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By October 15, 2013 1 Comments Read More →

Government Shutdown Creates Huge Compliance Backlog for Wine Industry

By Elizabeth Hans McCrone 

gov shutdown quote2If the House and Senate are able to avert Thursday’s debt ceiling deadline and come to some type of an agreement, the country might breathe a collective sigh of relief – but for the wine industry, the crisis is far from over.

The government shutdown that has taken the Alcohol and Tobacco Tax and Trade Bureau (TTB) essentially out of commission since October 1, has created a serious pile up of new business and wine label permit applications that can’t be touched until the TTB is back on line.

“With this shutdown we’ve got a backlog of applications and labels that need approval before our clients can sell product,” says Debbie Pina Polverino, owner/consultant of Divine Wine Compliance. “Our work is piling up because we can’t submit them. We get calls every day. We have to let our clients know that until we hear further, it could take six to nine months – or more – for approval. It’s going to be a nightmare.”

Polverino, her clients and many others in the business are caught up in a quagmire of the federal budget impasse that is having far-reaching impacts throughout the alcohol beverage industry. The TTB’s regulatory role includes granting permits for new business applications and Certificate of Label Approvals or COLA’s. Without the federal funding that allows the TTB to operate, those processes have ground to a halt, which means start-ups can’t open their doors, wines needing labels are left in storage and even imports are stuck in Customs, waiting for the government green light.

“Any importer trying to bring foreign wine into the country is subject to the same approval process,” confirms Eva Bedolla, owner of Wine Compliance.Com. “It’s definitely a ripple effect that we’re all seeing. We have to do something. It’s critical for this country to get back on its feet. This (shutdown) isn’t good for anybody, not just the wine industry.”

Out of sheer frustration, there are some in the business that are reportedly taking matters into their own hands.

According to Drea Helfer, owner of DH Wine Compliance, there are basically two options available to her clients. They can choose to wait for the feds to reopen, or “go a little renegade” and continue to move forward, choosing to file for approval retroactively, once the federal government is back on line.

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Helfer points out that the backlog the TTB will have to contend with once its doors do open again means the agency’s ability to track several hundred cases of wine for smaller producers will likely be compromised.

“I’m not recommending that they break the rules” Helfer says. “But for some people it’s like, what rules can I bend a little so I can still do business? I’m careful to let my clients know that if they do decide to go renegade, they need to realize there could be consequences and what those consequences are.”

Michael Kaiser is the Director of Communications for WineAmerica, an association of U.S. wineries that does political and policy advocacy for the industry at the national level.

His organization has just seen planning for their first annual Wine Policy Day disintegrate because of the government closure, a result he considers a real setback for the business.

“This was a pilot program for those three states (Arizona, Maryland & Ohio) which had to be cancelled because of the crisis, “ Kaiser says. “The idea was to bring (legislators) out to wineries in their districts, tour the facility, try the product and get them to realize why it’s important to support the industry.”

Kaiser says plans to reschedule the event are now on hold until spring or possibly late next year, but he says the industry has even more at stake at the moment.

“The wine industry needs a Farm Bill passed and immigration reform,” Kaiser points out. “We thought this was the year that we would get it done. Right now, we can’t do anything until we know what’s happening with the budget.”


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1 Comment on "Government Shutdown Creates Huge Compliance Backlog for Wine Industry"

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  1. Update from TTB: Impacts of Government Shutdown on TTB Online Systems-What You Need to Know
    http://www.ttb.gov/news/shutdown-impacts-ttb-online-apps.shtml

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