UC Davis can sell its wine under new California state law

UC Davis’ viticulture and enology department produces thousands of gallons of wine per year. Virtually

UC Davis’ viticulture and enology department produces thousands of gallons of wine per year. Virtually all of it goes down the drain.

That’ll change next year. Senate Bill 918, authored by Sen. Bill Dodd, D-Napa, and signed into law by Gov. Gavin Newsom on Sept. 30, will let UC Davis sell up to 20,000 gallons — the equivalent of more than 100,000 bottles.

Roughly 80 to 90 percent of the wine will be sold to commercial wineries to be used in blends, viticulture and enology department chair David Block said. The cream of the crop — likely cabernet and albarino — will be bottled internally and sold at prices prohibitive to most undergrads.

UC Davis won’t come anywhere near the 20,000-gallon cap for the foreseeable future, Block said, and the money the school makes will essentially be gravy. Getting the wine out to market instead of down sewer drains is more about staying true to the ethos of UC Davis’ Jess S. Jackson Sustainable Winery Building, the world’s first zero-carbon-emission wine teaching and research facility.

“Whatever we produced from teaching or research, it would just go down the drain, and that’s not great for the sewer system,” Block said. “We’re not planning to rely on income from sales to run the program but from economic point of view, it’s not fiscally sustainable to be putting wine down drain, either.”

“Any income from wine we sell will be put back into the program for teaching and research and extension,” Block said. “While we don’t plan to rely on that, any extra funding we have allows us to do more things.”

UC Davis has been actively seeking state permission to sell wine it produces since 2015, said Adrian Lopez, the university’s director of state government relations. Its status as a public university previously prevented the viticulture and enology department from selling or even giving away wine.

A 2016 bill authored by then-Sen. Lois Wolk, D-Davis, and signed into law by then-Gov. Jerry Brown, was supposed to grant a wine sales license to a nonprofit corporation controlled by UC Davis experts such as Block, but technically separate from the university.

Yet Wolk’s bill required the separate organization to be a nonprofit mutual benefit corporation, according to Section 23701a of the Revenue and Taxation Code, Lopez said. That section, as it turns out, refers not to nonprofits but to a category of agricultural income tax exemptions that nonprofits inherently can’t earn.

The discrepancy kept UC Davis from selling its wine for four years until SB 918 passed with a nod to the appropriate California Corporations Code statute for nonprofits and deletion of the Revenue and Taxation Code reference. UC Davis can legally begin selling wine on Jan. 1, 2021, and Block hopes to have made the first sales within six months of that date.

Though SB 918 pertains only to UC Davis, the state’s two other public schools with viticulture programs — Cal Poly and Fresno State — have been selling their wines through similar separate-but-affiliated entities for years.

UC Davis produces about 470 different types of wine per year, most of which is unsalable. When students learn a skill or researchers test a new winemaking technique, those wines aren’t normally finished out and put in barrels, Block said.

“We have the ability to make really great wines and ability to teach students how to make really great wines when they get out, but our product is knowledge from teaching, research and extension, not the wines themselves, so it hasn’t really been a focus to date,” Block said. “Having said that, we’re not going to sell any product in a bottle that UC Davis won’t be proud of.”

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Benjy Egel covers local restaurants and bars for The Sacramento Bee as well as general breaking news and investigative projects. A Sacramento native, he previously covered business for the Amarillo Globe-News in Texas.

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