Beer

Dumb Minnesota Beer Law Punishes Successful Breweries

Castle Danger Brewing is the latest of the state's craft breweries to be victimized by a law that forbids all but the smallest operations from selling growlers on location.

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A Minnesota law that punishes breweries for being too successful is about to strike another blow.

This time it's going to hit Castle Danger Brewing—probably the coolest name of any brewery in the state—which has, in little more than a decade, gone from being a homebrewing operation to being crowned the best brewery in the state two years running in polls of Minneapolis Star Tribune readers. That accomplishment is even more impressive considering that Castle Danger is located in a small town on the shores of Lake Superior, more than two hours outside the Twin Cities.

But that sort of statewide fame comes with an obvious downside in Minnesota. Breweries that produce more than 20,000 gallons of beer annually are prohibited from selling growlers—typically 64-ounce, refillable containers for transporting beer—from their own taprooms. Aside from growlers, all breweries in Minnesota are forbidden from selling beer to-go. Castle Danger Brewing will hit the 20,000-gallon threshold and will stop selling growlers on October 1, the brewery announced on Facebook.

Maddy Stewart, marketing and events manager for the brewery, told the Duluth News Tribune that the brewery will have to make "some pretty tough decisions" due to the expected financial loss. Growlers make up about 30 percent of the brewery's taproom sales. According to the Minnesota Craft Brewers Guild, some breweries have lost as much as $300,000 in revenue after hitting the no-growlers threshold.

Being prohibited from selling growlers is also a bit of a personal blow to Castle Danger Brewing. Back in 2011, when the brewery first opened, the only way to get Castle Danger beer was to show up at the brewery on one of the three nights per week when growlers were on sale. There wasn't even a taproom yet, just a single tap for filling the large to-go bottles.

Why should a successful brewery be banned from selling beer in certain containers? It's all about the political power of beer distributors and liquor stores. Once a brewery hits the 20,000-gallon threshold, the only way to get its beer to the public (aside from what might be served in glasses at the brewery's taphouse) is to contract with a distributor.

Earlier this year, some state lawmakers attempted to change the law to allow breweries to sell growlers if they produce less than 40,000 gallons of beer annually. That proposal was sunk by defenders of the so-called "three-tiered system" of alcohol producers, distributors, and retailers.

Like similar systems in many other states, the three-tiered model is a holdover from the days immediately following prohibition. These days, it mostly serves as state-sanctioned protectionism for distributors and retailers, who can use their influence in state government to set artificial and arbitrary rules on producers—in this case, breweries.

And Minnesota's growler sales cap is the definition of arbitrary. There's no public health justification for saying that it's OK for a brewery to sell 64-ounce bottles of beer to the public as long as the brewery makes 19,999 gallons of beer each year, but that a brewery producing 20,001 gallons of beer shouldn't be allowed to do the same.

In practice, the rule is a way to guarantee distributors get a piece of the action, but it also unfairly punishes breweries for doing nothing more than increasing production to meet the demand for their products. By limiting the growth of small breweries, the law hands an advantage to larger operations that don't rely on growler sales at all. And unions like the Teamsters oppose lifting the cap because mandating that breweries sell their beer through distributors helps guarantee Teamster jobs, the Minnesota Post reported during the legislative fight earlier this year.

Castle Danger is hardly the only brewery to hit the no-growlers threshold. Other Minnesota-based craft breweries like Fulton, Schell, Summit, and Surly have already busted through the 20,000-gallon limit and continued growing. Bent Paddle Brewing and Lift Bridge Brewing Company are quickly approaching the same limit.

It's clear that successful breweries can survive the loss of growler sales, but that doesn't make Minnesota's law any less nonsensical.

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  1. I call it the Three-Tyrannied System. (You can use that. No charge.)

  2. There’s a simple fix – just pass a law prohibiting small breweries from brewing more than 20,000 gallons of beer. Why should I as a beer consumer be punished by being denied my favorite growler just because some greedy bastard selfishly thinks the brewery is his to do with as he pleases? He didn’t build that. His brewery is only allowed to exist so long as it serves the interest of the public, it’s not as if he has some sort of “right” to impose his views of private property rights on the rest of us. He should be grateful he’s allowed to make a living wage off of his efforts, it is certainly within the state’s power to expropriate all of his ill-gotten gains, all of the money he has stolen from the public.

  3. Wait a minute… 2 weeks ago boehm was saying any hit to profits was from trumps tariffs. Eric, dont backtrack now.

  4. I don’t suppose they could game the system by operating for six months as Castle Danger and six months as Danger Castle…?

    1. Stone spun off some of its production to Arrogant. I don’t know the reason behind this, but I suspect it was some stupid regulation considering they operate in CA.

      These guys could do something similar, but it would require (I think) a new tap room and brewery under the other brand. The growler laws in MN require you to only sell beer that you produced at your own licensed facilities.

  5. This is really frustrating. Castle Danger for those outside Minnesota is in Two Harbors which is “The Middle of Nowhere”. Picking up a Growler on the way to a cabin is half the reason you swing through Two Harbors.

    1. It’s a bunch of bullshit. I’m stopping by there next month just to buy a couple of growlers on my way to the gunflint trail. Sadly both the DFL and what passes for the Republican Party in this state are both in the pockets of the liquor lobby.

  6. Home-brewing beer and taprooms are issues claimed by Democrats as victories over blue law Republicans when libertarians were the only political party advocating for their legality.
    The same is playing out for legal weed.

  7. Do you guys not have editors or fact-checkers? The barrel limit is not 20,000 gallons, it’s 20,000 BARRELS. Big difference. 620,000 gallons. You also say in the subheadline it “forbids all but the smallest operations from selling growlers on location”. This is patently untrue. This law affects a handful of the breweries in Minnesota, as you acknowledge later in the article. Summit, Schells, Surly, Cold Spring, and Fulton are I believe the only breweries currently affected, out of perhaps 170 breweries in the state. It should be noted that the growler requirements also include 750 mL vessels, whether it be a growler or crowler.

    1. Oh man you really told them. “See guys it’s not even that protectionist!!11!!”

      Fuck off slaver.

      1. Whoa, do you have this kind of knee-jerk reaction about everything? If that’s what you got out of my comment, you need to learn how not to jump to conclusions. As someone who has a part time gig at a MN brewery and a frequent consumer of MN craft beer, IMO the barrel limit should have been gone a long time ago. I just take issue with an article where the author can’t bother to get the facts right and resorts to clickbait language that doesn’t square with the reality of the situation. You’d think a reader of a magazine by the name of Reason might be, well, a bit more reasonable.

    2. says the head of the three-tiered system of MN alcohol regulation

    3. Why can’t I buy a growler of Surlys?? Bull shit law.

  8. Breweries, like other parasitic small businesses, must be eliminated as should all vestiges nefarious capitalist enterprises.
    Small businesses make up the majority of business transactions in the Union of Soviet Socialist Slave States of America, and with these numbers the only way to purge our beloved socialist slave state is to destroy them through onerous legislation, taxation and oppressive licensing fees.
    Then, and only then, can the masses enjoy the joys and benefits of unemployment, misery, and hopelessness every true socialist state offers.

  9. Time for Danger Castle Brewing to move to a more business-friendly state. That was the original intent of the Founding Fathers to create multiple experiments in liberty. If one state was too restrictive, then people would move to less restrictive states to improve their lives.

    1. They can see Wisconsin on a clear day across Superior.

  10. defenders of the so-called “three-tiered system” of alcohol producers, distributors, and retailers

    Warning: Do not read that link to the NABCA article unless you’re willing to risk damaging computer screen. It includes a wide array of specious arguments: “Straw man”, “Broken window”, “For the children”, “Good for some is good for all”, and others. All are put forth without irony.

  11. […] Reason argues persuasively as to the ridiculousness of Minnesota’s current beer law… […]

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