The typical license for a winery in California is a Type 02 Winegrower license, but many businesses interested more in marketing wine, or having wine custom crushed to their specifications, instead of actually producing the wine on a bonded wine premises, obtain a combination Type 17/20 license instead. The Type 17 license is a wine and beer wholesaler license, and the type 20 is a retail license for the sale of wine and beer for consumption off the licensed premises. When the licenses are held together, they allow the sale to retailers and consumers of wine only. The combination license does not allow the holder to produce wine. Significantly, California law was changed in 2009 to permit these 17/20 license holders (sometimes called “virtual wineries”) to donate their wines to non-profit organizations. This privilege, previously reserved to licensed producers and importers, enables virtual wineries to participate in wine tastings and other events held by non-profit organizations. The 17/20 license structure and abundance of wineries that do custom crush production in California have made it relatively easy for virtual wineries to succeed and, as a result, we have seen tremendous increases in the 17/20 license model over the last several years.
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