Wine Preserve (BID) FAQs
We are excited to start working with you on the Wine Preserve (BID)!
We know you have questions. We have compiled as many of them in this section. If you still have questions after reading this section, please feel free to reach out to us via email: contact@scmwa.com or call 831-685-8463. A board or staff member will get back to you as soon as possible.
What is a Wine Heritage District?
A Wine Heritage District is a geographically determined area (a “district”) that contributes stable funding to promote the wine industry within that area.
How is a Wine District funded?
Wine Districts are funded through an assessed fee wineries elect to pay. Our fee would be 1% on all retail sales. For example, 1% of $50.00 = $0.50 Retail sales typically include wine, wine clubs, merchandise, and events.
This is not a tax.
Taxes fund the government, the Wine Heritage funds our industry. It is crucial to understand that the assessed fee is for the exclusive benefit of the industry that collects the funds. It does not go to any other industry and may not be used by the government.
Which wineries have to pay the assessed fee?
All wineries within the district pay the assessed fee on total retail sales. Wineries can pass the assessed fee on to customers, this is common practice. In your POS system, an additional line item would be set up to charge 1% on all retail transactions.
Will I still have to pay association dues?
No, winery membership dues would be eliminated beginning January 1 in 2026. This occurs approximately four months after assessment collections begin. All wineries in the district who pay into the Wine District become de facto voting members of the new winery association. Once the assessment is passed, all wineries have equal voting rights, regardless of production size. The Association will still have Grower Members , Special Members and Business Members, both of which will pay dues, but all assessed wineries are automatically granted membership.
Who collects the money?
To keep your information confidential, a third-party accounting firm collects the fee and then distributes it to the the managing non-profit.
How do we know everyone is paying their fair share?
The data needed to process the fees you have collected from your customer is the same data you use to submit California sales tax. We expect a minimal increase in accounting work for the wineries. Your assessment payment can be audited against your tax data. There are penalties and interest for wineries not collecting and submitting the assessment.
Where does the money go?
The funding goes to a nonprofit membership organization comprised of all the fee-paying wineries. This is typically the wine industry’s existing association; in our case, the Santa Cruz Mountains Winegrowers Association also known as Wine of the Santa Cruz Mountains.
What can you spend the district funds on?
Wine District funds must be spent for the benefit of the wineries paying the assessment. This includes, but is not limited to:
- Marketing: To make wine consumers aware that the Santa Cruz Mountains AVA produces wines that compare favorably to any in the world, and guide them to visit us and buy our wines.
- Public Relations: Including familiarization tours, media pitching and influencer relations.
- Events: Consumer and trade events that expand the reach of the region.
- Industry Education: To provide education and assistance to member wineries and growers to help them continue to improve the quality of their wines and grapes.
- Government Engagement: To work with legislative bodies to ensure that laws and regulations contribute to the preservation of agriculture and the sustainability of member businesses.
- Community Relations: To maintain good relationships within our community.
- Special Projects such as the expansion of the Winery Directional Signage
Who decides how the money gets spent?
The Santa Cruz Mountains Winegrowers Associations’ Board of Directors creates a Management District Plan (MDP). The MDP is a legally binding document that lays out how the entire district will operate. The plan is approved by both the assessed wineries and the Board of Supervisors and City Councils. It contains specific information such as the assessment fee amount, how it’s collected, and how the funds will be used.
What is the management oversight?
The Santa Cruz Mountains Winegrowers Association must manage the district in alignment with the MDP and the guidance of the Santa Cruz Mountains Winegrowers Associations’ Board of Directors. The Santa Cruz Mountains Winegrowers Association must also present an annual report to the County Board of Supervisors or City Council, which is also available to assessed businesses.
Can the City/County take the assessment money?
NO. Funds raised through the assessment must be spent within the district for the benefit of the wineries paying the assessment. Funds raised through the Wine District cannot be diverted to government programs and must be spent on programs and activities defined in the MDP.
Are Wine Districts permanent?
Districts are initially created for up to five years, then renewed for up to 10 years.
When should my winery start collecting the Wine Preserve fee of 1% on all retail sales from my winery?
January 1, 2026
When do I have to pay that money?
Monthly for year one. The Wine Preserve (BID) assessment starts on January 1, 2026. The monthly payment will be made in February 2026. In year 2, collections will be on a quarterly basis
Who do I pay?
The County is contracting with a third-party collections agency called HdL to collect the Wine Preserve (BID) fee. HdL is the same agency that collects taxes for the state. Part of why they were chosen by the County as the collections firm is they have access to tax data and can assure the County that all vintners are paying into the assessment accurately. They are able to audit your payments against your confidential tax data. Your payments will be equal to 1% of your CA retail sales less private event rental income.
Over the next few months, HdL will be confirming your contact data and will be in touch as to where to send the payments. They are working to make various payment options available to the wineries and we will be following up on this with you, as well. We will assist them in building an accurate database.
Do I have to include the assessment on my receipt?
No, you do not. If you prefer, you may include the assessment in the prices of your products by raising them 1%. The advantage of this choice is that the assessment is automatically taxed.
I’d prefer to pass the assessment along to the consumer. What do I need to know?
You may pass the assessment on to the consumer by separating it out as an item on the receipt referred to as the “Wine Heritage District or SCMWHD” You must also disclose the assessment to them prior to the purchase. You may do so by listing on your website, your tasting menu, or a plaque by your cash register.
Is the assessment taxable?
Yes, it’s important to clarify that the Wine Heritage District fee itself is not a tax, but rather a fee that is taxed. The California Department of Tax and Fee Administration (CDTFA) has determined that sales tax applies to the revenue generated from Business Improvement District (BID) assessments when they are collected on taxable retail sales. This means that the 1% Wine Preserve Fee is subject to sales tax because it is assessed on gross retail sales, including taxable items such as wine and merchandise. This aligns with how other BID fees are treated under state tax regulations.
Do you have any suggested language for the disclosure of the assessment.
We suggest the following: “The Santa Cruz Mountains Wine Heritage District is a taxable 1% assessment added to all California orders which funds the promotion and protection of our world-class wine region.”
DECIDE HOW YOU WILL HANDLE THE FEE
Absorbing vs. Passing on the Fee:
- If absorbed, the winery pays the BID fee from its operational costs.
- If passed on to the consumer through the price of the item. Integrate the fee into the price of the retail item by adding 1% to the price of the item.
- For the above options, you would calculate one percent of your taxable sales and that is the amount that you would pay for the fee when your BID payment is due.
- If passed on to the consumer as an additional line item.
- Add 1% to all taxable retail sales in California. See additional processes below.
STAFF TRAINING & INTERNAL COMMUNICATION
Educate Your Team – Provide staff with a simple, positive explanation of the BID fee:
- “The 1% fee helps fund marketing efforts that attract visitors and boost wine sales for our winery and others in the region.”
Train on Customer FAQs – Prepare staff for common customer questions, such as:
- “Is this a tax?” → “No, this is a business fee that directly benefits local wineries.”
- “Can I opt out?” → “All wineries within the district participate in this initiative to promote Santa Cruz Mountains wines.”
Encourage Positive Messaging – Frame it as an investment in the wine community, reinforcing that it supports marketing, events, and tourism promotion.
CUSTOMER COMMUNICATION & DISCLOSURE REQUIREMENTS
Required Disclosure – If the fee is passed on to customers, it must be disclosed in advance. The disclosure can be placed:
- On a placard or sign in the tasting room (links to flyers below)
- On tasting room menus, event flyers, and restaurant menus
- In the footer of your website or in the checkout/cart
- On receipts, even if the customer declines the receipt
- In wine club emails
Sample Disclosures & Printable Flyers
- If the fee is passed on (Download Flyer Here):
“All retail sales subject to a 1% Santa Cruz Mountains Wine Heritage District fee.” - If the fee is included in the retail price (Download Flyer Here):
“All retail sales include a 1% Santa Cruz Mountains Wine Heritage District fee.”
LEGAL & COMPLIANCE CONSIDERATIONS
Start Date – The 1% BID fee must begin being collected on January 1, 2026.
Initial Collection Schedule – Payments to the third-party collector (HdL) will be monthly for the first year, then likely shift to quarterly. Details to come.
Understand Fee Scope – The 1% BID applies to all Direct-to-Consumer (DTC) sales, including:
- Wine sales (tasting room, online, phone orders)
- Wine club shipments
- Tasting fees, tours, and event tickets
- Merchandise and prepared foods as sold through the tasting room or in conjunction with a winery tasting event (if applicable)
Exempt Transactions – The BID does NOT apply to:
- Wholesale wine sales
- Out-of-state transactions
- Sales executed before January 1, 2026
- Private event rentals and rental fees
Tax Implications – The California Department of Tax and Fee Administration (CDTFA) advises that sales tax applies to BID fees on taxable items.