The Free Press, Mankato, MN

June 14, 2013

Area lawmakers pass 3 beer bills

By Dan Linehan
dlinehan@mankatofreepress.com

---- — South-central Minnesota lawmakers went 3-for-3 with their beer bills last session. They created the position of beer educator, expand the definition of a small brewer and exempt the Winnebago Craft Brew Fest from fees on out-of-state brewers.

Sen. Gary Dahms, a Republican who represents New Ulm, sponsored a bill to raise the threshold for breweries to be eligible for a state subsidy. It allows brewers that make up to 250,000 barrels a year, up from 100,000 barrels, to be eligible for a tax credit of $4.60 per barrel up to 25,000 barrels.

The subsidy is worth up to $115,000 a year. Schell's Brewery of New Ulm has been over the 100,000-barrel limit about three years, President Ted Marti said. He said the definition of a “small brewer” was set in the 1970s, when the small brewers were getting “eaten alive” by their larger competition.

Of the change, Marti said “it was really trying to have that small brewer credit reflect what's really happened in the industry over those last 40 years.”

Brewing requires expensive equipment, and Schell's will likely have to expand its fermentation equipment soon. They're also adding a filling room for machinery that puts their beer in bottles and cans.

“It by no means goes into our pocket,” Marti said of the subsidy.

Tim Tupy, co-founder of the Mankato Brewery, said his company brewed about 1,000 barrels last year, so it won't hit either the new or old threshold anytime soon.

But he said it's good news for his company when larger craft brewers like Schell's and Summit benefit.

“We all kind of work together in some aspects for the bigger cause of introducing people to craft beer,” he said. In other words, someone who tries Schell's Firebrick may try Mankato Brewery's Organ Grinder, too.

Sen. Julie Rosen, a Fairmont Republican whose district includes Winnebago, sponsored the Winnbego legislation. Without the exemption, the second in a row, out-of-state state brewers would have been burdened by costly fees to sell their beer in Minnesota.

Rosen's bill was included in the omnibus commerce bill, and she said a wider solution to help craft brew fests is being developed over the interim.

That would please Mark Opdahl, who helped organize the Mankato Craft Beer Expo last fall.

He doesn't see the state giving a blanket exemption to these fees, but suggests that out-of-state breweries could get a limited number of exemptions.

Opdahl said brewers use craft festivals to test different markets, and promoters like offering their customers new options.

“We're all trying to find something unique to separate ourselves from the others,” he said.

Opdahl said brewers that don't distribute in Minnesota have to pay thousands of dollars to even have a one-day event here.

Changing that would “only increase the attendance experience” and would help liquor stores, bars and companies like his.

The third law creates “beer educators” — people who buy beer at retail then serve for educational purposes. It was sponsored in the Senate by Dahle, a Northfield Democrat whose district includes much of Le Sueur County.

“We literally added the word 'and malt beverages' to 'wine,'” he said. “There were statutes already in existence for wine educators.

“It sure meant a lot to the educators and the tasters,” he said.