News that two of Minnesota's largest craft beverage producers are expanding in Wisconsin instead of Minnesota underscores the need to reform Minnesota's liquor laws, some legislators and those in the industry argue.
This week, Stillwater-based Lift Bridge Brewing said it was opening a taproom and production facility about 19 miles away in Wisconsin. This comes just weeks after Tattersall Distilling in Minneapolis said it would be opening a destination distillery across the border.
Related [March 31]: Lift Bridge Brewery opening a taproom in Wisconsin this spring
Both businesses cited Minnesota's liquor laws as reasons why they chose to expand in Wisconsin instead of Minnesota.
Lift Bridge is growing, and soon will exceed the state's "growler cap," meaning it won't be able to sell beer to-go from the taproom because it'll be too big, according to state law. Opening up a taproom and facility in Wisconsin will allow Lift Bridge to brew more beer and grow, while still being able to sell growlers in the Stillwater taproom.
Tattersall is facing a similar problem. Minnesota's liquor laws prohibit microdistilleries from operating a cocktail room or selling products directly to customers if they produce more than 40,000 proof gallons a year, and Tattersall is quickly approaching that threshold. Producing spirits in Wisconsin allows Tattersall to keep its Minneapolis taproom while it grows.
"Minnesota's outdated liquor laws are forcing successful Minnesota companies to expand in Wisconsin, costing our state significant investments, property tax revenue, and jobs," Rep. Jim Nash, R-Waconia, said in a statement Thursday. "There are several bipartisan proposals on the table to reform and modernize our liquor laws, and ensure they are meeting the needs of businesses and consumers."
The lawmaker, who has sponsored proposals in the House to update Minnesota's liquor laws, sent a letter on March 31 to Rep. Zack Stephenson, DFL-Coon Rapids, who chairs the House Commerce Committee, urging him to hold hearings on the proposed legislation when the Legislature returns from the Easter/Passover break next week.
In the letter, Nash accuses Stephenson of "hiding behind the Senate" and not holding hearings on the proposals because Senate Majority Leader Paul Gazelka, R-East Gull Lake, and others in the Republican-controlled Senate oppose such proposals and have said they won't be taking it up this year.
Nash writes that Stephenson is holding hearings on a proposal to legalize recreational marijuana, "which has no better odds in the other chamber than any of the bipartisan proposals that have been brought forward."
Not holding hearings on the liquor law proposals will "only lead to the continued exodus of jobs and expansion opportunities for other states, and hurt Minnesota's economy in the process," Nash writes, noting Lift Bridge and Tattersall's expansion plans will "generate millions of dollars" from construction, boosted property taxes and new jobs.
"Unfortunately, as a direct result of legislative inaction, it will be Wisconsin who stands to benefit — not Minnesota," Nash writes, noting he's aware of other breweries that are also considering expanding in neighboring states due to Minnesota's liquor laws.
Minnesota is notorious for being slow to pass any major changes to state liquor laws despite having a lot of support from Minnesotans. That's because the liquor store lobby, distributors/Teamsters and cities with municipal liquor stores continue to retain support from enough Republicans and Democrats to prevent legislation from passing.
"The time has come to stop letting a small group of powerful special interests control regulations for one of Minnesota’s most innovative and rapidly-growing industries," Nash writes. "The Senate’s apparent unwillingness to take action on these issues is also not an excuse for inaction by the House."
Nash notes momentum in the House in 2017 is what forced the Senate to finally pass the Sunday liquor sales bill after a years-long effort.
"As chair of the House Commerce Committee, you have the ability to build momentum and force the Senate to recognize that their position is untenable, and that it’s finally time to listen to the consumers and businesses who are asking us for change," Nash writes to Stephenson. "If there are interest groups who oppose these changes, you should let them come forward and make their case in a public setting, instead of conspiring with them behind closed doors to block progress."
Committee deadlines to pass legislation this session have passed, but Nash says Stephenson could work with House leadership to "secure necessary waivers" to ensure the bills can move forward and be considered for inclusion in omnibus bills.
"These issues are bipartisan and deserve an open hearing and debate in the Minnesota House," Nash writes.
While there have been efforts to modernize Minnesota's liquor laws for years, the COVID-19 pandemic and subsequent state-ordered closures heightened the push to update Minnesota's laws as craft beverage makers were forced to layoff workers and dump their product.
But so far, efforts have stalled, which inspired Minnesota's beer, wine, cider and spirits associations to team up this year to form the Minnesota Craft Beverage Council (MCBC) to push for a modernization of the state's "antiquated and arcane" liquor laws.
“We have all been asking for these changes separately at the Capitol for years, and have gotten nowhere,” Lauren Bennett McGinty, executive director of the Minnesota Craft Brewers Guild, said in a statement earlier this year. “So we’re coming together to say that we can’t afford to wait any longer. Without significant changes to the restrictions Minnesota places on craft beverage producers, this entire industry is at risk.”
Various proposals to update state law have been rolled into the bipartisan Drink Local Economic Recovery Act, which the MCBC says will ease regulations on craft beverage producers and allow them to help recover some of their losses from the incurred in 2020.
- Eliminating the growler cap that prevents a brewery that produces more than 20,000 barrels annually from selling growlers.
- Allow all breweries to sell beer in to-go containers up to 64 ounces, including four- and six-packs (currently beer can only be sold in crowlers and growlers.
- Allow distilleries to sell alcohol to-go in larger format bottles
- Allow cideries to self distribute, aligning cider taxes with existing beer taxes.
- Provide farm and commercial wineries with tax credits beyond 75,000 gallons
- Allow bars and restaurants to sell beer, wine and cocktails to-go permanently, and allow liquor stores, bars and restaurants to fill growlers.
"Being able to sell packaged beer direct to the consumer is critical to our ability to innovate and seek instant feedback. From the customer standpoint, being able to bring back home a little bit of the brewery experience creates a positive brand connection that is also critical to our long-term success," Brad Glynn, Lift Bridge's co-founder and VP of marketing, told BMTN on Wednesday. "It should be noted that over 98% of our beer produced does travel through the three-tier system. We have incredible relationships with our distribution network that have also allowed us to grow."
MCBC has stressed that it supports partners in the three-tier system, including distribution, liquor stores, bars and restaurants — the industries that have long pushed back against proposals to change liquor laws, fearing it would put them at a disadvantage. Proponents, though, argue that's not the case, citing other states that have updated their liquor laws without damaging other industries.
Curious to know more about all the obstacles proposals to update the state's Prohibition-era liquor laws face, and why it doesn't matter that they have support from lawmakers on both sides of the aisle, as well as many Minnesotans? Check out this MinnPost story that digs into it all.