The Santa Barbara County Board of Supervisors has reviewed the Wine Business Improvement District’s first year and ordered more transparent oversight following the district’s federal lawsuit.

The Wine Business Improvement District was mandated by the county in February 2025, requiring wineries and tasting rooms to pay a 1% assessment on gross retail wine sales to pay for promoting local wines to increase sales. 

In the first year, collections reached $1,113,189, which is below the projected $1.65 million. The WBID spent $745,163 in the year, leaving the remaining revenue to fund operations in the 2026-27 fiscal year.

Of the funds, 73% are allocated to promotions, 20% to administration, 5% to reserves and 2% to a third-party collection agency.

According to county Supervisor Joan Hartmann during the Sept. 1 meeting, the county’s wine region suffers from high fragmentation, as seven federally recognized American Viticultural Areas and four tourism marketing groups work independently. She noted that the district is the only marketing organization that operates on a countrywide scale.

“[WBID is] the tide that lifts all boats, and it’s really, really important as a means to integrate all the fragmented tourism efforts that we have,” Hartmann said.

However, the WBID has faced a federal civil rights lawsuit by the Lompoc-based Flying Goats Cellars. The company’s owners, Norm Yost and Kathleen Griffith, are represented by the Goldwater Institute and are contending that the 1% assessment is unconstitutional compelled speech and association under the First and Fifth amendments.

Their lawsuit alleges that the district forces small businesses to fund the political and marketing campaigns of the Santa Barbara County Vintners Association. Griffith criticized the SBVA’s promotional trips to South Korea and Japan, arguing the companies affected aren’t benefiting from it, as well as arguing that the point-of-sale limitations forces wineries to absorb the 1% fee as opposed to having it paid by customers.

“The Vintners has not provided integration of the wine bid assessment for all sales channels for all wineries in the county, and this is forcing many of us to absorb the assessment and not pass it rather than pass it on to the customer,” Griffith said.

Steve Pepe, co-owner of Clos Pepe Vineyards, also urged the board to reject the report, arguing that the county will face financial exposure as the defendants are “jointly and severally liable for the damages” if the WBID is ruled unconstitutional.

SBCVA CEO Allison Laslett defended the WBID, arguing that its accounting software is segregated and ensures that no district funds are spent on the international trips.

While the board accepted the annual report, it issued several new mandates to address local concerns. Hartmann directed the SBCVA to incorporate public meetings to be more transparent, as well as to establish a system within three months to allow the county to review any marketing plans before launch.

Additionally, Supervisor Bob Nelson directed county staff to gather more data comparing regional wine sales, transient occupancy taxes and municipal revenue to ensure the WBID is providing value across the county.