News & Commentary

Selling or transferring a winery involves far more than a real estate closing. California's alcoholic beverage license does not automatically transfer with a change in ownership, and the surrounding grape, distribution, and land use agreements each have to be addressed separately.

Rogers, Sheffield & Campbell, LLP's Wine Law Group has advised Central Coast wineries on ownership transitions for years.

What Legal Steps Are Required to Transfer Winery Ownership?

A winery sale or succession triggers a distinct set of legal requirements beyond the deed itself.

• A new or amended license application must be filed with the California Department of Alcoholic Beverage Control (ABC) for a person-to-person transfer, or for a 50% or greater change in ownership of a corporation, LLC, or limited partnership holding the license.
• A notice of intended transfer typically must be recorded with the county recorder, and ABC will not process the transfer until the 11th day after that notice is properly recorded.
• Local land use approvals, conditional use permits, and any water rights tied to the property need to be confirmed as transferable before closing.
• A temporary permit can allow the buyer to keep selling alcohol during the transfer waiting period, but it generally requires the premises to have been operating under an active license shortly before the application is filed.

How Do Custom Crush and Distribution Agreements Transfer With the Business?

Custom crush arrangements, distribution agreements, and alternating proprietorship agreements are contracts between the winery and a third party, and they do not automatically follow a change in ownership unless the agreement itself allows assignment.

A buyer should review every contract for assignment and change-of-control clauses before closing, since a distributor or crush partner may have the right to terminate rather than continue with a new owner.

What Happens to Existing Grape Purchase and Vineyard Leases?

Grape purchase agreements and vineyard leases often run for multiple harvest seasons, and a change in winery ownership can trigger renegotiation if a grower's contract was tied to the prior owner personally.

Reviewing these agreements early prevents a new owner from losing access to fruit mid-transition, which can disrupt an entire vintage.

What Due Diligence Should a Buyer Complete Before Closing?

Beyond the ABC license itself, a buyer should confirm the winery's compliance history and verify there are no pending accusations or license conditions attached to the existing permit, since those obligations carry over to a new owner.

A bulk sale notice may also be required under California law when substantially all of a winery's inventory and equipment are sold outside the ordinary course of business, a step that protects creditors and can affect the closing timeline.

How Should a Winery Sale or Succession Be Structured?

An entity sale, where a buyer purchases the company that holds the license and contracts, generally preserves existing agreements more easily than an asset sale, which requires each contract and permit to be reassigned individually.

For a family succession rather than a sale, holding vineyard real estate separately from the operating winery entity can simplify a later transfer between generations.

Family successions often use a structured buyout funded through the winery's own earnings over several years, rather than requiring the next generation to secure outside financing for the full purchase price up front.

Why Work With a Wine Law Attorney on a Winery Transfer?

John H. Haan chairs Rogers, Sheffield & Campbell, LLP's Wine Law Group and advises clients on grape purchase agreements, custom crush arrangements, distribution agreements, and the regulatory compliance issues that come up whenever a winery changes hands.

Schedule a Case Evaluation

A winery transfer that overlooks even one required filing or contract clause can delay a sale for months or jeopardize the license entirely. Rogers, Sheffield & Campbell, LLP has represented Santa Barbara County wine industry clients on formation, licensing, and ownership transitions for years.

Call 805-963-9721 to schedule a case evaluation before you sign a purchase agreement.

Sources

1. California Department of Alcoholic Beverage Control, ABC-217 transfer instructions
2. California Department of Alcoholic Beverage Control, ABC-227-A notice of intended transfer instructions

The information on this page is provided for general educational purposes only and does not constitute legal advice. Every case is different. Past results do not guarantee future outcomes.