Buzzkills: the Minnesota Legislature makes booze bills boring again

Leave it to the Minnesota Legislature to make booze boring.

While there were lots of bills proposed this session to liberalize and modernize the state’s system for regulating the production and sale of beer, wine and liquor, none made it into the annual exercise known as the liquor omnibus bill.

Lifting a cap on craft brewers that will deny an increasing number the ability to sell growlers? Dead.

Allowing the same establishment to sell both craft beer and craft cocktails? No. Growler sales in liquor stores? Not happening.

Letting the same owner have more than one liquor store in any given city? Done for.

Letting craft breweries have guest taps of other brewers’ beers? Nope.

Beer and wine sales in grocery and convenience stores? You’re kidding, right?

Even a bill to end Minnesota’s status as the last state with 3.2 percent beer died a sobering death.

Instead, both the GOP-controlled Senate and the DFL-controlled House have omnibus bills that grant special liquor permits to a handful of requesters across the state and make a few somewhat substantive changes to state liquor regulations. But that’s it.

The Senate’s liquor bill, Senate File 2130, passed Thursday 57-10, and it primarily doles out special liquor permits — the Austin junior hockey league, for one, will be able sell beer and wine at the Riverside Arena if the bill becomes law, and the Twin Cities Marathon will get to serve beer to finishers. Similar provisions were granted to the Pemberton Community Center, the Legacy of the Lakes Museum in Alexandria and the Roseville Cedarholm Golf Course.

The only substantive change might be to let the Minnesota Airports Commission set their own hours for the Lindberg and Humphrey terminals so that ticketed passengers would be able to drink between 2 a.m. and 6 a.m.

The House version of the bill, House File 2290, doesn’t do much more. It has the airport hours but also includes a one-hour extension of Sunday liquor sales hours; it also lets liquor stores stay open longer when Christmas Eve and New Year’s Eve fall on a Sunday. But other than that, it mostly has its own set of special permits, which include one for the Macalester College Scottish Fair and for a restaurant at 68th and France in Edina.

In the Senate on Thursday, a series of amendments to the liquor bill were offered, changes that would have affected people who aren’t laying over at the airport or attending hockey games in Austin. But after Sen. Gary Dahms, the Redwood Falls Republican who chairs the Senate Commerce Committee, voiced objections, the amendments were withdrawn. 

Sen. Karin Housley, R-St Mary’s Point, offered an amendment to the bill that would increase the barrel-production limits for craft breweries to sell growlers. Under current law, once a brewer produces more than 20,000 barrels — there’s 31 gallons to a barrel — they can no longer sell growlers from their taproom. The brewers already over the 20,000 barrel cap are Fulton, Third Street, Surly, Summit and Schell’s. Those approaching it are Castle Danger, Bent Paddle and Lift Bridge.

Housley’s amendment, cosponsored by Sen. Sandra Pappas, DFL-St. Paul, would raise the cap to 40,000 barrels. “Our small brewers want to grow,” Housley said, arguing that that craft brewers have spread throughout the state and have more than 8,000 employees.

“This is the ultimate small business,” said Sen. David Osmek, R-Mound. Allowing them to sell their product on site not only lets brewers market their products but gives them a revenue stream to help them grow.

But Dahms said it was a long and difficult conversation between craft brewers and the other parts of the liquor business to even increase the cap from 3,700 barrels to 20,000. That was set to maintain the integrity of what is called the three-tier system, which dates back to the days after Prohibition was repealed in the 1930s.

That system was designed to prevent brewers and distillers from controlling all aspects of  alcohol sales. Before Prohibition, big brewers not only brewed the beer but distributed it and even owned many of the taverns. Post Prohibition, many states, including Minnesota, required separate ownership of production, wholesale distribution and retail sales.

So, Dahms said, letting breweries sell that much beer moves them from just producing beer to distributing it as well. The cap requires them, once they get big enough, to contract with distributors who get beer in kegs, bottles and cans to bars, restaurants and liquor stores.

Other provisions offered and withdrawn was the change to Sunday hours (which was also offered in the House bill) and Housley’s attempt to get the Legislature out of the business of approving special permits, something it hasn’t said no to even once in her seven years in the Senate. An amendment by Sen. Erik Simonson, DFL-Duluth, to let craft cideries use out-of-state apples when Minnesota apples are out of season was also withdrawn before it could be voted on.

Sen. Tom Bakk, DFL-Cook, said the amendment on the barrel cap for growler sales was more serious than it sounded. “There’s a deal to be made, but we have to talk about the elephant in the room,” Bakk said.

That is: Brewers want to be able to sell six-packs and other packages of their beer, which has traditionally been the business of liquor stores. If brewers promise not to come back and try to get different containers for sale, there is a chance the liquor stores will stop opposing the production cap.

Bakk said a deal needs to be reached so that “we don’t have warring parties bringing their disputes to the Legislature and asking us to pick a side.”

But that led Osmek to respond that the liquor stores like the status quo; for them, no deal means they win. “Just saying no might work in Washington, D.C. but it doesn’t work in Minnesota,” he said.

Housley ultimately voted no on the bill and said afterward that it was hardly an omnibus liquor bill when it made so few changes and when the Commerce Committee didn’t even hold hearings on the more substantive changes offered by many different senators. Housley also pointed to the influence of the Teamsters Union, which has contracts with all of the alcohol distributors. The union opposes changes that could reduce the amount of business done by those companies.

Before the vote Thursday, Bakk distributed a letter from the union that to all senators opposing the cap increase (as well as a change that wasn’t offered to allow brewers to sell bottles and cans). “This is also unacceptable and it will undoubtedly negatively impact Teamster jobs!,” the letter, from Teamsters Joint Council 32, said of on the barrel cap change.

Housley said she was told by union lobbyists that they would sit down with her and brewery representatives to see if a compromise could be reached. That would likely entail a trade of the cap limit lift for a pledge not to seek other changes.

But the Teamsters’ letter doesn’t bode well for such talks. “After much conversation in an attempt to offer a compromise to the Minnesota Craft Brewers Guild, there has been no agreement whatsoever, nor is there one that we can foresee in the very near future,” the Teamsters letter stated. But it did offer this bit of hope: “It’s unfortunate that we couldn’t come to a ‘peace in the valley’ agreement with the craft brewery industry, but we are optimistic that with further conversations it could be achieved.”

The liquor politics in the House aren’t much different. House Commerce Committee Chair Laurie Halverson, DFL-Eagan, said she and other House members are very sensitive to anything that would hurt mom-and-pop liquor stores in their districts. She said anyone proposing a change in alcohol regulation has to show how it would impact all parts of the three-tier system.

“Our system has created a market where a small mom-and-pop can compete with a Total Wine and a big box store all on the same block,” Halverson said. The small stores are important parts of many communities.

“I’m not going to put my mom and pop out of business,” she said, adding that she worked at a small liquor store while attending college. The initial request by the craft brewers was to increase the barrel cap from 20,000 to 250,000 barrels and be able to sell bottles and cans. That, she said, gets them closer to being their own distributor. “They want to collapse the three-tier system,” she said.