Castle Danger to halt growler sales in October. Are other Minnesota breweries next?

Beer lovers visiting the North Shore soon will no longer be able to bring home their favorite drafts from Castle Danger Brewery, an announcement that is adding fuel to a legislative fight over Minnesota liquor laws.

In October, the popular Two Harbors beer maker will stop selling refillable jugs, known as growlers, that customers can take home from the taproom. State law prohibits breweries that produce more than 20,000 barrels per year from selling growlers — a mark Castle Danger surpassed last year. A barrel is the equivalent of 31 gallons of beer.

Castle Danger's announcement comes in the wake of a failed push to raise the barrel cap at the State Capitol this year.

While those who distribute and sell craft beer say the existing law protects them from being wiped out by a system that diminishes the need for retailers, breweries like Castle Danger say they are being forced to choose between growth and sales.

"We're losing something that's been a part of our taproom since day one," said Maddy Stewart, Castle Danger's marketing and events manager.

The change will be a financial hit as well as a cultural one, because growler sales make up 30% of Castle Danger's taproom revenue. On busy summer Saturdays, the taproom sells an average of 200 growlers, Stewart said, often to visitors stopping by on their way to other North Shore destinations. She said that the reusable bottles help spread the brewery's brand around the state, boosting business for retail stores selling Castle Danger beers.

Sen. Karin Housley, R-St. Mary's Point, introduced a bill in February that would have allowed breweries producing up to 250,000 barrels to sell growlers, but the measure never made it out of committee.

"I think it's a sad thing when government wants to stop our small businesses from growing," Housley said.

In April, Housley tried to add an amendment to the Senate's omnibus liquor bill that would have boosted the barrel cap to 40,000, but withdrew it after objections from Commerce Committee Chairman Gary Dahms, R-Redwood Falls, who said the cap affects only "a handful of the dozens of craft breweries across the state." Tony Chesak, executive director of the Minnesota Licensed Beverage Association, argued growler regulations should not change to accommodate "already thriving" breweries at the cost of small, independent liquor retailers. Chesak noted that a bill passed in 2013 raised the production cap for growlers from 3,500 barrels.

Mike Larson, operations manager for St. Anthony Village Wine and Spirits, said his store sells lots of Castle Danger's beer — and he counts himself as a fan. But, he said, the state's largest brewers — like Summit, August Schell and Surly — have for years outstripped the 20,000-barrel limit, "and they're doing just fine and dandy."

Lauren Bennett McGinty, executive director of the Minnesota Craft Brewers Guild, a trade group that has lobbied to raise the growler cap, said the law was put in place to protect small businesses from large breweries like "the Budweisers and the Millers of the world" seizing the market.

The growler cap is looming over a handful of other Minnesota brewers.

Indeed Brewing Co. in Minneapolis and Duluth's Bent Paddle both topped 15,000 barrels in 2018, according to the Minnesota Department of Revenue.

Castle Danger, which produced nearly 23,000 barrels in 2018, employs about 40 people. The brewery will have to lay off one full-time employee and eliminate a handful of part-time positions in October, Stewart said.

In 2013, Fulton Beer in Minneapolis exceeded the 20,000-barrel mark and celebrated the "death of the growler" with a taproom celebration. Stewart said Castle Danger plans to do something similar, though she's hopeful that legislation will make the disappearance of growlers short-lived. Housley is teaming up with breweries to petition the Legislature and Gov. Tim Walz to change the cap next year.

"We say beer is a bipartisan issue," Stewart said. "And we mean it."

Katie Galioto • 612-673-4478