Deal reached: State's wineries might get to import 50 percent from outside
PIERRE -- Legislation creating a separate state license for wine manufacturers and allowing half of their fermented products to be imported into South Dakota advanced Wednesday.
PIERRE - Legislation creating a separate state license for wine manufacturers and allowing half of their fermented products to be imported into South Dakota advanced Wednesday.
The Senate Local Government Committee spent several hours weeding through arguments on SB 187.
Sen. Alan Solano, R-Rapid City, sponsored the measure as a backstop for another state Department of Revenue measure, HB 1067.
Essentially the objectionable sections were removed from 1067, put into 187 and then further amended.
The two pieces of legislation split the 12 wineries now operating in South Dakota.
Jim Schade of Volga, one of the owners, alleged the department hasn't been enforcing its 2012 letter stating South Dakota wineries should use South Dakota products.
Schade worked for the department as a director overseeing alcohol regulations during the second Janklow administration.
At least two wineries licensed by the department have been purchasing fermented products outside South Dakota and bottling them in South Dakota.
One is Firehouse Wine Cellars in Rapid City. Another is Valiant Vineyards at Vermillion, whose owner is former legislator Eldon Nygaard.
"We don't represent ourselves to be a South Dakota wine," the Firehouse lobbyist, lawyer Roger Tellinghuisen of Rapid City, testified. "It's accurate and it's legal."
Tellinghuisen said it's similar to farmers who buy cows from outside their states. "Does that make them any less in the ag business?" he asked.
"The kids are fighting in the back seat, I guess," Schade said at one point about the wine industry now being split.
South Dakota wineries can't compete with this "cheap" juice brought from outside South Dakota, according to Schade. "It's extremely cheap," he said.
Among others opposing Solano's legislation Wednesday were winemakers Jeremiah Klein of Rosholt, Matthew Jackson of Sturgis, Sandi Vojta and Matt Keck from Hill City and Don South of Renner.
"To me this is not why I moved back to South Dakota," Klein testified. "Wineries should make wine. It's pretty simple."
Sen. Kris Langer, R-Dell Rapids, presided as chairwoman. She asked for a break, rather than proceed to a vote, so the sides could meet.
"I'd like both parties to come together," Langer said.
The final deal, cobbled together from hand-written notes and Solano's tablet, sets the import threshold at 50 percent.
Opponents initially wanted the bill dead and then offered to compromise at 10 percent.
The Senate will debate the amended version of 187 later this week.
Key features include: wine manufacturers could have one additional location each; wine manufacturer licenses would cost $2,500 (farm winery licenses would be $500 under 1067); and
the department would receive rule-making authority.