South Dakota farm wineries won a battle Wednesday in the state House of Representatives that could allow them to make more than twice as much wine and also somewhat restrict their competitors.
“Farm wineries in South Dakota are a success story,” Representative John Mills, a Volga Republican, said. He is prime sponsor of HB 1185.
The vote was 42-28 in favor. The legislation now advances to the Senate for consideration. The state Revenue Department opposed the bill at its first committee hearing Tuesday.
Farm wineries could each produce up to 350,000 gallons annually under one of the proposed changes. They’re currently capped at 150,000 gallons.
The legislation also would require the Revenue Department to reject labels from wine manufacturers that aren’t farm wineries unless their labels say “estate bottled” or “produced and bottled” or “made and bottled.”
Manufacturing wineries don’t have to use South Dakota-grown crops, while state law requires farm wineries to use at least half of South Dakota raw products and prohibits them from using imported.
The two sides battled up to the end of the 2018 session over issues such as labeling.
“We thought we had a compromise last year,” Representative Tim Rounds, a Pierre Republican, said. He asked House members to vote no Wednesday.
Representative Fred Deutsch, a Florence Republican, noted the fight last year occurred mostly in the House Commerce and Energy Committee that Rounds chaired.
Deutsch said the legislation this year went to the House Agriculture and Natural Resources Committee that voted 11-0 for it.
Representative Mark Willadsen, a Sioux Falls Republican, argued the bill went to the wrong committee this year.
Representative Thomas Brunner, R-Nisland, said wine manufacturers don’t have to put any South Dakota products in their wine.
“The farm winery industry in this state has grown fantastically,” Brunner said.
Representative Oren Lesmeister, a Parade Democrat, said the Revenue Department needs to do its job regarding rule-bending by wine manufacturers.
“I think this is a fair bill for our in-state wineries,” Lesmeister said.