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November 2015 WINES&VINES 121 WINE EAST WINE INDUSTRY NEWS N apa, Calif.—The most unusual talk at the 24th Wine Industry Financial Symposium held Sept. 21 and 22 was about the impact of legalized marijuana in Colorado. Cleverly scheduled as the last session to keep the busy attendees in their seats, it documented a fall in wine sales after medical marijuana was legalized there, but later a dra- matic gain when recreational marijuana was allowed. The conference united execu- tives and staff from the wine busi- ness with lenders to hear from experts in all aspects of the busi- ness. Attendance at the event held in Napa was more than 250. Jim Smith of Republic Na- tional Distributing Co.-Colorado, a major distributor, reported that after only a year, taxes from recreational cannabis sales are greater than those from all alco- holic beverages combined. He showed that legalization of marijuana seemed to have hurt wine and other alcohol sales initially, but the event fairly quickly increased tourism and even migration into the state by young people, which has more than compensated for the drop. He reported, however, that while most of the tax money was intended for schools and medi- cal research, in practice half of the money has been used for enforcement. He added that four states and the District of Columbia allow recreational marijuana sales at present, and an additional 12 states are considering it. Surely people in all tiers of the wine business are pondering mari- juana's possibilities, too. For now, recreational marijuana is a direct- to-consumer business, but Smith said wine and spirits wholesalers are looking closely at the cannabis sector, and some believe it will need the middle tier to provide a level playing field, as was in- tended for immediate post-Prohi- bition alcohol sales. Of course, most of the confer- ence was about the wine business. A recurrent theme was the growing split of the wine business into two worlds: high-volume wines made mostly from grapes grown in California's Central Valley and priced less than $10 per bottle, and higher priced wines from coastal grapegrowing regions. Sales of cheap wine have been shrinking as more expensive wines have grown in popularity. In recent years this trend has led the three largest wine companies to invest in the coastal region. Adam Beak, managing director of the Bank of the West, noted that these are good times. "If you're not making money in the wine business today, you should look in the mirror for the reason." Beak does, however, foresee problems for lenders. With easy credit and low lending rates from large "outside" lenders with little experience in the wine business, Beak warns, "They won't be around when things get tough again." —Paul Franson The Effect of Marijuana Legalization on Wine Sales COLORADO MARIJUANA AND ALCOHOL TAXES Marijuana Alcohol Sales tax 2.9% 2.9% Excise tax 25% Beer: 8 cents per gallon Wine: 28 cents per gallon Spirits: $2.28 per gallon Taxes collected* $70 million $42 million *Fiscal year 2014-15 SUPPORT RESEARCH & WINE INDUSTRY NEEDS THROUGH THE A M E R I C A N V I N E YA R D FO U N D AT I O N P.O. Box 5779, Napa, CA, 94581 • T: (707) 252-6911 Visit our Web site at www.avf.org for information on funding and current research projects A S S E S S M E NTS O F D I F F I C U LT TO F E R M E NT J U I C E S Dr. Linda Bisson examined the causes of chronically difficult to ferment juices. These problem fermentations do not appear to respond to nitrogen or other commercial nutrient addition, occur regardless of yeast strain used, and are challenging to restart the fermentation. For more information visit AVF.org or contact Dr. Bisson at lfbisson@ucdavis.edu. For a wealth of useful viticulture and enology research and information, visit AVF.org, ngr.ucdavis.edu, asev.org, iv.ucdavis.edu or ngwi.org Finding Solutions Through Research