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Liquor industry deal would create council to recommend booze law changes in Minnesota

One group especially unhappy with the proposals: grocery and convenience stores, which were not only left out of negotiations that led to the latest efforts around changing liquor laws, but would also not have a place on the new advisory council.

House File 2767 would set up a formal council of industry players, including brewers, distillers, distributors, unions and liquor store owners.
House File 2767 would set up a formal council of industry players, including brewers, distillers, distributors, unions and liquor store owners.
MinnPost file photo by Bill Kelley

An agreement among the leaders of businesses that make up the Minnesota liquor industry has boosted the chances of the first reform of alcohol laws since Sunday sales were approved in 2017.  The proposal would give craft brewers and distillers the ability to sell in more packages  — six-packs for beer and larger bottles for distillers. It would also allow larger brewers to reopen taprooms that they were forced to close when their beer production hit a cap under current law.

But another aspect of the proposal awaiting action on the House floor has gotten less attention: a formal system to reach similar compromises in the future. Rather than have brewers, distillers, distributors, unions and liquor store owners negotiate informally — or argue publicly — about dividing the business, the bill (House File 2767) would set up a formal council of industry players.

Called the Liquor Industry Advisory Council, the board would listen to proposals for changing state alcohol laws. If enough of the members agree, it would be forwarded to the Legislature for consideration. 

As crafted by House Commerce Committee Chair Zack Stephenson, the board would be a confederation of sorts that would require some support from each sector: liquor retailers, producers and distributors.

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“It makes sense to have specialized bodies to make recommendations,” said Stephenson, DFL-Coon Rapids. “And it’s just a recommendation that the Legislature could ignore. And some of these groups have been very successful in seeing their recommendations adopted here.”

State Rep. Zack Stephenson
MinnPost photo by Peter Callaghan
State Rep. Zack Stephenson
According to the proposal, the retail group would have one representative from private liquor stores, one from municipal liquor stores and one from bars; the wholesaler group would have one representative from a labor union, one from a distilled spirit wholesaler and one from a beer distributor. The alcohol producer group would need one appointee from small brewers, small distillers and a manufacturer from larger alcohol producers.

To send an agreement to the Legislature, a proposal would need approval by both a majority of the nine members plus at least one vote from each of the three industry groupings.

The council was patterned on a panel of business and labor leaders to discuss and recommend changes to the state workers’ compensation system. As with alcohol laws, the workers’ compensation panel saves the Legislature from brokering disagreements  between sometimes warring lobbying groups.

“Go figure it out,” is how Stephenson describes the charge of these industry panels.

Though not outlined in the bill, the deal also obligates the industry players to keep the status quo for five years. That would close the door to some other changes to Minnesota’s liquor laws, such as the sale of wine and strong beer in grocery and convenience stores. Current state law allows those stores to sell only lower alcohol beer: 3.2 percent alcohol by weight or 4 percent alcohol by volume.

Stephenson agrees with the five-year moratorium, but he also said the deal among the liquor stores, Teamsters Union, alcohol distributors and craft producers only binds those private players who are party to it, not the Legislature.

“If the grocers want to continue to pursue beer and wine in grocery stores, they’re not violating the agreement if they do so, and no legislator is violating the agreement if they sponsor that,” he said.

Given how hard it is to change Minnesota liquor laws — something that tends to happen, often grudgingly, every five years or so  — won’t having all of those businesses be a powerful force in opposing change? 

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Yes, Stephenson agreed. There could, however, be smaller changes that would be discussed by the advisory council. And when the five-year-agreement has lapsed, the council would be the venue for debating next steps. “There could be a purpose for the liquor advisory council for the next few years, or it could be that it’s more of a functioning body after five years,” he said. 

Tony Chesak
Tony Chesak
Tony Chesak, the executive director of the Minnesota Licensed Beverage Association, supports the council concept. “The creation of a Liquor Regulation Advisory Council would allow many stakeholders and industry members to carefully review any and all liquor proposals before and during prospective liquor law changes,” Chesak wrote in a letter to lawmakers. 

The Licensed Beverage Association represents small private liquor stores as well as bars and restaurants. It has opposed allowing sales of wine and full-strength beer in grocery stores and supports the current law limiting liquor store owners to one store per city.

One group is especially unhappy with the Stephenson bill: Supporters of wine and strong beer sales in grocery and convenience stores. They were not only left out of the industry negotiations that led to the Stephenson bill, but they would also not have a place on the Liquor Advisory Council.

“We didn’t get invited to the party,” said Steve Anderson, a founder of Bobby and Steve’s Auto World, a group of eight auto and tire centers that all include gas stations and convenience stores. “There have been a lot of nice group meetings going on without us.” 

While some large grocery stores have adjacent liquor stores, even those are restricted by the one-per-city rule. Target, for example, can have a full liquor store next to its downtown Minneapolis store but not one on Lake Street. Other grocers without an affiliated liquor store can only sell so-called 3.2 beer.

“It’s a stupid law,” said Anderson. Of the Stephenson bill, Anderson said, “there are more restrictions that don’t need to be there that’s helping a certain group but not us.”

Grocery and convenience stores have also objected to a contract that was drawn up by one of the lobbyists involved that would legally bind the parties to the agreement.

“The Parties agree to actively lobby against and oppose any such proposals and testify in Legislative Hearings expressing their opposition,” the contract states. “For the sake of clarity, and not to limit the foregoing, this active and public opposition includes any legislation, regarding the sale of alcohol in convenience and grocery stores and eliminating the prohibition on multiple retail licenses per municipality.”

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Industry lobbyists claim the contract was a draft, and any agreement they might sign would be far less formal and less legalistic. The five-year-moratorium, however, is included and was mentioned when Stephenson described the deal last month.

State Sen. Gary Dahms
State Sen. Gary Dahms
The Stephenson bill has not yet come to a full vote in the House. And nothing will pass the Legislature without the support of Senate Commerce Committee Chair Gary Dahms, R-Redwood Falls. Dahms has often been reluctant to expand access to alcohol but has said he is looking at the bill because it has broad agreement in the industry.

“Ultimately a deal is meaningless if it doesn’t pass the Senate,” Stephenson said. “The whole idea was to get a bill done, to come up with a bill that could become law.”