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Updating Minnesota’s Prohibition-era liquor laws likely has a lot of support. Here’s why that doesn’t matter.

Bills that attempt to change Minnesota liquor laws run into several interconnected obstacles.

Individual bills in the Minnesota House have sought to let larger brewers continue to sell growlers — 64-oz. bottles — from taprooms.
Individual bills in the Minnesota House have sought to let larger brewers continue to sell growlers — 64-oz. bottles — from taprooms.
MinnPost file photo by Corey Anderson

On Wednesday, the Minnesota House of Representatives will hold a hearing on sweeping legislation to legalize marijuana for recreational use.

Yet it is likely that at no time during the 2021 session will the House — or the Senate — even hold a hearing on bills to expand the offerings of craft brewers and distillers, including the authority to sell beer in 12-ounce cans and spirits in .750 liter bottles. The chair of the House Commerce Committee has said there isn’t time to delve into the liquor laws in a year when COVID and the budget are top of mind.

State Rep. Jim Nash
State Rep. Jim Nash
The odd juxtaposition isn’t lost on Republican Rep. Jim Nash, who has been trying to update Minnesota’s liquor laws since even before he was elected to the House in 2014, when he was the mayor of Waconia. “That is an absurdity that boggles the mind,” Nash said. “I can guarantee you that the conversation about legalizing pot is going to take longer than the conversation about changing our arcane and old alcohol laws.”

Proponents of changing laws to allow brewers and distillers to grow — or just to survive during the pandemic — have tried going small and going big. Individual bills have sought to let larger brewers continue to sell growlers — 64-oz. bottles — from taprooms; to let brewers sell beer to-go in 12-ounce bottles and cans; to let distillers sell spirits to-go in standard .750 liter bottles; and to permanently allow restaurants to sell beer and wine to-go.

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This session, one new coalition is trying to go big, putting all the previously proposed changes — plus changes sought by cideries, farm wineries and restaurants — into a single bill. The theory is that bringing big brewers, small brewers, distillers, cideries, farm wineries and many restaurants together will create a force that can break through opposition.

So far, it hasn’t. 

State Rep. Liz Olson
State Rep. Liz Olson
Even with the No. 3 DFL leader in the House, Rep. Liz Olson of Duluth, sponsoring the coalition bill, it isn’t enough to get the measure scheduled for a hearing in the House Commerce Committee. “The way we’ve done it before hasn’t always worked,” Olson said. “The more people who we engage, the further we’ll get along in this.” 

In the state Senate, the bill’s sponsor, Sen. Mark Koran, R-North Branch, is a committee chair and a candidate to be chair of the state Republican Party. And yet he also hasn’t been able to get a hearing in the Senate Commerce Committee under Sen. Gary Dahms, R-Redwood Falls. “Those issues are there,” Koran said of the longstanding resistance to changing the state’s liquor laws from industry groups, including alcohol wholesalers, the Teamsters Union and independent liquor stores. 

There are two significant additions this year to the coalition behind the Olson and Koran bills, however: the 2,000-plus member Hospitality Minnesota, the organization that resulted from the merger of the Minnesota Lodging Association, the Minnesota Restaurant Association and the Minnesota Resort and Campground Association; and Minnesota Independent Restaurants, a group that came together to advocate on behalf of an industry disproportionately affected by COVID-19.

State Sen. Mark Koran
State Sen. Mark Koran
The broader coalition is meant to keep the pressure on legislative leaders and committee chairs. “It’s tough to drag someone into the middle or even into the conversation,” Koran said. “But that’s why we’re here today, to put pressure on everybody and educate the public as to what the obstacles are.”

Koran pointed out that it’s easier for some alcohol businesses to locate in those states and sell into Minnesota than to actually locate a business inside the state. Added Lauren Bennett McGinty, executive director of the Minnesota Craft Brewers Guild: “As of right now, there’s not really a way to compare our laws to other states because we are so far behind. Even Utah has looser liquor laws than we do, so there’s a lot of ground to make up.”

No peace, no liquor bills

Bills that attempt to change Minnesota liquor laws run into two interconnected obstacles. One is the requirement by legislative leaders that lawmakers will only weigh in if the entire industry comes to an agreement. This is usually described as a need to have “peace in the valley.”

“With everything on our plate, it’s gonna be hard to do things that there isn’t pretty broad consensus,” said House Commerce Committee Chair Zack Stephenson, DFL-Coon Rapids, who said he preferred to focus his committee’s time on general business relief for the hospitality industry to help with the pandemic.

“Making permanent changes to state liquor laws is certainly one way we could help them, but I don’t think it’s the only way we could help them,” said Stephenson, who said he supports limiting fees charged by food delivery apps, for example.

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This brings up the second obstacle: There can be no peace if the legacy industries — liquor wholesalers and private liquor stores — are OK with current law. In 2011, they supported the so-called Surly Bill, which allowed brewers to sell beer in their taprooms to-go, beer in growlers and 32-once cans known as crowlers. In 2015, craft distillers got similar if more limited sales authorityAnd in 2017, the legacy players ended their opposition to Sunday liquor sales.

But further changes, they argue, would upend Minnesota’s post-Prohibition method for regulating alcohol, a three-tier system that splits up the manufacturing, distribution and retail sale of booze. 

Letting small brewers or distillers produce, sell and in some cases distribute their own product has been allowed as an exception to that system — with restrictions. Under current state law, once brewers become more successful — to the point where they produce more than 20,000 barrels a year — they lose the right to sell growlers. In Minnesota, five brewers have reached that threshold: Castle Danger, Surly, Schell’s, Fulton and Summit. 

Those companies are now the only breweries in the United States that can’t sell growlers from their own breweries, according to the Alliance of Minnesota Craft Breweries, a trade group recently formed by six Minnesota brewers, including all those affected by the cap except Summit. The group is calling on lawmakers to remove the growler cap this legislative session.

Another new group — actually a coalition of existing groups — has formed to work on the broader legislation that is the Olson and Koran bills. The Minnesota Craft Beverage Council is made up of the Minnesota Craft Brewers Guild, the Minnesota Cider Guild, the Minnesota Farm Winery Association and the Minnesota Distillers Guild. They too are hoping a unified effort on a comprehensive bill will pressure legislators to make changes.

In Minnesota, the three-tier system is supported by the Teamsters Union, which represents the drivers and warehouse workers at the wholesalers who distribute alcohol products in Minnesota, as well as the Minnesota Licensed Beverage Association, which represents alcohol retailers, including independent liquor stores, bars and restaurants and the association of city-owned municipal liquor stores.

In a statement released Tuesday, the MLBA explained its opposition to further altering the current system: “Everyone involved in the hospitality industry – restaurants, bars, breweries and more – is hurting due to Covid-related restrictions and shutdowns. We hope legislators focus on continued relief packages for ALL small businesses in the industry. A new, controversial law benefiting a handful of breweries will come at the expense of many others.”

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Edward Reynoso, the political director of Teamsters Joint Council 32, wrote Tuesday that the 2021 session is “laser-focused” on pandemic response and a two-year state budget, and that “… controversial changes in alcohol policy that gives advantages to only a small group in the hospitality industry — at the direct expense of others — is neither appropriate nor right.”  

Regarding any talks toward an industry-wide deal, he wrote, “We are happy to have conversations in the future, but have absolutely no interest in any policy change that sacrifices our members’ jobs and the ability to provide for their family.”

These are not insignificant groups in Minnesota politics. The Teamsters is part of the DFL coalition and is a significant donor to campaigns. The so-called mom-and-pop liquor stores and independent restaurants are often fixtures in every legislative district in the state, small businesses that most politicians are reluctant to take them on. 

An exception is Nash, who engaged in a Twitter battle with the Teamsters this week about a tweet that was taken down shortly after it drew his attention.

The Minnesota Craft Beverage Council members have stressed their own economic presence throughout the state, however, including their role in revitalizing many smaller downtowns. They estimate there are more than 250 businesses making beer, wine, cider and distilled spirits throughout the state. 

Jeff Zeitler, the owner and winemaker at Urban Forage Winery and Cider House in Minneapolis, said he has been frustrated in the past with how hard it is for a sole businessperson to be heard at the Capitol. “It’s not possible to negotiate with someone who won’t meet with you. I do believe others in this industry have had this same experience,” he said. “Sometimes opposition makes the bonds between erstwhile competitors stronger. Without the continued stonewalling, brewers, cideries, wineries, distilleries and restaurants may never have come together to advance our common interests.”

Industry frustration

The best illustration of the frustrations of the craft brewery and distillery industry came in mid-March of the 2020 legislative session, when House DFL leadership was finally going to allow craft industry bills to be heard in committee. But when the threat of the COVID-19 pandemic became clear to the Legislature, the hearing was canceled and the House and Senate went on hiatus. The issue was not considered vital enough to return, though some minor liquor changes were passed in the midst of the pandemic, specifically letting restaurants sell small amounts of beer and wine with to-go food orders.

But that only added to exasperation among those in the industry. That’s because a restaurant could sell 12-ounce cans or bottles of craft beer to its customers, but the brewery couldn’t sell that size container from its own taprooms. 

Rectifying that is the subject of another bill, Senate File 50, by Sen. David Osmek, R-Mound. It would let craft breweries sell their products in more familiar 12-ounce bottles and cans from their taprooms. The House companion, HF 121, is sponsored by GOP Reps. Mary Franson of Alexandria, Jerry Hertaus of Greenfield and Marion O’Neill of Maple Lake. So far there are no DFLers signed on to either bill.

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Backing that bill is yet another craft organization, the Small Craft Brewers Coalition, made up of the smallest brewers in the state, those who aren’t big enough to attract a distribution agreement from wholesalers to get their products into liquor stores, bars and restaurants. The coalition estimates that 160 of the state’s 190 craft breweries are too small to attract distribution deals from wholesalers.

According to Jeremy Mathison, the founder, brewery operations manager and director of community outreach at Broken Clock Brewing Cooperative in Minneapolis, “The majority of breweries behind this bill are just looking to survive. This year has been unlike any other in memory and many small brewers struggle to stay afloat.”

Tami Bredeson, who owns Carlos Creek Winery in Alexandria with her husband Kim, said small businesses like hers need state laws that allow them to form and grow. “I’ve been in the room and had that experience of dealing with the three-tier system and their concerns,” she said. “But we really need free access to markets during our early years, our incubation period.”

“We’re putting the cart before the horse when we’re asking a brand new teeny business that doesn’t have the volume to be in distribution to have limited access to the market until they become large enough to attract the services of a distributor,” said Bredeson.

Correction: A quote spoken by Lauren Bennett McGinty, executive director of the Minnesota Craft Brewers Guild, was incorrectly attributed to Rep. Liz Olson. The article has been corrected: “As of right now, there’s not really a way to compare our laws to other states because we are so far behind. Even Utah has looser liquor laws than we do, so there’s a lot of ground to make up,” McGinty said.