Category Archives: Legislative Events

Legislative events and news relevant to Minnesota liquor, wine, and beer consumers

Legislative Events, Newsfeed

Proposed Minnesota Recycling Changes to Result in Higher Prices for Consumers

Minnesota’s Legislature is considering a proposal to add deposit fees to nearly all bottles and cans purchased in Minnesota. The proposal would result in an additional $0.10/container, or $2.40 per case of beer. The amount may be refunded if consumers bring used bottles and cans to newly created redemption centers. The deposit fee is intended to create an incentive to increase the rate of recycling in Minnesota to 80%.

Scope of beverage containers with deposit
All alcoholic or a nonalcoholic drink intended for human consumption and packaged for sale in a redeemable beverage container including beer and other malt beverages, wine, distilled spirits regardless of dairy-derived content, carbonated and noncarbonated soft drinks, flavored and unflavored bottled water, fruit juice, and tea and coffee drinks regardless of dairy-derived content.
–Draft program design for a recycling refund program for beverage containers in Minnesota – MPCA

The proposed beverage container deposit fee is part of a recommended recycling program being proposed by the MPCA, as charged by the Minnesota Legislature during the 2013 legislative session.

The commissioner shall prepare and submit a report to the chairs and ranking minority members of the senate and house of representatives committees and divisions with jurisdiction over the environment and natural resources by January 15, 2014, with recommendations for a statewide recycling refund program for beverage containers that achieves an 80 percent recycling rate. In preparing the report, the commissioner shall consult with stakeholders, including retailers, collectors, recyclers, local governments, and consumers on options to increase the current recycling rate. An assessment of the financial impact of any recommended program shall be included in the report. All money deposited in the environmental fund for the metropolitan solid waste landfill fee in accordance with Minnesota Statutes, section 473.843, and not otherwise appropriated, is appropriated for the purposes of Minnesota Statutes, section 473.844. $315,000 the first year and $315,000 the second year are from the environmental fund for the electronic waste program under Minnesota Statutes, sections 115A.1310 to
115A.1330.
–H.F.No. 976

The new program will undoubtedly mean higher beverage prices, not only from the deposit, but from the additional costs of setting up and operating a new redemption system for bottles and cans. Higher beverage prices would hit low‐income families and seniors on fixed incomes the hardest. Minnesotans with the fewest resources would have to devote a greater percentage of their income to the new program. Additionally, higher beverage prices will mean people buy less, having a negative impact on producers, distributors, retailers. The reduction in beverage sales would ultimately cost Minnesota jobs.

Of course, the proposed price increase from the new Minnesota recycling program would affect each community differently. It is unclear how the program would co-exist with current recycling programs that are already well integrated in Minnesota municipalities. Curbside recycling program costs could change drastically without the revenue from the collection of cans and bottles.

Much like the current ban on Sunday liquor sales, retailers near state borders would see the greatest drop in revenue as shoppers make purchases across state lines. On-sale retailers would ultimately move away from bottles and cans and toward kegs in an effort to cut down on the upfront costs the and hassle of collecting and storing used beverage containers, not to mention getting them to a collection center.

You’d be hard-pressed to find anyone that is anti-recycling. And, an 80% recycling rate is admirable goal, but is the best course of action to place all the cost on consumers while putting existing recycling programs on a shelf? Many Minnesotan’s recycle already, the introduction programs like “single sort” recycling in Hennepin County, Minnesota’s recycling rate should continue to improve. Maybe Minnesota legislators need to make recycling more convenient, not more expensive.

Legislative Events, Newsfeed

Government Shutdown Hits Brewers

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TTB

The government shutdown could have an adverse impact on your beer. The U.S. Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau, commonly referred to as the TTB, is the federal agency that regulates brewers. The TTB has given notice that the agency will not be approving new beer labels, or any other regulatory functions during the federal government shutdown.

Don’t worry though, they will still be collecting taxes. It is the only way they can keep us safe… Huh?

TTB would halt its regulatory functions, non-criminal investigative activities and audit functions. However, TTB would ensure that all tax remittances are processed because these functions are deemed necessary for safety and protection of property.

Source

Legislative Events, Newsfeed

Indeed Brewing Now Selling Growlers

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Indeed GrowlerAs a result of the progress made during the last legislative session, Indeed Brewing is selling growlers. Indeed never intended to sell growlers because they planned on meeting the 3,500 bbl limited very early early on in their production plans.

Thanks to the Save the Growler movement effort organized by the Minnesota Brewer’s Association, the 3,500 bbls limit has been upped to 20,000 bbls. Matt Schwandt covered the issue here in Minnesota Growlers Saved For Some, For Now.

Now, If we could fix the universal branding issue, we can leave the growler rules alone for a while.

Legislative Events, Newsfeed

The SEC’s New General Solicitation Rule: Will it Really Help Breweries Raise Funds Faster?

Infographic-New-SEC-Rules-on-General-Solicitation
Infographic via Angel Investment Network

By Jeffrey C. O’Brien

Of all the legal issues involved with starting a brewery, none is more complicated, cumbersome, time consuming and costly than obtaining equity capital.  That’s due to the requirements – or should I say, restrictions – imposed by federal and state securities laws.

On September 23, 2013, the new Securities and Exchange Commission (“SEC”) rule which lifts its long-standing prohibition on general solicitation and general advertising for certain private securities offerings under Rule 506 of Regulation D goes into effect.  Some have written that finding investors will get easier and pre-launch breweries are looking at updates to their websites to include a pitch for funds. Is the new rule that much of a benefit to issuers, or is the devil in the details? 

Background on Securities Laws

In the aftermath of the 1929 stock market crash and in the midst of the Great Depression, Congress enacted the Securities Act of 1933.  This Act created the SEC as the federal regulatory agency having jurisdiction and oversight over the raising of investment capital.  Under the Act, an issuer must either register its offering with the SEC (this is said to be a “public offering”) or make the offering under one of several exemptions set forth in the Act.  Most small private company offerings are made under exemptions set forth in Regulation D.  Rule 506 is one of the Regulation D offerings and allows an unlimited amount of funds to be raised, provided that the issuer does not engage in general solicitation or general advertising of investors. 

The importance of the prohibition on general solicitation is this:  unless the issuing company or someone with close ties to it knows of any “accredited investors” interested in investing, the issuing company faces a steep uphill climb to realizing its fundraising goal(s).  In the brewery context, experience shows that those most interested in owning part of a brewery are typically “non-accredited”, meaning that they lack the net worth and/or annual income sufficient to qualify as “accredited.”  The process for soliciting these “non-accredited” investors – who the law deems to be unsophisticated and entitled to greater disclosures and protection – is complicated and expensive…unless the SEC ever creates regulations giving effect to the crowdfunding provisions of last year’s JOBS Act.

The New Rule 506(c)

The new rule creates another means of raising funds from accredited investors under Rule 506.  The “old” rule – whereby no general solicitation is made – is now found as Rule 506(b).  New Rule 506(c) allows issuers to engage in general solicitation and general advertising to market their offerings, so long as: (1) all purchasers of the securities are accredited investors; (2) the issuer takes “reasonable steps to verify” that the purchasers of the securities are accredited investors; and (3) all terms and conditions of Rules 501, 502(a) and 502(d) are satisfied.

“Reasonable steps to verify” is the key verbiage of this new so-called “easier” way to raise funds.   Under current Rule 506 offerings, typically the issuer verifies accredited investor status via a check-off box in its subscription agreement.  That, however, is not enough under Rule 506(c).  An issuer looking to engage in general solicitation to find investors under Rule 506(c) is going to have to review tax returns, bank statements, personal financial statements, or receive a written opinion from an attorney, CPA or financial advisor.  This is a cumbersome task that goes well beyond finding the right location, determining what to name your brewery and beers and where to source your raw materials from.

In short, the wisest course of action, in my opinion, when it comes to the new Rule 506(c) is to proceed as if it does not exist.  The 506(b) offering, while restricting an issuing brewery’s ability to cast a wide net for equity investors, remains far simpler to comply with and less fraught with potential liability for the brewery and its professional advisors.

Reprinted with Permission

Legislative Events, Newsfeed

Minnesota Gubernatorial Candidate Jeff Johnson Supports Sunday Alcohol Sales

Jeff Johnson for GovernorMinnesota Gubernatorial Candidate Jeff Johnson Supports Sunday Alcohol Sales.

 

We reached out to gubernatorial candidate Jeff Johnson last week via twitter to ask him about his stance on Sunday alcohol sales and brewpub distribution. His reply was a refreshing affirmative on Sunday sales, and a request to know more about brewpub distribution.

Things are busy around here, so we haven’t had a chance to talk to Jeff about brewpub distribution yet. But, this is surely a good sign that we might have some leaders thinking about the wishes of the Minnesota consumers, rather than special interest lobbyists.

Republican gubernatorial candidate Jeff Johnson is a former Minnesota House Assistant Majority Leader. He currently sits on the board of Hennepin County, and represent the 7th district.

You can find out more about Jeff and his gubernatorial campaign at http://johnsonforgovernor.org/.

*This is not an official endorsement*

Legislative Events, Newsfeed

On Minnesota Brewery Taprooms and Sundays

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surly taproom closed on sundaysA while back Fulton Brewery wanted to open their taproom on Sundays for Minnesota Twins games. Their Sunday ambitions were short lived. Shut it down, they were told. Surly Brewing was given the same lesson earlier this week when they opened their new taproom. The sad reality is that Minnesota brewery taprooms aren’t allowed to open on Sundays.

According to City Pages, Surly must keep their taproom doors closed on Sundays, despite getting permission from Brooklyn Center.  The issue stems from a state requirement that mandates food sales on Sundays if a qualifying establishment (A restaurant, club, bowling center, or hotel with a seating capacity for at least 30 persons and which holds an on-sale intoxicating liquor license…) wants to serve alcohol.  Surly doesn’t sell their own food, nor are they a qualifying establishment.

This wasn’t the first time that laws requiring Sunday food sales have hurt local business owners. Bar owners in North Saint Paul also faced extra scrutiny a few years back when they were required to start serving prepared food after a being given a year meet compliance. I guess pizza and chips don’t soak up enough booze, only prepared food can do that…

Liquor and Licensing guidelines from League of Minnesota Cities puts it like this:

A city may issue a Sunday license only to those operating one of the following types of establishments:

  • Restaurants that have an on-sale intoxicating liquor license and a minimum seating capacity of 30 persons.
  • Clubs that have an on-sale intoxicating liquor license and a seating capacity of at least 30 persons.
  • Bowling centers that have an on-sale intoxicating liquor license and a seating capacity of at least 30 persons.
  • Hotels that have an on-sale intoxicating liquor license.

It is worth pointing out that farm wineries in Minnesota can sell wine on Sundays, both on-sale and off-sale, with no mention of food, let alone prepared food.

MN Statute 340A.315 FARM WINERY LICENSE
Subdivision. 2.Sales.
A license authorizes the sale, on the farm winery premises, of table, sparkling, or fortified wines produced by that farm winery at on-sale or off-sale, in retail, or wholesale lots in total quantities not in excess of 50,000 gallons in a calendar year, glassware, wine literature and accessories, cheese and cheese spreads, other wine-related food items, and the dispensing of free samples of the wines offered for sale. Sales at on-sale and off-sale may be made on Sundays between 10:00 a.m. and 12:00 midnight.

Local taprooms often partner with food trucks to provide imbibers with a bit of sustenance. But, that is not really a restaurant. Surly brewing intends to have a full kitchen with locally sourced food to pair with their beer. So, their Sunday taprooms plans may just be a waiting game. As for the rest of the taprooms in town? The future is uncertain.

If Minnesota breweries want to open their taprooms on Sundays they need to be classified as a restaurant (…an establishment, other than a hotel, under the control of a single proprietor or manager, where meals are regularly prepared on the premises and served at tables to the general public…), get the law changed, or seek some sort allowance for food trucks.

Maybe someday we can hang out in a taprooms on a Sunday and listen to a live acoustic set, or turn on the big screen and enjoy some football, but probably not anytime soon.  Does anybody know of any local wineries that have big screen TV’s?

Legislative Events, Newsfeed

Video: Understanding MN Beer Tax Laws with BBS University

Better Beer Society UniversityI was honored to moderate a great discussion panel about beer and taxes in Minnesota at Better Beer Society University.

Luckily we avoided the excise tax increase this year. To see how everything played out in the legislature click here.

Pop some popcorn and watch the beer business wisdom flow from Paul Morrissey jr. (Capitol Beverage), Dan Schwarz (Lift bridge), Jason Alvey (Four Firkins), Joe Falkowski (JJ Taylor), Pete Rifakes (Town Hall brewery), Mark Joseph (Ale jail).

Many thanks to Rob at BBS for including consumers in the conversation.

Legislative Events

Minnesota Legislators Will Not Increase Alcohol Excise Tax

mn sealThanks to Governor Dayton and members of the Minnesota Legislature for having the wisdom to not raise the excise tax on beer and alcohol. Brewing is an important part of our culture and community.

Thank you to everyone that helped make this happen, from brewers to consumers, the only way this and other initiatives work is because people got involved and made their voices heard.

From Star Tribune –
DFL Gov. Mark Dayton and Democratic legislative leaders scrapped a proposed alcohol tax hike and an income tax surcharge on high earners as part of a last-minute budget agreement.
The leaders convened a late-night meeting Thursday to resolve crucial differences as legislators enter their final few days of the legislative session.

Brewers, retailers, and consumers rejoiced at at the announcement.

Summit Brewing Founder Mark Stutrud was thankful, but rightfully cautious.Petition signing

Mark Stutrud –
…there will be no increase in excise taxes on beer from this year’s state legislative session. For those of you who actively contacted Gov. Mark Dayton and your legislators, Summit Brewing Company would like to say ‘thank you’ for your activism. We also want to thank the legislators and Governor Dayton for listening to our concerns in regard to the effect the proposed tax hike would have had on not only Summit and our consumers, but on the growing craft brewing industry at large in the state of Minnesota.

Stutrud’s comments hold a lot of value, the fight is only over for now. Beer and alcohol are easy “sin-tax” targets for legislators looking to raise revenue.