A county in California is attempting to mandate that businesses pay dues to trade associations, even if they don’t support them. This situation is drawing parallels to unions, which once compelled workers to join and contribute financially.
This development could have repercussions for businesses throughout the state.
Not many people know about Flying Goat Cellars, a family-run winery in Lompoc—yet perhaps they should. Having spent considerable time enjoying wines from Los Olivos, Solvang, and the Santa Ynez Valley, I can say Flying Goat is worth mentioning.
These aren’t just abstract companies; they are small, local businesses where the owners might be the very people pouring your tasting flights and sharing the stories behind the wines.
That’s what makes the recent ruling from Santa Barbara County particularly concerning.
The county supervisors established the Wine Business Improvement District last year, requiring wineries that sell directly to consumers to pay a 1% sales assessment.
Another tax? It’s hard to be surprised if California finds new avenues for revenue.
What’s troubling is that this isn’t a tax in the typical sense. It doesn’t support public services like roads or parks. Instead, it funds the Santa Barbara County Vintners Association, a private group that decides how the money is used.
But the concern goes deeper than that. The enforcement of this rule poses an issue.
Wineries not only have to pay the assessment; they must also become members of the association.
There’s no option to opt-out. You pay the dues and join the organization—it’s essentially funding specific advocacy and promotion.
Flying Goat Cellars doesn’t align with the association’s priorities or marketing strategies. According to Santa Barbara County, that’s not a problem.
Kate Griffiths, co-owner of Flying Goat, expressed in a recent discussion, “It’s completely unreasonable to have to opt in without a choice.”
Legal questions arise here. Can the government compel business owners to financially back a viewpoint they don’t support? Can it force one to join a private group against their will?
The Goldwater Institute argues that the answer to both is “no.” This organization focuses on cases where government overreach affects citizens and small enterprises.
“The Supreme Court has consistently held that private entities cannot impose subsidies on the speech of other private entities, and that’s precisely what’s happening here,” noted Goldwater attorney Adam Shelton.
Goldwater has filed a federal lawsuit on behalf of Flying Goat Cellars against Santa Barbara County and the Vintners Association.
The lawsuit contends that mandating wineries to fund private associations infringes on First Amendment rights regarding forced speech and personal association. It also raises Fifth Amendment issues about diverting private funds to these organizations.
Supporters claim the district serves everyone’s interests through local marketing. But whether this is true remains up for debate. The real question is whether the government has the authority to make such determinations for individuals.
This should raise alarms for every entrepreneur in California. It’s not only a localized issue in Santa Barbara County.
Similar wine districts are already established in regions like Temecula, Livermore, and Santa Cruz Mountains, with many more observing closely.
This is how government programs tend to proliferate—a pilot initiative in one area inspires replication in another until it feels like a given.
It’s unfortunate how governmental entities can replicate successful revenue models, much like a virus spreads.
Even if this legal challenge doesn’t succeed, don’t assume the matter will stay confined to the winery sector. Other struggling trade associations across California could similarly push for mandatory membership and funding.
But perhaps there’s hope—another winery operator in Santa Barbara County is interested in becoming a plaintiff.
This is crucial because constitutional freedoms hold little weight if only wealthy corporations can afford to defend them.
In my view, Flying Goat Cellars stands a good chance of prevailing.
The Supreme Court has already established that the government cannot force payment for advocacy simply because it believes that advocacy serves a good cause, as demonstrated in the 2018 ruling of Janus v. AFSCME that eliminated compulsory union dues for public employees.
If this principle applies to civil servant wages, it’s unclear why it wouldn’t extend to the financials of a small winery.
Paying 1% of a family business’s sales to an industry group with which the business disagrees is forcing a subsidy, even if under different circumstances.
This lawsuit, while no certainty, is worth pursuing. If government entities can mandate winery participation today, they might just as easily extend this power to other businesses tomorrow.
This issue transcends just wine.
