine trail shouldn’t exist in Napa, where you have a trail of a dozen or so wineries that produce 1,000 cases annually or less and don’t have distribution anywhere.”

Elise Nerlove is a second-generation grape grower and winemaker at Elkhorn Peak Cellars as well as vice president of Save the Family Farms, the organization that lobbied for the new micro-winery ordinance. Her family produces 800 to 1,000 cases of wine, or around 2,500 gallons, annually at a custom crush facility — a site where equipment is shared by multiple producers — and has been making wine since the 1990s. “Back in the mid-’90s, the only way to sell wine was through the distribution channel,” she says. “Wine clubs didn’t exist back then. But the wine industry and how you sell wine has evolved and now, people don’t buy wine [from the little guys] unless they visited your farm.” She and other small farmers knew they needed to modernize their approach in order to stay relevant in the rapidly evolving Napa Valley landscape.

The Campaign for Micro Wineries

Obtaining a winery use permit is an expensive endeavor, between fees and studies to ensure compliance with both county and state laws, which cover anything and everything from traffic to groundwater to environmental practices. Gallina cited one instance where a prospective winery owner paid $300,000 in third-party audits alone before even filing for a permit. If something’s not up to code, it needs to be renovated to meet requirements. Nerlove estimates it costs about $5 million to start a winery nowadays. Patience is another currency required in spades; the average permit process takes anywhere from three to five years.

When the county began cracking down on producers that didn’t have winery permits in the mid-2010s, Nerlove’s father and others saw an opportunity to affect change. Around 2018, the Save the Family Farms movement was born. The goal of the organization was (and is) to create a channel for micro wineries to connect with consumers via tastings in the vineyard and ultimately sell wine. They sought concessions that would take into account their size and assets so they could also capture some of the tourism that bigger wineries enjoyed.

“There’s no reason that a micro-winery wine trail shouldn’t exist in Napa, where you have a trail of a dozen or so wineries that produce 1,000 cases annually or less and don’t have distribution anywhere,” Nerlove says. “You can have the real farmer experience. Go on-site, walk the vineyard, taste the grape from the vine, and talk to the grower directly. In Napa today, you’re very hard-pressed to find an experience like that.”

In 2020, Napa County streamlined the permit process for wineries by creating new permit types and processes. The timing dovetailed with the work being done by Save the Family Farms. “We initially approached the county and just said, ‘Hey, there’s a whole group of really, really small wine businesses out there,’” Nerlove says. “‘Most of these people have their own vineyards. They’re making wine from their own vineyard sites. They’re using custom crush facilities, and they’re foreclosed from direct-to-consumer sales. Can you help?’” After much negotiation, the Micro Winery Ordinance was passed in 2022.

What the Micro Winery Ordinance Does — and Does Not — Do

The new ordinance created an official definition of “Micro Winery,” stipulating a production minimum of 201 gallons, and a maximum of 5,000 gallons. Rather than undergo a Planning Commission Meeting, wineries would be reviewed during a Zoning Administrator Hearing, which ostensibly would shorten the permit process to a year or less. Wineries may also be more likely to receive a categorical exemption, allowing them to bypass a longer audit required by the California Environmental Quality Act. Most importantly, tours and tastings are allowed on-site for micro wineries (but no marketing events), so they can capture some of the tourism dollars that flow into the region.

However, the wineries must still submit the same initial paperwork as with a Winery Definition Ordinance and pay the same $10,000 deposit. They also need to meet the requirements of this larger ordinance and are subject to the same reviews. The tourism component is not without big concessions, either. No more than 20 daily trips (10 round trips) total can be made to a vineyard, which includes not only tourists but employees and deliveries, for example.

The biggest pain point lies in one of the core tenets of the Winery Definition Ordinance: on-site production. Like the Nerloves, most micro wineries produce their wines at an offsite facility, not on their property. It goes without saying that building a winery is expensive — plus, the state of California requires a separate septic system for winery wastewater, another costly element to install. Gallina explains that by definition, it’s only the actual fermentation and aging that needs to take place on-site. Crushing and bottling can be done at different facilities. However, transportation of the juice counts as a delivery trip, reducing the daily allowance in the trip till.

Can Micro Wineries Get a Foothold?

Just because a winery can’t host on-site, it doesn’t mean it’s excluded from the tourism game altogether. Gallina notes the urban tasting rooms in downtown Napa, which have been proliferating like mushrooms, as one option.

But small farmers want to capitalize on their biggest asset — the vineyard. Lindsay Hoopes of Hoopes Vineyards served as an assistant district attorney in San Francisco before moving up to Napa to help her father with the family vineyards. Upon hearing the plight of Save the Family Farms, she joined as a consultant and advisor, even though Hoopes Vineyard is big enough to fall outside of the micro-winery ordinance’s parameters. “If you don’t allow these families to figure out a way to improve their properties towards an economically viable business, and you’re relegating them to only three-tier distribution system sales even though they own property in Napa, and you don’t make a way for them to start small and build, I just don’t know where that leaves you,” she says.

In the end, Save the Family Farms believe the micro-winery ordinance doesn’t go far enough to make a difference. “It feels like we did a lot of negotiating with Napa County,” Nerlove says. “We quickly learned that the county wasn’t willing to budge on existing regulations at all. It just sort of seemed like we approached the county with a problem and a bunch of proposed solutions and the initial ask got chiseled down to something that we’re not even sure is going to benefit the producers.”

To date, only three wineries have filed under the new micro-winery ordinance, and all are still in the review process for a permit.

“I just want to say, we can’t vary from the winery definition ordinance that’s been put in place,” Gallina says. “And so this micro-winery procedure was designed with that [in mind]. It had to be consistent with the general plan policies and the winery definition ordinance, because if not, then we had to take all of that back and process a change. And that’s gonna open up, I hate to say it, a can of worms.”

Gallina says the County is already under constant scrutiny for its work. Whether from concerned neighbors in regard to a new winery being built or environmental watch groups, Napa’s development — and the county’s management of its growth — has a lot of concerned stakeholders.

Everyone seems to be fighting for the soul of Napa, but figuring out how to achieve this common mission — preserving the agricultural and cultural heritage of the land — is creating a bottleneck in progress, and leaving Napa’s identity in flux. The current process favors bigger, wealthier players who want to enter the Valley, but this contingent of smaller wineries comprises another part of the Napa Valley mosaic and could become just one more outlet for Napa to tell its story to a new generation of drinkers.

“How you make money and how you use the land in terms of connecting with the consumer has taken on a different look,” Hoopes says. “We have to make Napa approachable for a different generation. If we lose the small businesses, we lose the heart and soul of Napa Valley.”

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