California has one of the biggest and most complex economies in the world, which means that wineries in the state have a lot of regulations to navigate — and quite a few tax exemptions at their disposal. One such exemption is AB 199, a bill signed in 2015 that gives businesses a sales-and-use tax exemption when purchasing recycling and composting equipment. It may be worth investigating if your winery hasn’t taken advantage.
What is AB 199?
The AB 199 tax exemption is part of California’s ongoing efforts to encourage environmentally sustainable business practices and increase the state’s overall recycling and composting levels. It’s one of many laws and programs designed to reduce greenhouse gas emissions and other environmental hazards.
According to Californians Against Waste, “recycling reduces the need for carbon-intensive virgin resource extraction, while composting prevents organic waste from ending up buried in landfills, where anaerobic bacteria feed on it and release methane into the atmosphere.” And in a state where drought is a persistent problem, compost can help grass grow in dry soil to absorb carbon from the atmosphere.
Wineries that want to do their part, both for the sake of the planet and to fight back against increasingly volatile weather that makes the wine business that much more difficult to succeed in, can apply for the exemption and reasonably expect to be approved. CAEATFA, the state treasury authority responsible for the program, approves most applications that come through, awarding up to $100 million to manufacturers each year. But it’s not just good citizenship and the long-term climate outlook that should motivate wineries to apply.
Why should wineries use this exemption?
This tax exemption is not wine-specific by any means, but recycling and composting are both worthwhile activities for wineries to pursue. Composting can actually improve their product, according to UC Berkley’s Agroecology Research Group.
Composting releases nutrients slowly, making it good for grapes, which don’t need as much nitrogen as other crops. Compost can add beneficial micronutrients to the soil and minimize damage to beneficial microorganisms, making vines healthier and possibly even increasing yields. According to one study on the effect of compost in Mondavi Vineyards over three years, “blocks with compost applied had increased yields of up to 0.9 tons per acre.”
Then there’s the fact that, as the Wine Institute points out, consumers want sustainably produced wine. If you can show that your winery consistently recycles packaging, uses recycled bottles and engages in composting, you’ll have a much better shot at attracting younger customers, who are generally more engaged with environmental issues. As Beverage Dynamics observes, one way for wineries to reach wine-averse Gen Z and Millennial drinkers is to “be well-defined about their social values, and their efforts to address environmental concerns.”
The AB 199 tax exemption can help wineries do just that by easing the upfront costs of establishing a viable recycling and composting program.
Navigate the complexities of the wine industry with VinPoint
Of course, subscribing to a tax exemption program, no matter how beneficial, adds yet another thing for your wine business to track. Unwieldy spreadsheets and disconnected technology systems won’t be enough. Reach out to Enavate’s expert team today to learn how VinPoint, our wine-specific ERP platform, can help you get the most out of the tax exemptions available to you.