Grape expectations: Nevada wine industry primed for success amid law changes

RENO, Nev. — For years, Wade Johnston has dreamed of opening up a winery in Northern Nevada.

In 2015, when Nevada lawmakers lifted the ban on opening commercial wineries in counties with more than 100,000 people with the adoption of Assembly Bill 4, Johnston saw an opportunity to make that a reality.

“I’ve wanted to do this for a long time and that was the just the first thing that happened that enabled us to,” Johnston said in an interview with the Northern Nevada Business View. “That was big for us.”

A year later, Johnston and his business partner, Joe Bernardo, established the company Basin and Range Cellars. They acquired a 7.5 acre vineyard, located at Buffalo Creek Ranch near Minden, stretched on the faulted boundary between the Basin and Range Province and the Sierra Nevada. Set at 5,000 feet above sea level, it’s one of the highest-in-elevation commercial vineyards in the country.

With a vineyard ready to bear fruit in 2016, Basin and Range partnered with two other aspiring wineries, Nevada Sunset and Great Basin wineries. In an effort to split the challenging cost of breaking into the business, the trio blueprinted plans to share a winery and tasting room in downtown Reno.

But those plans were soon stomped out by the state, which said it didn’t allow multiple wineries to operate under the same roof.

Johnston said this was due to lawmakers’ “flat out incorrect” interpretation of the new AB 4 law, adding, “I suspect that it was up in the air, and the denial for our business model came because of the distributors.”

Johnston, along with his partners and the Nevada Wine Coalition, weren’t backing down. Last year at the 2017 legislature, with a swell of public support, the law was revised, allowing Nevada wineries to operate under an “alternating proprietorship” model.

At last, Johnston can see his winery come to fruition. Basin and Range Cellars, which has completed bottlings of its 2016 and 2017 vintages, is slated to open its tasting room in June in the burgeoning Brewery and Winery District in downtown Reno, at the so-called “Wineries on Fourth” building at 415 E. 4th St.

Still, “that cost a year and a lot of money,” said Johnston, referring to the legal hurdles along the way. “It really complicated the winemaking. But, nonetheless, here we are … two years after we started the business.”

SHORT SUPPLY

Indeed, even with the addition of the alternative proprietorship model, many in the wine community feel the laws in Nevada are too restrictive, especially when compared to neighboring Wine Country in Northern California.

Just ask Michael Steedman and Alynn Delisle, owners of Nevada Sunset Winery — tasting roommates with Basin and Range Cellars — which opened at Wineries on Fourth in September 2017.

The duo manages a 3-acre vineyard east of Reno in Fallon, and also gets grapes from other small growers in Northern Nevada and Northern California.

Specifically, Steedman and Delisle pointed to the state’s production cap as a frustration for many in the industry. The regulation says that after 1,000 cases of wine, Nevada vinters are required to use 25 percent Nevada-grown grapes.

Nevada grapes, however, are in scant supply and, consequently, are considerably higher priced than grapes in states like California, said Steedman.

“They have the infrastructure,” he said of the Golden State.

Not to mention, a new vineyard can take up to five years before it produces a payoff, he added.

Delisle said the cap is stunting the growth of the wine industry in the Nevada.

“California, Oregon, Washington … no one around us does that,” she said. “How are we going to compete as a state?

“We have a lot of the interest of winemakers moving into our state but they say they can’t,” she continued. “I have friends from California who are looking at Reno and Northern Nevada area, but with the 25 percent fruit restriction here, they say they can’t.”

LOOKING FOR PAYOFF

Johnston said the state-regulated three-tier system imposed on wineries, breweries and distilleries is also hindering the wine industry in Nevada. Under this system, producers can sell their products only to wholesale distributors, who then sell to retailers, and only retailers may sell to consumers.

“All summer we take care of the vineyards, in the fall we harvest, I spend all winter cellaring wine, in the spring I organize all these logistics to bottle it at a great expense,” Johnston said. “It’s a ton of work. And then I’m going to give half of my profits because they put my product on a truck and delivered it to a store next to me?”

To that end, Johnston added: “If you want to make a large fortune in wine you better start with a larger one.”

Which begs the question: what is the future of Northern Nevada’s wine industry?

“I’d be lying if I said it’s getting ready to flourish,” Johnston said. “The way that it’s structured right now, it’s not lucrative enough to give people incentive to plant vineyards.”

In the meantime, Johnston is simply focused on caring for his vineyard planted east of Lake Tahoe and officially — finally — opening his winery at Wineries on Fourth in Reno.

“I just have my head down with tunnel vision on, trying to make our thing happen,” Johnston said.