HF 37

as introduced - 92nd Legislature, 2021 1st Special Session (2021 - 2021) Posted on 06/19/2021 11:20am

A bill for an act
relating to liquor; modifying certain taxation provisions; modifying off-sale limit
for microdistilleries; authorizing self-distribution for certain producers; modifying
certain malt liquor packaging and off-sale requirements; modifying brand
registration requirements; authorizing limited off-sale for bars and restaurants;
making clarifying, conforming, and technical changes; amending Minnesota
Statutes 2020, sections 297G.01, subdivision 3a; 297G.03, subdivisions 1, 6;
340A.101, by adding a subdivision; 340A.22, subdivision 4; 340A.24, subdivisions
3, 4; 340A.28, subdivisions 1, 2; 340A.285; 340A.301, subdivision 10, by adding
a subdivision; 340A.311; 340A.315, subdivisions 7, 8; repealing Minnesota Statutes
2020, sections 297G.03, subdivision 4; 340A.315, subdivision 4.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2020, section 297G.01, subdivision 3a, is amended to read:

Subd. 3a.

Cider.

"Cider" means a product that contains not less than one-half of one
percent nor more than deleted text begin seven deleted text end new text begin 8-1/2 new text end percent alcohol by volume and is made from the alcoholic
fermentation of the juice of apples new text begin or pears new text end . Cider includes, but is not limited to, flavored,
sparkling, and carbonated cider.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax due on sales after December 31,
2021.
new text end

Sec. 2.

Minnesota Statutes 2020, section 297G.03, subdivision 1, is amended to read:

Subdivision 1.

General rate; distilled spirits and wine.

The following excise tax is
imposed on all distilled spirits and wine manufactured, imported, sold, or possessed in this
state:

		Standard		Metric
(a) Distilled spirits, liqueurs, cordials, and specialties regardless of alcohol content (excluding ethyl alcohol)	$	5.03 per gallon	$	1.33 per liter
(b) Wine containing deleted text begin 14 deleted text end new text begin 16 new text end percent or less alcohol by volume deleted text begin (except cider as defined in section 297G.01, subdivision 3a) deleted text end	$	.30 per gallon	deleted text begin $ deleted text end	deleted text begin .08 per liter deleted text end
(c) Wine containing more than deleted text begin 14 deleted text end new text begin 16 new text end percent but not more than 21 percent alcohol by volume	$	.95 per gallon	deleted text begin $ deleted text end	deleted text begin .25 per liter deleted text end
(d) Wine containing more than 21 percent but not more than 24 percent alcohol by volume	$	1.82 per gallon	deleted text begin $ deleted text end	deleted text begin .48 per liter deleted text end
(e) Wine containing more than 24 percent alcohol by volume	$	3.52 per gallon	deleted text begin $ deleted text end	deleted text begin .93 per liter deleted text end
(f) Natural and artificial sparkling wines containing alcohol	$	1.82 per gallon	deleted text begin $ deleted text end	deleted text begin .48 per liter deleted text end
(g) Cider as defined in section 297G.01, subdivision 3a	$	.15 per gallon	deleted text begin $ deleted text end	deleted text begin .04 per liter deleted text end
(h) Low-alcohol dairy cocktails	$	.08 per gallon	$	.02 per liter

In computing the tax on a package of distilled spirits or wine, a proportional tax at a like
rate on all fractional parts of a gallon or liter must be paid, except that the tax on a fractional
part of a gallon less than 1/16 of a gallon is the same as for 1/16 of a gallon.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax due on sales after December 31,
2021.
new text end

Sec. 3.

Minnesota Statutes 2020, section 297G.03, subdivision 6, is amended to read:

Subd. 6.

Small winery credit.

(a) A qualified winery producing wine or cider is entitled
to a tax credit equal to the excise tax due under subdivision 1, paragraphs (b) to (g), on the
wine or cider sold in any fiscal year beginning July 1. A qualified winery may take the credit
on the 18th day of each month, but the total credit allowed may not exceed, in any fiscal
year, the lesser of:

(1) the liability for tax; or

(2) $136,275.

(b) For purposes of this subdivision, "qualified winery" means a winery, whether or not
located in this state, that manufactured fewer than 75,000 gallons of wine deleted text begin and deleted text end new text begin or 250,000
barrels of new text end cider in the calendar year immediately preceding the fiscal year for which the
credit under this subdivision is claimed.

(c) By February 15 of each year, beginning in 2019, the commissioner of revenue shall
provide a report to the chairs and ranking minority members of the legislative committees
having jurisdiction over taxes that includes the following information for the previous fiscal
year, regarding the credit authorized under this subdivision:

(1) the total amount of the tax expenditure for the credit, including the amount of credits
claimed by Minnesota small wineries and out-of-state small wineries; and

(2) the number of claimants for the credit, including the number of Minnesota small
wineries and the number of out-of-state small wineries.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax due on sales after December 31,
2021.
new text end

Sec. 4.

Minnesota Statutes 2020, section 340A.101, is amended by adding a subdivision
to read:

new text begin Subd. 4c. new text end

new text begin Cider. new text end

new text begin "Cider" means a product that contains not less than one-half of one
percent nor more than 8-1/2 percent alcohol by volume and is made from the alcoholic
fermentation of the juice of apples or pears. Cider includes but is not limited to flavored,
sparkling, and carbonated cider.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2020, section 340A.22, subdivision 4, is amended to read:

Subd. 4.

Off-sale license.

A microdistillery may be issued a license by the local licensing
authority for off-sale of distilled spirits, with the approval of the commissioner. The license
may allow the sale of deleted text begin one 375 milliliter bottle deleted text end new text begin up to 1.5 liters new text end per customer per day of product
manufactured on site, subject to the following requirements:

(1) off-sale hours of sale must conform to hours of sale for retail off-sale licensees in
the licensing municipality; and

(2) no brand may be sold at the microdistillery unless it is also available for distribution
by wholesalers.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2020, section 340A.24, subdivision 3, is amended to read:

Subd. 3.

Total retail sales.

A brew pub's total retail sales at on- or off-sale under this
section may not exceed 3,500 barrels per year, provided that off-sales may not new text begin exceed 768
ounces per customer per day nor new text end total more than 750 barrels new text begin per year new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2020, section 340A.24, subdivision 4, is amended to read:

Subd. 4.

Interest in other license.

(a) A brew pub may hold or have an interest in other
retail on-sale licenses, but may not have an ownership interest in whole or in part, or be an
officer, director, agent, or employee of, any other manufacturer, brewer, importer, deleted text begin or
wholesaler, deleted text end or be an affiliate thereof whether the affiliation is corporate or by management,
direction, or control.

(b) Notwithstanding this prohibition, a brew pub may be an affiliate or subsidiary
company of a brewer licensed in Minnesota or elsewhere if that brewer's only manufacture
of malt liquor is:

(1) manufacture licensed under section 340A.301, subdivision 6, clause (d);

(2) manufacture in another state for consumption exclusively in a restaurant located in
the place of manufacture; or

(3) manufacture in another state for consumption primarily in a restaurant located in or
immediately adjacent to the place of manufacture if the brewer was licensed under section
340A.301, subdivision 6, clause (d), on January 1, 1995.

new text begin (c) A brew pub may own or have an interest in a malt liquor wholesaler that sells only
the brew pub's products provided that no more than 200 barrels a year may be distributed
under this paragraph.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2020, section 340A.28, subdivision 1, is amended to read:

Subdivision 1.

License; limitations.

A brewer licensed under section 340A.301,
subdivision 6, clause (c), (i), or (j), may be issued a license by a municipality for off-sale
of malt liquor at its licensed premises that has been produced and packaged by the brewer.
The license must be approved by the commissioner. A brewer may only have one license
under this subdivision. The amount of malt liquor sold at off-sale may not exceed new text begin 768 ounces
per customer per day nor new text end 750 barrels annually. Off-sale of malt liquor shall be limited to
the legal hours for off-sale at exclusive liquor stores in the jurisdiction in which the brewer
is located, and the malt liquor sold off-sale must be removed from the premises before the
applicable off-sale closing time at exclusive liquor stores, except that malt liquor in growlers
only may be sold at off-sale on Sundays. Sunday sales must be approved by the licensing
jurisdiction and hours may be established by those jurisdictions. Packaging of malt liquor
for off-sale under this subdivision must comply with section 340A.285.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2020, section 340A.28, subdivision 2, is amended to read:

Subd. 2.

Prohibition.

A municipality may not issue a license under this section to a
brewer if the brewer seeking the license, or any person having an economic interest in the
brewer seeking the license or exercising control over the brewer seeking the license, is a
deleted text begin brewer that brews more than 20,000 barrels of its own brands of malt liquor annually or a deleted text end
winery that produces more than 250,000 gallons of wine annually.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2020, section 340A.285, is amended to read:

340A.285 deleted text begin GROWLERS deleted text end new text begin PACKAGING new text end .

(a) Malt liquor authorized for off-sale pursuant to section 340A.24 or 340A.28 shall be
packaged new text begin in a container that is not more than 64 ounces in size and that is consistent with
the provisions of Minnesota Rules, parts 7515.1080 to 7515.1120.
new text end

new text begin (b) Packaging of malt liquor new text end in 64-ounce containers commonly known as "growlers" or
in 750 milliliter bottles deleted text begin . The containers or bottles deleted text end shall bear a twist-type closure, cork,
stopper, or plug. At the time of sale, a paper or plastic adhesive band, strip, or sleeve shall
be applied to the container or bottle and extended over the top of the twist-type closure,
cork, stopper, or plug forming a seal that must be broken upon opening the container or
bottle. The adhesive band, strip, or sleeve shall bear the name and address of the brewer. deleted text begin
The containers or bottles
deleted text end

new text begin (c) Containers new text end shall be identified as malt liquor, contain the name of the malt liquor,
bear the name and address of the brew pub or brewer selling the malt liquor, and shall be
considered intoxicating liquor unless the alcoholic content is labeled as otherwise in
accordance with the provisions of Minnesota Rules, part 7515.1100.

deleted text begin (b) deleted text end new text begin (d) new text end A brew pub deleted text begin or deleted text end new text begin , new text end brewer new text begin , or exclusive liquor store new text end may, but is not required to, refill
any container or bottle with malt liquor for off-sale at the request of the customer. A brew
pub deleted text begin or deleted text end new text begin , new text end brewer new text begin , or exclusive liquor store new text end refilling a container or bottle must do so at its
licensed premises and the container or bottle must be filled at the tap at the time of sale. A
container or bottle refilled under this paragraph must be sealed and labeled in the manner
described in paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2020, section 340A.301, is amended by adding a subdivision
to read:

new text begin Subd. 9a. new text end

new text begin Additional permitted interest in wholesale business. new text end

new text begin A winery may own or
have an interest in a wine wholesaler that sells only the winery's products.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 12.

Minnesota Statutes 2020, section 340A.301, subdivision 10, is amended to read:

Subd. 10.

Sales without license.

A licensed brewer or brew pub may without an
additional license sell malt liquor to employees or retired former employees, in amounts of
not more than 768 fluid ounces in a week for off-premise consumption only. A collector of
commemorative bottles, those terms are as defined in section 297G.01, subdivisions 4 and
5, may sell them to another collector without a license. It is also lawful for a collector of
beer cans to sell unopened cans of a brand which has not been sold commercially for at
least two years to another collector without obtaining a license. The amount sold to any one
collector in any one month shall not exceed 768 fluid ounces. A licensed manufacturer of
wine containing not more than 25 percent alcohol by volume deleted text begin nor less than 51 percent wine
made from Minnesota-grown agricultural products deleted text end may sell at on-sale or off-sale wine made
on the licensed premises without a further license.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 13.

Minnesota Statutes 2020, section 340A.311, is amended to read:

340A.311 BRAND REGISTRATION.

(a) new text begin Except as provided in paragraph (e), new text end a brand of intoxicating liquor or 3.2 percent
malt liquor may not be manufactured, imported into, or sold in the state unless the brand
label has been registered with and approved by the commissioner. A brand registration must
be renewed deleted text begin every three years deleted text end in order to remain in effect. The fee for an deleted text begin initial deleted text end new text begin annual new text end brand
registration new text begin is $15 and the fee for a three-year registration new text end is $40. The fee for new text begin a three-year
new text end brand registration renewal is $30. The brand label of a brand of intoxicating liquor or 3.2
percent malt liquor for which the brand registration has expired, is conclusively deemed
abandoned by the manufacturer or importer.

(b) In this section "brand" and "brand label" include trademarks and designs used in
connection with labels.

(c) The label of any brand of wine or intoxicating or nonintoxicating malt beverage may
be registered only by the brand owner or authorized agent. No such brand may be imported
into the state for sale without the consent of the brand owner or authorized agent. This
section does not limit the provisions of section 340A.307.

(d) The commissioner shall refuse to register a malt liquor brand label, and shall revoke
the registration of a malt liquor brand label already registered, if the brand label states or
implies in a false or misleading manner a connection with an actual living or dead American
Indian leader. This paragraph does not apply to a brand label registered for the first time in
Minnesota before January 1, 1992.

new text begin (e) Brewers or a manufacturer producing cider are not required to register a brand label
under this section if the malt liquor or cider is sold solely for consumption on tap at a licensed
premises.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2020, section 340A.315, subdivision 7, is amended to read:

Subd. 7.

Distilled spirits permitted.

Farm wineries licensed under this section are
permitted to manufacture distilled spirits as defined under section 340A.101, subdivision
9, which may exceed 25 percent alcohol by volume, made from deleted text begin Minnesota-produced or
Minnesota-grown deleted text end grapes, grape juice, other fruit bases, or honey. The following conditions
pertain:

(1) no farm winery or firm owning multiple farm wineries may manufacture more than
5,000 gallons of distilled spirits in a given year, and this 5,000 gallon limit is part of the
50,000 gallon limit found in subdivision 2;

(2) a farm winery may not sell at on-sale, off-sale, or wholesale, a distilled spirit that
does not qualify as a Minnesota spirit. For purposes of this section, to qualify as a Minnesota
spirit, 50 percent of the distilled spirit must be processed and distilled on premises. Distilled
spirits produced or in production prior to July 1, 2017, are not counted as part of the
calculations under this clause;

(3) farm wineries must pay an additional annual fee of $50 to the commissioner before
beginning production of distilled spirits; and

(4) farm wineries may not sell or produce distilled spirits for direct sale to manufacturers
licensed under section 340A.301, subdivision 6, paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 15.

Minnesota Statutes 2020, section 340A.315, subdivision 8, is amended to read:

Subd. 8.

Bulk wine.

Farm wineries licensed under this section are permitted to purchase
and use bulk wine, provided that:

(1) the quantity of bulk wine in any farm winery's annual production shall not exceed
ten percent of that winery's annual production; new text begin and
new text end

deleted text begin (2) the bulk wine under subdivision 4 shall be counted as a portion of the 49 percent of
product that need not be Minnesota-grown and may be imported from outside Minnesota;
and
deleted text end

deleted text begin (3) deleted text end new text begin (2) new text end the bulk wine must be blended and not directly bottled.

"Bulk wine," as used in this subdivision, means fermented juice from grapes, other fruit
bases, or honey.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 16. new text begin LIMITED OFF-SALE FOR BARS AND RESTAURANTS.
new text end

new text begin (a) A qualifying licensee may offer off-sales of malt liquor, hard seltzer, cider, wine,
and cocktails with a prepared food take-out order, without obtaining an additional license,
subject to the following limitations:
new text end

new text begin (1) any sale of malt liquor, hard seltzer, cider, wine, and cocktails is made in conjunction
with and is incidental to the sale of prepared food for take-out;
new text end

new text begin (2) the alcoholic beverages other than cocktails are sold in their original, unopened
packaging;
new text end

new text begin (3) cocktails must be packaged in a container with a secure lid or cap and in a manner
designed to prevent consumption without removal of the lid or cap;
new text end

new text begin (4) no more than 72 ounces in total of malt liquor, hard seltzer, and cider; 128 ounces
in total of malt liquor, if packaged in a growler; 750 milliliters of wine; and 34 ounces of
cocktails may be sold per prepared food take-out order;
new text end

new text begin (5) the qualifying licensee must confirm that the person picking up the prepared food
take-out order is at least 21 years of age as provided by Minnesota Statutes, section 340A.503,
subdivision 6; and
new text end

new text begin (6) the qualifying licensee must notify the insurer providing the coverage required by
Minnesota Statutes, section 340A.409, that it is making off-sales under this section.
new text end

new text begin (b) All laws and rules relating to the off-sale of liquor under Minnesota Statutes, chapter
340A, not inconsistent with this section apply to the sales allowed by this section including
but not limited to Minnesota Statutes, sections 340A.502 to 340A.504.
new text end

new text begin (c) For purposes of this section, "qualifying licensee" means an establishment licensed
under Minnesota Statutes, section 340A.404, subdivision 1, paragraph (a), or subdivision
6, paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 17. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2020, section 297G.03, subdivision 4, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2020, section 340A.315, subdivision 4, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for tax due on sales after December
31, 2021. Paragraph (b) is effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: 21-04300

297G.03 DISTILLED SPIRITS AND WINE; RATE OF TAX.

Subd. 4.

Bottle tax.

A tax of one cent is imposed on each bottle or container of distilled spirits and wine except as provided in 297G.07, subdivision 3. The wholesaler is responsible for the payment of this tax when the bottles of distilled spirits and wine are removed from inventory for sale, delivery, or shipment.

340A.315 FARM WINERY LICENSE.

Subd. 4.

Minnesota products.

If Minnesota-produced or -grown grapes, grape juice, other fruit bases, or honey is not available in quantities sufficient to constitute a majority of the table, sparkling, or fortified wine produced by a farm winery, the holder of the farm winery license may file an affidavit stating this fact with the commissioner. If the commissioner, after consultation with the commissioner of agriculture, determines this to be true, the farm winery may use imported products and shall continue to be governed by the provisions of this section. The affidavit is effective for a period of one year, after which time the farm winery must use the required amount of Minnesota products as provided by subdivision 1 unless the farm winery holder files a new affidavit with the commissioner.