Suttons Bay Law

Proposed “Carried Interest” Tax Purports to Soak Wall Street But Hits Family Businesses

For the time being, the Senate has again abandoned efforts to impose a “carried interest tax” on venture capitalists, investors, and managers of family businesses. The tax would have increased the 15% capital gains tax rate on certain investors’ profits to the top income tax rate, which is scheduled to hit 39.6% on January 1st (H.R. 4213). The share of investors’ profits is called “carried interest.” It might appear at first glance that it’s perfectly fine for investment managers to be taxed at higher rates on their “carried interest.” But venture capitalists and investors don’t reside exclusively on Wall Street. The law was written so broadly that it could have hit approximately 6.5 million people invested in real estate partnerships that own anything from a single dwelling to sizable commercial properties.

The proposed legislation attempts to sway middle America by couching the carried interest tax as imposing a higher rate on “investment management services” and “investment managers” who work for Wall Street houses. In reality, the proposed legislation could have imposed a higher tax rate on any partnerships invested in particular assets. The higher rates would apply to investment gains and also to gains from the sale of the partnership, and therefore, a sale of the family business would not qualify as a capital gains transaction. Family operations are commonly formed as partnerships and managed by a family member. Under the proposed legislation, the managing family member could be subject to the “carried interest tax.” For a family partnership to gain liability protection and also not be subject to the higher taxes, an outsider – not a family member — would have to manage the partnership. The House version of the legislation exempted family farms and ranches held in partnerships. Other family partnerships would have had to wait for the Treasury Department to exempt them through regulations.

Although the proposed legislation is dead for now, it is likely to reemerge as efforts to plug the federal deficit mount. The increased carried interest tax may be reintroduced in some other form. If so, watch carefully to see how the “carried interest” tax will hit families that are well beyond the alleged targets of the legislation, and communicate any concerns to your representatives in Congress.

Dan A. Penning

Tags: Agribusiness, Asset Protection, Business Management/Law, Business Succession, Cottage Law, Know it Now, Real Estate by Dan Penning
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Oil and Gas Leases: What Northern Michigan Landowners Should Know

Recently, many of my firm’s clients who own multiple acres of land in northern Michigan have been contacted by petroleum company representatives and offered oil and gas rights leases for their land. While many of these companies are reputable and offer fairly standard terms in their leases, they are generally trying to secure leases that are most favorable to them. The landowner should be aware of provisions that can be included to protect their investment and maximize the owner’s financial return.

Know What Your Oil and Gas Rights are Worth

Most oil and gas leases propose two financial benefits. The first is the oil and gas lease price per acre. Recently, one major oil and gas company paid up to $5,000.00 per acre for what they had determined to be land located strategically close to what the company believed would be a very fertile and productive natural gas field. While not all landowners will be fortunate enough to garner that type of lease price, it is not unusual for companies to make initial offers at a fraction of the amount they are willing to pay to lease a landowners oil and gas rights. Rarely is the first offer the best offer they are willing to make.

The second financial benefit is the “royalty” to be paid by the oil and gas company in the event their exploration results in the installation of an active well to extract oil or gas. Recently, oil and gas companies negotiated oil and gas leases for thousands of acres of state lands and agreed to pay the state royalties at a rate of 1/6th of the gross revenue resulting from an active well. As a result, landowners should not agree to anything less than the State of Michigan was able to negotiate for its royalty rate. I recently reviewed an oil and gas lease for a client that proposed a 1/10th royalty rate which we easily negotiated to the more favorable 1/6th rate being paid to the State.

Avoid Deduction of “Post Production Costs” From Royalties

Many proposed oil and gas leases will include provisions allowing an oil and gas company to deduct a portion of the company’s “post production costs” (PPCs) which essentially is simply a practice of the companies lowering their overhead and increasing their profits by passing overhead costs on to the landowner to be deducted from royalties. Landowners should be careful to make sure their royalties are to be paid off the gross revenue from a well with nothing other than a proportionate share of applicable government taxes being deducted from the royalty payment.

Require the Inclusion of a “Pugh Clause” in the Lease

A “Pugh Clause” protects the landowner by requiring the oil and gas company to release certain land subject to the lease after termination of the lease term that has not been pooled into the land subject to the royalty payment in the event an active well results from the lease and exploration. For example, an oil and gas company may only pool an apportion of the leased land for royalty purposes and without a Pugh Clause, the companies in some instances can tie up the entire parcel subject to the lease even though they are only paying royalties on a portion of the land.

There are other concerns that also should be addressed and included in the lease to protect the landowner including where the placement of well will be allowed, where facilities can be constructed on the landowners property and provisions specifying that the companies must restore the land to its original condition after completing various activities on the land.

Be Prepared

There has been a significant increase in the oil and gas activity in northern Michigan in the last six months. Oftentimes the oil and gas leases are presented in a fast and furious fashion. Don’t be afraid to take your time and carefully consider any proposed lease and determine whether there are other companies also interested in the oil and gas rights to your land. A little competition never hurts the process. Also, seeking the advice and input of a qualified attorney to protect your rights as the landowner is also recommended.

Dan A. Penning

Tags: Agribusiness, Asset Protection, Business Management/Law, Know it Now, Personal Management, Real Estate by Dan Penning
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I’m pleased to announce that one of Michigan’s premier business journals, DBUSINESS, recently announced its 2010 “Top Lawyers” in metropolitan Detroit - and three of the principals with Wright Penning & Beamer made the list.

DBUSINESS compiles its list as a resource and reference guide for its readers. Selection criteria include:

• legal knowledge
• analytical capabilities
• judgment
• communication ability, and,
• legal experience.

The list was published in the journal’s November/December 2009 edition.

According to the publication, selected lawyers “possess the highest professional ability and ethical standards.”

Dirk Beamer, Lee Flaherty and I were selected this year. Beamer for his expertise in business and commercial litigation; Flaherty for her work with non-profits and charitable organizations, and I was recognized for business and estate planning.

As a founding shareholder of the firm I’ve focused my practice areas primarily in planning for business entities including family businesses, estate planning for business owners, individuals, families with special needs children, and succession planning for family cottages and farms. Through these practice areas our firm has become a leading resource for individual and business clients.

Beamer oversees our firm’s diverse litigation practice, focusing primarily on business and commercial litigation. He spearheads the firm’s efforts in insurance law, unfair competition, trademark infringement, employment matters and contract disputes. Dirk has litigated in state and federal courts across the country. He also counsels business owners and managers concerning employment practices and management.

In addition to her work with non-profits, Lee Flaherty is well versed in real estate, business law, estate planning and probate. Lee’s business expertise encompasses the support of ongoing businesses, business purchases and sales, and representation in commercial real estate transactions. Her estate planning practice focuses on the preparation of a wide variety of trusts and other documents to assist clients in avoiding probate, preserving assets and minimizing taxes.

I take pride in my colleagues’ accomplishments and wanted to share this good news with you. As a firm we continue to strive daily to deliver the highest quality legal services to our clients throughout Michigan and beyond.

Dan A. Penning

Tags: Agribusiness, Business Management/Law, Business Succession, Cottage Law, Employment Law, Estate Planning, Know it Now, Personal Management, Special Needs Children, Suttons Bay Depot by Dan Penning
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“…proper planning in most instances can navigate around any estate tax liability…”

There is a long history of debate regarding the federal estate tax. The implementation of the tax originally was to prevent the build-up of wealth that could lead to a creation of large estates and a permanent class of idle rich that would attempt to impose a monarchy.

While I am generally not in favor of raising taxes or the estate tax in general, there is a valid question as to whether the impact of the existence of the estate tax has any real negative impact on the majority of small business owners and family farms. Previously, President Bush tried to repeal the estate tax in his 2001 Tax Bill. President Bush succeeded to include provisions in the Bill that would phase the estate tax out of existence by the year 2010. The goal of the phase-out included in the Bill was to provide Congress with incentive to affirmatively decide the fate of the estate tax before its repeal in 2010. Now that President Obama has been elected, the fate of the estate tax has taken a different turn.

Under President Obama’s proposed new budget bill, there are provisions that freeze the estate tax at its 2009 level. The 2009 estate tax level provides for individuals with estates of up to $3.5 million to be exempt from estate tax which begins at a 45% tax rate, and married couples, with proper planning, can obtain an exemption of up to $7 million. In addition to using the aforementioned estate tax exemptions, there are additional estate planning tools which can, depending on the assets includable in an individual or married couple’s estate, provide for opportunities to possibly avoid estate tax on estates worth as much as $10 – 12 million or more.

The question then becomes is the estate tax a lion roaring down the path to chew up large pieces of individual’s estates, or is it a lamb in most instances avoidable and of no consequence?

According to a study by The Center on Budget Policy and Priorities, a Washington-based think tank, estate tax does not pose a significant problem to small business owners or individuals with family farms. That study claims that almost no small businesses or farm estates would owe any estate tax under the Obama budget bill. Based on the study’s analysis, fewer than .2% of all estates–2 of every 1000–will be subject to tax in 2009. Of the estates that are taxable, only about 1.3% are small business or farm estates. At the end of the day, the study purposes that only 3 out of every 100,000 people who die this year owning a small business or farm will be subject to any estate tax.

On the other side of the debate, the National Federation of Independent Business (NFIB) runs a separate organization, The Family Business Estate Tax Coalition, which primarily focuses its efforts to obtain a repeal of the estate tax. This organization argues that over the life of a business, the government collects income tax and other taxes. As a result, the group argues that the government has taken more than its fair share in taxes prior to an individual’s death. The organization further argues that the assets of a small business or family farm, including real estate, equipment, machinery and other business property can quickly add up to millions of dollars of value and yet only result in the production of a middle class income for the business or farm owner. While the individual, during their lifetime, may have paid for significant business assets, the group argues that the reality is that the individual only received a nominal return in income when compared to the overall value of the business assets.

The debate regarding estate tax will never cease as long as it is in effect. The lesson to be learned by an individual, small business owner or family farm owner is that proper planning in most instances can navigate around any estate tax liability.

Dan A. Penning
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Know Your Business, Grow Your Business, Protect Your Business

Tags: Agribusiness, Business Succession, Estate Planning by Dan Penning
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As recently reported in the February 25 issue of the Oakland County
Legal News

By KATHY BARKS HOFFMAN

LANSING, Mich. The sauvignon blanc was from California, the pinot noir from Oregon.

But the wine served Sunday night with dessert as the nation’s governors dined at the White House with President Barack Obama and his wife was the most unusual - a Michigan ice wine from Black Star Farms in Suttons Bay.

The frozen grapes were picked in December 2007 and crushed outside so they wouldn’t thaw. The wine was released last July and sells for $80 or more for a half bottle.

The White House paired the sweet A Capella Riesling ice wine with huckleberry cobbler with caramel ice cream.

Black Star Farms managing partner Don Coe said Monday that former President George W. Bush and his wife served the winery’s 2000 A Capella ice wine to a governors’ dinner seven years ago.

The Bushes also served the winery’s Sirius Maple dessert wine during a May 2005 Rose Garden event celebrating Cinco de Mayo. A pinot gris was served once.

“It’s always exciting,” Coe said of his wine’s White House appearances. “We’re delighted.”

Tags: Agribusiness, Wine Industry by Dan Penning
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Michigan Governor Jennifer M. Granholm recently signed the last of two bills of a three-bill package paving the way for growth of a previous market for home-grown food products that was unexplainably subject to stricter state limitations than those limitations dictated by federal law. Previous state regulation on bidding to buy Michigan food products limited school districts to only $20,000 per year. Under the new law, that limit was increased to $100,000 per year which is the federal limit.

The aforementioned action exhibits that the legislature and governor can provide leadership in creating positive business opportunities. Unfortunately, our lawmakers and governor are inconsistent when it comes to enhancing and expanding the business environment for certain growing industries within the state. One such example was the passage of Bill 6644 in December, 2008 substantially restricting the shipment of wine by Michigan retailers directly to Michigan customers. The passage of that law will only stifle the expansion of the distribution and sale of Michigan wines and related businesses supporting the wine-making industry. The farm-to-school bill gives some hope for our state and its governmental leaders that the right decision to support business in Michigan can be made. We now need to work to make this behavior more consistent to grow Michigan’s economy.

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Dan A. Penning

Tags: Agribusiness, Wine Industry by Dan Penning
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PROPOSED LAW BANNING DIRECT SHIPMENTS BY IN AND OUT-OF-STATE WINE RETAILERS IS BAD LAW AND BAD FOR MICHIGAN
Prior to the holidays, the Michigan Legislature hustled a poorly crafted piece of legislation through the system to allegedly protect the public’s best interest by making it almost impossible for in and out-of-state wine retailers to ship directly to customers. The senate modified Bill 6644 previously passed by the House of Representatives by allowing wine deliveries by retailers to consumers but only if the product is delivered by employees of the retailer.

The Bill supporters will cite factors such as loss of state tax revenue from diminished sales by Michigan liquor distributors and without the new law, alcohol sales to minors would sky rocket out of control.

Basically, the Bill’s proponents argue that alcohol, unlike other products, needs to be strictly regulated based on the potential harm to the public because of abuse, addictions, and the products intoxicating effects. They argue that the current system with minor modifications has served its purpose well for 75 years so why change it. Maybe the Bill’s proponents fail to notice the internet, computer, and fax machine in their home or office which was not there 20 years ago, let alone 75 years ago when a substantial portion of the law that still governs alcohol distribution and sales was created by the legislature.

The rush to pass legislation directly resulted from a recent federal district court case Siesta Village Market, LLC vs. Granholm where the judge ruled that the State of Michigan was prohibited from banning out-of-state wine retailers from selling, delivering and shipping wine through commerce direct to Michigan customers. Michigan’s law and certain provisions of the state’s liquor code prevented that activity by out-of-state wine retailers and that law was challenged by the Plaintiff in the Siesta Village Market case. Various legislative analysis agencies such as House Fiscal Agency in summary reported the following as an argument in support of the bill:

“Passage and enactment of the bill, on the other hand, would give time for the case (Siesta Village Market, LLC vs. Granholm) to be litigated and for the commission and lawmakers to examine the issue and see if a regulatory structure could be developed and implemented that would be equal treatment to in-state and out-of-state retailers yet still protect the public from unscrupulous business owners, and that would create a mechanism by which to collect appropriate taxes. In the meantime, the bill would protect the three tier system, ensure that laws prohibiting sales to minors are adhered to . . . “

If the legislature is serious that the law is in place to allow further work to be done in order to develop regulations to manage the alleged downside of the fall of the three tier system, then who should be expected to lead the charge? Presumably, the legislature has dealt with many of these issues with respect to the fact that out-of-state wineries have been allowed to ship to customers in the State of Michigan for the past several years and there already exists a regulatory system with respect to taxes on those sales by out-of-state wineries to Michigan residents.

In the meantime, small retailers who are located in tourists destinations with local wineries such as Leelanau County, Michigan will be negatively impacted in that it is economically impossible to dispatch employees all over the state to deliver wine to consumers who previously placed orders for more of various wines of the region they may have first noticed and purchased while visiting the area on vacation.

In conclusion, it is clear that the law passed by the legislature is an act of protectionism for the powerful Michigan Beer and Wine Wholesalers Association and their lobbyists who seek to anchor the wine industry and the sale of related alcohol products in an archaic system which ultimately will be bad for business and bad for Michigan residents.

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Dan A. Penning

We welcome your comments. Please post your comments and opinions about House Bill 6644.

Tags: Agribusiness, Wine Industry by Dan Penning
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A recent article about Michigan’s House Bill 6644 as it appeared in Crain’s Business News

Alcohol bill uncorks biz concern
By Amy Lane and Nathan Skid

LANSING - When Ronnie Jamil looks at House Bill 6644, he sees some of his business in jeopardy.

That’s because the bill, which would ban retailers from shipping wine and other types of alcohol directly to customers, extends to catered events.

“We are a unique wine shop in a nice neighborhood of people that like to be catered to,” said Jamil, co-owner of Bella Vino Fine Wine and Spirits in Farmington Hills. “This is a competitive edge we have over box chain stores, that we can offer delivery to residential homes and businesses. We cater food, and if someone is throwing a party and they want a few cases of beer and bottles of wine, we can do that.

“This bill is trying to eliminate or disallow us to distribute this to our customers.”

Jamil is emeritus director of the Associated Food & Petroleum Dealers, which along with the Michigan Retailers Association and the Michigan Restaurant Association and others have concerns about the legislation that swept through the state House last week in a 97-9 vote.

Focus is now on the state Senate where, with the brief session time remaining, the bill could go to a committee or directly to the Senate floor.

The Michigan Beer and Wine Wholesalers Association is backing House Bill 6644. In a statement e-mailed to Crain’s on Friday, President Michael Lashbrook said “we support regulations that will help protect our ability to stop dangerous products from reaching consumers and alcohol from falling into the hands of minors, both of which are the driving force behind HB 6644.”

The bill, sponsored by Reps. Barbara Farrah, D-Southgate, and Chris Ward, R-Brighton, would prohibit both in-state and out-of-state retailers from direct shipping and require all sales to go through the state’s existing three-tier distribution network in which alcohol products flow from producers to wholesalers and then to retailers.

The measure responds to an October federal court ruling that found unconstitutional a Michigan law that bans out-of-state retailer shipping of wine but permits in-state retailer shipping.

The state has appealed the ruling and sees it as undermining Michigan’s ability to control sales, but is seeking the legislation as a broader and more rapid remedy.

The legislation would prohibit in-state and out-of-state retailers from directly shipping to consumers any kind of alcoholic product — beer, wine and liquor — even if the delivery is only a few blocks away.

Andy Deloney, the restaurant association’s vice president of public affairs, said the House version “essentially makes it all but impossible” for restaurants that hold retail beer and wine licenses to do catering that includes alcoholic beverages.

He said the association is working with the Michigan Liquor Control Commission and other interests to address the catering concerns in the Senate, “while also being mindful that we’re running out of time in the legislative session.

“We’re hopeful that we can come up with some language to address that,” Deloney said.

Ken Wozniak, director of executive services at the Liquor Control Commission, said the commission is looking at ways to address some of the concerns raised about the bill. One possibility is a catering permit that would apply to in-state and out-of-state businesses.

Also being looked at is retaining the ability for Michigan businesses to continue to direct ship. One way to do that might be to limit the means of delivery for all shippers, in-state and out-of-state.

“It’s not that we’ve shut off all dialogue on those issues,” said Wozniak. “Hopefully by the time this gets to a committee meeting in the Senate, we’ll have something worked out, if it can be worked out at all.”

Sen. Alan Sanborn, R-Richmond, would lead the bill on the Senate floor and chairs the committee that would discuss the bill. Andrew Doerr, his chief of staff, said Sanborn “is hoping that we can get something done with the legislation before the end of the year,” but with the caveat that the commission continues to work with those concerned about catering to ensure such events can continue, and not at a significantly increased cost.

He said Sanborn would also like to address gift-basket shipping, which also is affected by the proposed ban, although the commission’s Wozniak said that’s a more complicated issue.

Michigan business interests aren’t the only ones who have raised concerns with the bill.

Free the Grapes, a Napa, Calif.-based national grassroots coalition for wineries and consumers, has sent e-mails to its list of Michigan wine-loving individuals who in turn sent about 240 faxes to state lawmakers, as of early last week.

Executive director Jeremy Benson said direct shipping is “a way for people to sample products that may not be available in their market, in many cases, and be able to purchase them the way they want to purchase them. And that’s what this ultimately comes down to, and that’s choice.”

He said that instead of banning all direct shipping, Michigan could remedy its problem by adopting model legislation that is a basis for direct-shipping laws in other states, involving both wineries and retailers. Such a law would require shippers to obtain a state license, pay sales taxes, and abide by regulations that include package labeling and limits on amounts shipped.

Michigan enacted similar legislation in 2005, creating a direct shipper license available to both in-state and out-of-state wineries.

But Wozniak said the issue in Michigan goes beyond wine. Even though the current court case centered on wine shipments, it has implications for the shipping of beer and spirits, he said. The state is the wholesaler of spirits, and “if a lot of sales were being made through out-of-state retailers, that would have, we think, a very dramatic effect on state revenues,” he said.

The state made about $204 million in profit on the sale of spirits in 2007.

Wozniak said it’s not unlikely that a future lawsuit could be filed regarding Michigan liquor shipping, because Michigan allows in-state but not out-of-state delivery. Michigan’s liquor prices are significantly higher than those of other states.

“Our attorneys and the commission itself feels that we’ve got to deal with the issue for all alcohol products,” Wozniak said.

Joel Goldberg, editor and founder of MichWine, a Brighton-based consumer Web site on Michigan wines, said Wozniak’s argument is “a red herring.” He said he is not aware of any challenge to spirits laws on such a basis, and said Michigan could still require an out-of-state retailer to go through the state.

Amy Lane: (517) 371-5355, alane@crain.com

Nathan Skid: (313) 446-1654, nskid@crain.com

Tags: Agribusiness, Wine Industry by Dan Penning
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From a recent email from Lois Bahle of The Suttons Bay Area Chamber of Commerce concerning how House Bill 6644 could affect two Chamber members:

As we all know, doing business in today’s economic climate is difficult at best. That’s why I’m asking you to support two of our retail members by contacting your state representative, state senator and future state representative on behalf of two of our retail members.

As you may have read in Thursday’s Leelanau Enterprise, House Bill No. 6644, which is supported by the Michigan Beer and Wine Wholesalers, would effectively eliminate the ability of retailers like the Silvertree Deli and Hansen Foods from shipping wine directly to the customer. According to Bruce Vaughn at The Silvertree Deli, the bill is so restrictive that he wouldn’t even be able to deliver a case of local wine to a wedding, much less ship it anywhere else in the state.

While this bill focuses on retailers, it could also have a negative effect on new wineries who are struggling to find an audience for their wines. While direct sales at the winery are still possible and wineries will still be able to ship directly, local wine shops such as The Silvertree Deli and Hansen Foods have done a superior job of presenting local wines. Their support of the Michigan wine industry through their knowledge and personal promotion of local wines can be a big boost for a start up.

Unfortunately, if the ability to distribute is limited to wholesale distributors, small start up wineries would find their products lost in the long list of wines marketed through the distributor. Since distributors look for a certain volume of sales before they will pick up a winery’s line, many small wineries may never be able to build the volume they need to get a distributor to represent them.

The wine industry in Michigan is one of a few bright spots our business economy. This bill could have a chilling effect on that business – and that’s something Michigan doesn’t need right now. In fact, the Michigan House Fiscal Agency analysis of the bill pointed out that the bill could “seriously affect a business’ ability to stay afloat in a troubled economy.” Despite that, the House moved to push this legislation through before an economic analysis was completed.

A main argument made in promoting this legislation was a fear the state would not collect taxes it’s due on retailer and caterer delivered sales. We could debate the merits of that argument for days, but the reality is that this bill will reduce tax revenues in the immediate future. That’s not something Michigan needs right now

You should also know that the state is appealing the federal judge’s ruling that struck down Michigan’s law permitting in-state retailers to ship wine directly to private residences. Supporters of this bill are claiming its passage buys time for the litigation to progress, but in reality this preempts the court appeal.

The Senate plans to try to move this bill before recessing for the holiday. I’m concerned that while we are all busy with the Christmas season, this bill will be pushed through the senate and across the Governor’s desk – effectively getting through the end-of-the-year session while no one is watching.

Action is urgent. The House of Representatives passed this bill 97-9. We need you to act now. I urge you to contact Senator Michelle McManus and the other members of the Michigan Senate and encourage a no vote on this bill. One simple way to do this is to go to www.winecam.org. There you can automatically send a fax or get email or surface mail addresses to send your message to the State Senators. The last scheduled session of the Senate is December 18 – just 10 days away. Your voice in support of small business in Michigan needs to be heard. Please fax, call, email or write your senator today!

Sincerely,
Lois Bahle

Tags: Agribusiness, Wine Industry by Dan Penning
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Congratulations to Leelanau Peninsula Winery LMawby Vineyards and Old Mission Peninsula Winery Peninsula Cellars on winning the Jefferson Cup!
“winners represent some of the most compelling wines made in America”
From an article which recently appeared in The Detroit News:

Thursday, December 4, 2008
Sandra Silfven
Michigan wineries win two Jefferson Cups

The ninth annual Jefferson Cup Invitational, held last week in Kansas City, brings to a close the year’s big wine competitions, and Michigan drove away with two Jefferson Cups, a high honor that’s like a great big Christmas present for all the wineries in the state.

L. Mawby Vineyard’s Mille 2002 and Peninsula Cellars’ Riesling Select 2006 bested their categories at this unique competition. Larry Mawby makes Mille, his only vintage-dated bubbly, about twice a decade, and Peninsula Cellars has a solid track record for Riesling.

The event celebrates American winemaking in the spirit of one of the country’s most passionate wine lovers, Thomas Jefferson, by inviting wineries across the U.S. to enter select wines, which already have been cited for excellence, to compete in what amounts to the championship game.

In the spirit of democracy, it’s not just another dance where 90 percent of the winners are from the West Coast — though many are. And that’s to the credit of Doug Frost, who chairs the event and ranks as one of three people in the world to hold Master Sommelier and Master of Wine credentials, and knows not only the wines from the most famous regions of the world, but also the wines of America’s West, Midwest, East Coast and the South.

“The 700 wines in this invitational are chosen by me, based upon my own tasting notes, other reviews and probably most importantly, an effort to create a fair list of wines from around the country,” Frost said this week.

The Jefferson Cup is the highest award at the event, and this year, 17 were handed out for both European grape varietals (Chardonnay, Cabernet Sauvignon, etc.) and non-European species (such as Vidal and Norton), which flourish in the more extreme climates in the U.S.

“The 17 cup winners represent some of the most compelling wines made in America,” Frost said.

Of course, California showed well, and Napa Valley’s Cosentino Winery, which swept up medals at events all year long, had five Cup nominations and went on to win a record three cups.

California wines nabbed eight of the 17 cups, followed by Michigan and New York with two each, and the rest went to wines in Washington, Kansas, Georgia, Virginia and Rhode Island.

Of the 700 entries, a total of 51 wines were nominated for the Jefferson Cup. This in itself is a huge honor, and Michigan’s St. Julian racked up three nominations — for Braganini Reserve Sauvignon Blanc 2007, Braganini Reserve Traminette 2007, and Solera Cream Sherry.

In descending order, the awards were Jefferson Cup, Jefferson Cup Nominee, Great Wine and Certificate of Merit. But clearly, every wine invited to this event was a winner.

Here are the Jefferson Cup winners.

2008 JEFFERSON CUP WINNERS
Sparkling Wine

L Mawby Mille 2002 Leelanau Peninsula (Michigan)
White Vinifera Wine

Peninsula Cellars Riesling Select 2006 Old Mission Peninsula (Michigan)

For a complete listing of all the 2008 Jefferson Cup Winners and Jefferson Cup Nominees please visit the Detroit News article here.

Tags: Agribusiness, Wine Industry by Dan Penning
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