Small Minnesota brewers, distillers look to help from Capitol

Craft breweries and distilleries have boomed in cities and towns across Minnesota, but business restrictions brought about by the pandemic have them fighting for their survival.

Owners say a small, temporary tweak in state law that governs how they package and sell their products would be a lifeline in a time of economic uncertainty.

"Everyone got their PPP loan money, so we're all saying we're good for the next eight weeks. That's about as much certainty as we have," said Matt Schwandt, co-owner of Bauhaus Brew Labs in Minneapolis.

With just over a week left in the legislative session, several state lawmakers are scrambling for the change, which would temporarily allow on-site sale of beer in traditionally sized cans at breweries. Distilleries would be allowed to sell spirits in larger bottles.

But opposition from other liquor and hospitality interests makes it a tough sell at the statehouse.

"Obviously it's an uphill climb given where we are in the session," said Rep. Liz Olson, DFL-Duluth, who's sponsoring the bill. But she said it's worth pursuing given that small breweries and distilleries in cities like hers were important players in a pre-pandemic economic rebound.

"The economic impact of tourism on our region is major, and a big part of that tourism has been our craft economy," Olson said. "I think there's hardly anyone who comes to Duluth for vacation now who doesn't visit one of these fine establishments."

The Minnesota Craft Brewers Guild has more than 150 members, each representing a different brewery. Evan Sallee, president of the group and owner of Fair State Brewing in Minneapolis, said about half are in the Twin Cities area and the rest are scattered around the state.

Sallee said that in a recent survey, more than half the guild's members expressed doubt about whether they could survive through the summer.

Minnesota's stay-home order has forced breweries and distilleries to close their tap and cocktail rooms, a major source of revenue. For now, there's only one source of on-site revenue: Breweries can sell beer in larger-sized glass growlers and aluminum crowlers. Distillers are allowed to sell one 375-ml. bottle of spirits per customer per day.

"On the national level, these are among the most restrictive laws of their kind," said Mark Schiller, co-owner of Northfield's Loon Liquor Co. Distillery and president of the Minnesota Distillers Guild, which has 22 members. For instance, he said, Wisconsin distilleries have no limits on the amount of spirits they can sell on site. And breweries in most states are allowed to sell their beer on site in cans.

Under the House bill, Minnesota breweries could sell six-packs of 12-ounce cans and four-packs of 16-ounce cans for the length of the pandemic-driven peacetime emergency, and then for 60 days afterward. Distilleries could sell up to two 375-ml bottles or one 750-ml bottle per customer for the same period.

As a concession to bars and restaurants, which can now sell beer and wine with curbside food orders, the legislation would also extend that authorization to 60 days past the end of the emergency declaration.

But the lobbying groups for bars, restaurants, liquor stores and beer wholesalers, historically a powerful force at the State Capitol, oppose the change.

"Conferring special advantages to one tier of the industry simultaneously puts other tiers at a disadvantage," said Mike Madigan, president of the Minnesota Beer Wholesalers Association (MBWA).

Leslie Rosedahl, a lobbyist for several hospitality interests, said the measure would also hurt restaurants, bars and liquor stores. She noted that legislative leaders have said they are looking to avoid controversial measures in the closing days of this session, given the limits on lawmaking imposed by COVID-19.

"There's a huge appetite to help businesses that are hurting right now, but this helps some businesses at the expense of others," Rosedahl said.

The measure would need to be approved by the House and Senate Commerce committees. Neither chairs of those committees, DFL Rep. Laurie Halverson of Eagan nor Republican Sen. Gary Dahms of Redwood Falls, returned calls seeking comment for this report.

Meanwhile, brewers and distillers say they're just trying to stay in business. Some brewers said they're particularly worried about looming supply problems from the companies that produce growlers and crowlers; without that access, they'd have no way to sell their beer as long as taprooms remain closed.

"There's a finite supply and they're going fast," said Schwandt, of Bauhaus. "We just found out our primary supplier is going to be out until July."

Schiller, of the Northfield distillery, pointed out that most of the state's distilleries have switched to primarily manufacturing sanitizer for hospitals, police and fire departments.

"We're not trying to be liquor stores here," Schiller said. "We're just trying to recover a fraction, a tiny fraction, of our lost revenue."

Patrick Condon • 612-673-4413