Is there a five-year rule when it comes to changes to Minnesota’s strict regulation of alcohol? If so, it could suggest that a bill that surfaced last week in the state House might actually have a chance of passage.
It was 2011 when the Legislature passed the so-called Surly Bill, named after the brewer, which allowed for the sale of beer on site in taprooms. And it was 2017 (six years instead of five, but close enough) when the Legislature finally allowed private and municipal liquor stores to open on Sundays.
Now, five years after that comes House File 2767, a fledgling “Free the Growler” deal between key and formerly warring segments of the alcohol business in Minnesota that includes an agreement that none of the parties will return to the Legislature to significantly change Minnesota liquor laws for … five years.
Peace in the valley?
A year ago, House Commerce Committee Chair Zack Stephenson was criticized for not holding any hearings on bills proposing to change the state’s liquor laws. But the Coon Rapids DFLer spent the time between last session and this one traveling around the state and meeting with liquor store owners, brewers and distillers. The bill that resulted from those negotiations makes several changes to Minnesota’s rules, specifically around who can sell beer and spirits for off-site consumption — and in what amounts and in what packaging.
[image_credit]MinnPost photo by Peter Callaghan[/image_credit][image_caption]State Rep. Zack Stephenson[/image_caption]
The bill “sets the stage not just for peace for one year but for a period of time — five years — where we can allow the liquor industry to grow and not be pounding down our doors … every year asking for changes.”
The Republican lead on the committee, Rep. Tim O’Driscoll of Sartell, used what amounts to a magic phrase around the Capitol to describe the bill: “We may have peace in the valley,” O’Driscoll said, referencing a demand by legislative leaders that they’ll take up changes to the law only all of the different segments of the state’s liquor industry agree. Lawmakers are reluctant to referee industry disputes because many have support in all camps: small liquor stores; craft brewers and distillers; the Teamsters Union and wholesalers.
Stephenson’s bill, however, gives all of the players — with a significant exception — something they want.
The makers of beer and distilled spirits, many of which are startups or small businesses, would get an increase in off-sale limits. Currently, brewers can have taprooms but they can only sell growlers (64 ounce glass jugs) and crowlers (32 ounce aluminum cans) as long as they produce 20,000 barrels per year or less. Since the Surly Bill passed, five brewers have surpassed the limit and had to stop selling beer to go: August Schell, Summit, Surly, Fulton and Castle Danger.
[image_caption]State Rep. Tim O’Driscoll[/image_caption]
Most of the 170 brewers in the state produce far less than these caps. Under the bill, Minnesota distillers would also be allowed to abandon smaller 375 milliliter bottles they were limited to under a 2015 law.
“Is it enough?” Galligan said. “It isn’t. But it is a step in the right direction and it is progress. Working together is ultimately going to benefit all tiers.”
Tiers refers to the state’s post-prohibition regulatory scheme designed to keep any segment of the industry — production, distribution and retail sales — from being too powerful. The Surly Bill was a hard-fought exception to the system, allowing a brewer to sell both on site and to-go beer to customers, and the other segments of the industry demanded limits on those activities for producers.
What do private and municipal liquor stores get? They block any changes that would let grocery stores sell wine and full-strength beer — and the knowledge that such competition will be kept at bay for at least five years.
Tony Chesak, the executive director of the Minnesota Licensed Beverage Association, which represents private liquor stores and many bars and restaurants, said he likes the Stephenson bill. “The biggest threat to independently owned liquor stores is big box, convenience grocery stores,” Chesak said.
“No one is walking away with big smiles on their faces but no one is walking away disappointed either,” Chesak said. “It’s a good time for the industry coming off the COVID mess to allow some things to happen in the industry that we’ve never allowed before. We support one another instead of fighting every year. For 20 years it’s all I’ve been doing, it seems.”
The five-year moratorium on additional change does not restrict lawmakers from acting, however. House Minority Leader Kurt Daudt, who could become speaker of the House next year, is a strong proponent of letting grocery stores sell wine and full-strength beer.
“Chair Stephenson’s goal, our goal, is to have a five-year cease fire,” Chesak said.
The losers are advocates for grocery store sales who saw the other segments of the industry line up against that major expansion of liquor access.
“Minnesota is the very last state when it comes to modernizing 3.2 beer liquor laws, and unfortunately the House omnibus liquor bill fails to catch our laws up with consumer expectations, demand and today’s marketplace,” said Red, White and Brew MN, a coalition of the state’s retailers, grocers, service station and convenience store owners and operators. “It’s long past time to allow Minnesotans the convenience of picking up a six-pack of full-strength beer or bottle of wine at grocery or convenience stores.”
The reference to 3.2 is the state’s law that allows such stores to sell beer that is 3.2 percent alcohol by weight. (In the more-common measure of alcohol content, alcohol by volume, 3.2 beer translates to 4 percent alcohol.)
While craft brewers and distillers support less regulation, they recognized that this deal helps them by solidifying the existing business relationship with liquor stores. “At the end of the day for us, we’ve been selling to these small stores for a long time,” Galligan of the craft guild said. “We’ve built up a relationship with them. We support liquor stores and we want to see all tiers grow.”
The Joint Council of Teamsters did not respond to requests for comment, but the union has told others involved in the deal that they will support it.
What about the state Senate?
Senate Commerce Committee Chair Gary Dahms, R-Redwood Falls, has been an advocate of slow change in alcohol laws. Dahms, however, said he would look at so-called peace-in-the-valley deals by the industry players.
[image_caption]State Sen. Gary Dahms[/image_caption]
Senate Majority Leader Jeremy Miller said he had not yet read the House bill yet.
But there are members of the GOP caucus who support changing liquor laws, including Mark Koran, R-North Branch. “I’m a free market guy,” Koran said. He sees the regulation of grocery store sales, growler size limits and other restrictions as protecting the current system from competition.
“It’s peace-in-the-valley for those who agree to lock out the others they won’t let in the valley,” is how he described a deal that blocks grocery store sales.
Still, if the Stephenson bill reached the Senate floor it would win a majority of Republicans and a majority of DFLers. The Senate GOP, however, gives great latitude to committee chairs, so Dahms could decide not to hear the bill or not include it in the Senate omnibus bill.
“It has majority support, it is just a matter of getting through the stranglehold of the chair to move on it,” Koran said.
While not what he would prefer, Koran said the bill is a positive. “It’s dozens of incremental steps without fundamentally realizing that it should be a free, open and fair market,” Koran said.
[image_credit]REUTERS/Brian Snyder[/image_credit][image_caption]Gov. Tim Walz[/image_caption]
When asked about the issue Monday, Walz said he would think about once a deal on unemployment insurance funding and bonuses for pandemic frontline workers is reached. “I’m glad they’re multitasking, but let’s do the essential workers and the UI and then move on to the growlers,” Walz said.
Who exactly are they kidding. Are they really under the impression that breweries are making 3:2 beer, just for us? It was one thing when there were actually other places that needed it, but one, not particularly large market? Yeah, sure. Like to see the testing data on that product.
I do believe opening liquor sales in grocery stores and quick markets, smaller liquor establishments could be hurt…but truthfully, by refusing to allow us to buy liquor from a grocery store is as inane as refusing car dealers to sell cars on Sunday.
Quite frankly, lots of grocery stores now have liquor stores on the side. It’s not a terrible inconvenience to get wine, beer, and even booze from those stores after you’ve grabbed your groceries. As for the grocery stores that don’t…some day they’ll be able to sell beer and wine. Today is not that day, unfortunately for them. But for the public and a lot of home grown businesses (breweries and distilleries), this is a definite step in the right direction.
The article states “Currently, brewers can have taprooms but they can only sell growlers (64 ounce glass jugs) and crowlers (32 ounce aluminum cans).” Crowlers in MN are 750 ml, not 32 ounces. We are the only state that requires 750 ml. I hope the bill includes changing to 32 oz aluminum cans as breweries in MN can struggle to get 750 ml cans manufactured.
I’m suspicious of anything that has the phrase “free market” attached to it, but as a life-long teetotaler, I don’t really have a dog in this fight. I think prohibition is a great idea. Unfortunately, ample historical evidence shows us that it doesn’t work in human populations anywhere on the planet that I’m aware of, so it’s off the table. And if prohibition is off the table, why is “peace in the valley” the operative phrase when the figurative Jolly Green Giant of the valley is being left out of the legislation? It’s one more example of the occasional irrationality of human behavior and legislative politics when economic and other interests clash. The guy on the street corner can be put in prison for years for selling certain kinds of white powder in little plastic packets because what’s in the packets is deemed dangerous, and therefore illegal, while the guy behind the cash register who sells a 750ML bottle that has the same dangerous effects as the white powder gets a regular wage, and, one hopes, benefits as well, because what’s in the bottle is part of the “regular” economy, and therefore deemed legal. Both items contribute to thousands of deaths every year.
You forgot one piece in your comparison. Alcohol and tobacco are heavily taxed by both state and federal. I believe the state of Minnesota takes in about $20 billion annually. During Covid this revenue grew and consideration was given to increasing taxes on both. Also , restaurants make more selling liquor than food and rely on these sales to keep the doors open. This tax is regressive since it disproportionately impacts people of lower income. Follow the money and you will usually find your answer.
“House Minority Leader Kurt Daudt, who could become speaker of the House next year, is a strong proponent of letting grocery stores sell wine and full-strength beer. ”
Now that does not happen every day, or any day, ever; I am in agreement with Kurt Daudt on something.
“Tony Chesak, the executive director of the Minnesota Licensed Beverage Association, which represents private liquor stores and many bars and restaurants, said he likes the Stephenson bill. “The biggest threat to independently owned liquor stores is big box, convenience grocery stores,” Chesak said.”
Translated to:
“Please don’t make me compete on a level playing field with my potential competitors. The public can subsidize me a little with a few extra dollars out of their pockets”
Now, as a true blue left wing kook, there are a lot of things I am willing to subsidize, our right wing friends would say virtually everything. But no, I draw the line at my neighborhood liquor store.
And on a personal note, as an occasional WI shopper few things are as convenient as having that bottle of Jack Daniels next to the box of Cheerios in your shopping cart…
Personally, I’m not a huge fan of giving the Walmarts and Total Wines of the world the home town advantage. They already have lots of advantages over the home grown retailers and leverage over home grown producers, so I’m ok with this. Small businesses contribute far more to local economies than the big ones, so I don’t see any reason to give power to the big ones when it will only disadvantage the little guys, and ultimately the local economy.
Total Wine is already out of the barn and local alternatives like Liquor Boy are competing well.
https://www.startribune.com/fermented-flip-flop-some-minnesota-liquor-stores-make-big-profits-with-total-wine-s-wines/567268592/
And for every WalMart there is a local Cub or other grocery provider who would benefit and a more prosperous Target is not a bad thing.
And I will admit to an aversion to profits garnered through lobbying investments: 3.7 Billion spent in 2021 and it only gets spent because the folks doing the spending know there is a return on investment, often better than the old fashioned way of working to expand a business through growth not loopholes.
I think this partly misses the point. They’re protecting the municipal liquor stores. There are many small cities that depend on liquor sales to keep their local taxes low. Allowing liquor sales at grocery stores means more local government aid bailouts from metro taxpayers to rural cities.
https://bringmethenews.com/minnesota-news/municipal-liquor-stores-in-24-minnesota-cities-could-be-in-jeopardy
After looking at the 24 towns on the link I would bet that the vast majority of these small towns do not even have grocery store of the size that would even have an interest in adding an aisle of liquor, beer and wine. Their munis do not need protection. Now, the Wayzata muni maybe more. Wayzata will survive.
Because there are no “Big Box liquor stores”, right?
You can only protect an industry from competition for so long, folks. I’d say the retail liquor industry has had its day.
Tony Chesak, the executive director of the Minnesota Licensed Beverage Association, which represents private liquor stores and many bars and restaurants, said he likes the Stephenson bill. “The biggest threat to independently owned liquor stores is big box, convenience grocery stores,” Chesak said.
Smaller liquor stores would not be able to compete with the big box grocery stores. Based on my (admittedly unscientific) review of Wisconsin and Iowa supermarkets, the groceries carry only the most popular brands – the selection stinks, if you don’t want Bud Light or Windsor Canadian – at a lower price and with more convenience that a regular liquor store. Those more popular brands keep the smaller stores alive, even for the better element of customers that likes our whiskey out of glass bottles instead of plastic jugs.
Independently owned liquor stores have also traditionally been the economic mainstays of poor neighborhoods, especially African American neighborhoods.
99% of the time I disagree with Kurt Daudt on his proposals, but with this liquor/grocery store issue he is correct.
Ironwood, in the U P of Michigan, a mostly progressive state, just across the Montreal river from Hurley, Wi., a mostly regressive state, area population of I’d say approximately 6k, Super One and Walmart grocery stores both have aisles devoted to beer/liquor. Hurley has an off sale liquor store, Brite Spot, that also sells groceries. Everyone gets along.
BTW, Ironwood recently opened it’s first cannabis store.
Ironwood is 100 miles from Duluth… lots of Minn/Wis. vehicles in the parking lot.
‘The times they are a changing’ folks.
Assuming this passes the next change I would like to see is extended hours of sale rather than more locations. I was previously of the view that I want to buy alcohol and groceries in the same cart but am now against that for two reasons. Expanded distribution means limited SKU stocking, and while Mich Golden has a time and place, it means that the national brands grow market share over locals that are generally more adventurous. Secondly, I appreciate speedy checkout and adding restricted sale items is going to choke throughput at the scarce staffed registers.
Wouldn’t it be a wonderful world if instead of ‘traveling around the state and meeting with liquor store owners, brewers and distillers’ our lawmakers asked the voters and people who live in the state how they want to buy their liquor?
Voters don’t donate as much campaign money as liquor store owners, brewers and distillers.
Bingo.
This is actually a really nice example of manufactured outrage and/or controversy. No one in MN is really having trouble finding a place to buy alcohol or the whatever they want to drink, yet our legislature is wrestling with this “problem” so much and so frequently they’re desperate to create an exit strategy. This is a nice illustration how the power to decide what questions get asked can control public policy. Sure, if you ask people about almost any given topic, they’ll have an opinion, and often time they’ll disagree and argue given the chance; but that doesn’t mean you’re asking an important question. Issues like this are almost a form of confirmation bias.
Notice all the support for some kind of “regulation” in the alcohol “market” on all sides of the isle while basic regulations in the rental or housing markets are anathema to many of the same legislators… as if finding a beer is MORE important than finding an affordable place to live. Whatever. Myself, I have yet to find a micro-beer-growler whatever that I like as much or more than a Guiness or a Heineken, and I have no trouble finding a place to buy my beer or wine. You can call me a beer philistine if you like.
Here’s a reason for grocery stores not to sell liquor or beer: So alcoholics don’t have to walk past Wal-Mart length shelves of it. It’s not hard to go out the door of Cub or Target and turn left into the booze shop, and it also happens to employ people.
That’s a good point that I hadn’t thought of. It is pretty cruel to place the object of one’s addiction in the most benign and essential places possible. With around 5% of the US population over the age of 12 having alcohol use disorder (“alcoholism”), which I imagine probably increased over the last 2 years, that might actually be a good reason to say that maybe we need to at the very least, limit access or visibility of alcohol sections in grocery stores. It’s a lot easier to avoid a liquor store if you’re recovering than an aisle in the grocery store where you get your food.
…and that alcoholic might just decide to enter the liquor store first and spend all of her/his money there rather than put groceries for the kids into the basket before going down the grocery store liquor aisle.
As a former individual business owner, I can see both sides of this issue. I owned two medium sized athletic clubs. The local community wanted to open a community center. I lobbied hard to make that not happen and I was lucky it didn’t. When you have to compete, you want a level playing field. I paid over 100K in taxes for each club, they would pay nothing. They would never go out of business, I might have and declared bankruptcy. Why should the government be in the liquor store business? Why should they be in the golf business? Why should they be in ANY business? My opinion is they should not. Just provide services and make policy and be done with it.
I also think government should not be picking winners and losers in business. Am I correct that we are the only state that doesn’t allow grocery and convenient stores to sell beer and wine? Wasn’t sure on that. If that’s the case it’s time to change that law.
Of course, when you write “the government,” you mean the residents of your community. If a community believes that private business like your gyms are not providing enough services or the right service to the community it is their right to decide to provide those services. You could make all of your arguments about everything from roads and sewer systems to healthcare and public safety. In fact, England made exactly those arguments as part of 500 years of starving and enslaving the Irish a few hundred years before new residents of North America decided laissez faire was just French for “let them eat cake” and starve if they weren’t lucky enough to be born rich and with a substantial inheritance.
It is astounding how much political clout liquor stores have in Minnesota, practically a prohibition state. Nobody ever said, “Goody, another liquor store in the neighborhood! That will be good for property values, crime, and community values.”