New Cal Poly Study Quantifies Regulatory Costs Facing Napa County Wineries
A newly released study commissioned by the Napa County Farm Bureau and conducted by researchers at California Polytechnic State University, San Luis Obispo (Cal Poly) provides the first comprehensive analysis of regulatory compliance costs for a Napa County winery, finding that regulations account for 17.5% of total wine production costs when both production and direct-to-consumer sales requirements are included.
The report, The Regulatory Costs of Wine Production in Napa County, authored by Dr. Lynn Hamilton and Dr. Michael McCullough of Cal Poly's Agribusiness Department, examined the cumulative costs associated with local, state, and federal regulations affecting a case study Napa County winery that sells less than 10,000 cases.
The study found that regulatory compliance associated with wine production totals $115,874 annually, or $13.44 per case. When direct-to-consumer sales regulations are included, total compliance costs increase to $203,832 annually, or $23.65 per case, representing 17.5% of average production costs. A larger winery would have had significantly higher regulatory costs, as small wineries are not subject to certain laws, such as the Affordable Care Act and some Alcohol Tobacco Tax and Trade Bureau regulations.
Peter Rumble, CEO of the Napa County Farm Bureau, noted the cumulative impact of a winery growing grapes for its own production. “Together with the prior report from Cal Poly showing grape growers are paying as much as $1.7 million in regulatory costs annually, this report’s findings emphasize the point that regulations are suffocating this industry. That a winery with modest production of 10,000 cases can be paying about another quarter million dollars just in regulation costs is shocking.”
The research evaluated compliance costs across a wide range of regulatory categories, including labor, water quality, water supply, alcohol production, employee safety, food safety, hazardous materials, environmental compliance, and direct-to-consumer sales. Labor-related regulations accounted for the largest share of production-related compliance costs followed by water quality, alcohol production, and other permitting and reporting requirements.
“Winery regulations show a much larger percent of production costs at 17.5% – almost double that of growing grapes in Napa County,” notes Lynn Hamilton, agribusiness professor at Cal Poly, who completed the study along with fellow Cal Poly agribusiness professor Michael McCullough. “These regulatory costs really affect profitability, especially when the wine industry is already experiencing
headwinds with the current oversupply of grapes and reduced demand. Policy makers don’t typically consider the economics of compliance when creating new laws.”
The report also notes that the findings represent a 2025 baseline and do not include several new regulatory costs already taking effect, including Napa County's groundwater sustainability fees, evolving packaging requirements, and additional county permitting costs, indicating that compliance expenses are expected to continue increasing.
The study follows Cal Poly's 2026 research examining regulatory costs for Napa County vineyards and expands the understanding of regulatory impacts across the region's wine industry.