Why did the Texas winery, the bottle shop, and the out-of-state wine producer walk into a bar together? Unfortunately, it’s not a joke. Because they all held the same Winery Permit (G), even though their operations differed vastly. The Texas winery cultivated local grapes, the bottle shop sold wines nationwide without growing a single vine, and the out-of-state producer marketed wines from different regions (even countries) than Texas. It’s a classic case of “same permit, different realities” under the Texas Alcoholic Beverage Commission (TABC) regulations. This Winery Permit (G) allows holders to manufacture wine, self-distribute to retailers, and sell directly to consumers, regardless of whether they actually produce wine or just bottle and sell wine made elsewhere.
While they might not share the same roots or even the same soil, in the eyes of the TABC, they’re all part of the same regulatory vineyard. It makes you wonder if the law needs a new vintage to distinguish between these very different types of wine businesses.
The story behind this law and its implications for Texas growers and wineries is complex. So complex that the Texas Legislature directed the Texas Alcoholic Beverage Commission (TABC) to conduct a study on winery permits in 2024. This study was focused on examining the privileges granted to winery permit holders, including those who don’t grow grapes or manufacture wine themselves. Organizations that represent wineries, distilleries and breweries were invited to comment.
The Texas Wine Growers did exactly that. Their response focuses on the need for a new type of winery permit, a “Farm Winery Permit,” to support Texas grape growers and authentic wine producers, but they suggest “grandfathering” existing permits to not hurt businesses. It highlights concerns about illegal shipments and the complexities of existing permits, which can be expensive and cumbersome to secure. They advocate for a streamlined permitting process to encourage new and small wineries, emphasizing the potential economic benefits of a farm winery system modeled after successful programs in other states. The report concludes that creating such a permit could enhance the marketability and growth of the Texas wine industry while ensuring compliance with regulations.
Currently, Texas has a single Winery Permit (G) that allows holders to manufacture wine, buy and sell wine from wholesalers and other wineries, self-distribute to retailers, and sell directly to consumers, regardless of whether they produce Texas wine or just bottle and sell wine made elsewhere. The Winery Permit allows holders to manufacture wine without any requirement to grow their own grapes. This has led to a rise in non-production wineries—businesses holding permits but not producing wine from Texas-grown grapes. As of 2023, nearly 70% of wineries in Texas fall into this category. This situation poses challenges for local grape growers, many discarding high-quality fruit due to insufficient demand. John Rivenburgh, president of the Texas Wine Growers, told me that 32 wineries buy 50 percent of the fruit grown in Texas. John’s been working with Texas wine for a long time. He is the winemaker/owner at Rivenburgh Wine, heads up the Rivenburgh Incubator and is co-founder of Bending Branch Vineyard, so his roots and perspectives run deep. But as of 2021, there are more than 470 wineries in Texas and 900 permits issued. More than 2,000,000 gallons of wine were produced in 2021 making it the fourth-largest wine-producing state in the nation. You do the math.
The narrative I’ve heard is that Texas grape growers aren’t producing enough high-quality grapes. But anecdotally John told me that the reality is that farmers are dropping 1,000 tons of unsold fruit in Texas. And based on what I tasted during this media tour, the wineries are selling most of the good stuff directly to consumers and it never reaches Dallas.
So why is a new permit needed? Creating a new permit specifically for producers who grow their own grapes could offer support for local farmers, widen the reach of good Texas wines that can be found outside the tasting room, and it would clarify things for the TABC and people in the industry.
The current state of winery permits in Texas presents a complex challenge that impacts grape growers, authentic wine producers, and consumers alike. The proposed creation of a “Farm Winery Permit” represents a potential solution to support local agriculture and enhance the reputation of Texas wines. By distinguishing between wineries that use Texas-grown grapes and those that don’t, this new permit could help address the oversupply of local grapes, encourage the production of high-quality Texas wines, and improve their availability beyond tasting rooms. While implementing such a permit system would require careful consideration and potential “grandfathering” of existing permits, it offers a promising path forward for the Texas wine industry. Ultimately, this regulatory shift could lead to a more vibrant, sustainable, and authentic Texas wine culture that benefits growers, producers, and wine enthusiasts across the state.