The 21st Amendment to the United States Constitution ended prohibition in 1933. That year, all 50 states adopted some form of three-tier system for regulating liquor sales. The three-tier system, often used to restrict the involvement of manufacturers and wholesalers in the retail liquor industry, still provides the framework for today’s liquor laws in Minnesota (see footnote i). May 25, 2011 marked a joyous occasion for Minnesota beer lovers and a big change in Minnesota’s liquor laws. On that day, Governor Mark Dayton signed into law a bill that would allow Minnesota brewers to sell pints of their own beer on-site at their breweries. The legislation initially faced strong opposition from the Minnesota Licensed Beverage Association and its lobbyists, which represent 2,000 bars, restaurants and package stores. Some feared passage of the bill would endanger the integrity of the three-tier system or affect their bottom line. However, the bill generated strong public support, and after some modification, including a limit of one in-state taproom per beer company and a 250,000 gallon per year cap on brewer tap room beer sales, found bipartisan support in the House and Senate. Dubbed the “Surly Bill,” Minnesota Statutes 2013, section 340A.301, subdivision 6b., revises the law that formerly prohibited on-site sale of a brewery’s beer and allows Minnesota brewers to obtain a license to operate a brewer taproom.
Where to begin
1. Develop a business plan
The type of licensing required to operate a brewery taproom depends on a number of factors, including:
- amount of beer brewed per year
- how beer is sold (growlers, bottles, cans, taps)
- whether beer brewed off-site is sold on-site
- whether hard liquor is sold on-site
- whether food is sold on-site
- how many patrons the brewery taproom can accommodate
- whether the site will have outdoor patio seating
2. Choose a location
The location of the brewery taproom affects the business in many ways. Cities have various requirements that must be met in order to open and operate a brewery taproom and may require particular permits, insurance, and inspections in order to open and operate the brewery taproom. Additionally, each city has its own zoning code and may restrict or prohibit operation of a brewery taproom in certain locations or neighborhoods.
3. Obtain a Brewery License
This requires licensing on the Federal and State level and approvals from the city where the taproom will be located. Before pursuing these approvals, the business should register with the Secretary of State (see footnote ii), obtain a State of Minnesota Tax Identification Number (see footnote iii), obtain zoning permits through the city (see footnote iv), and obtain Workers Compensation Insurance.
Also, be prepared to detail information about the building site, the owners/officers of the business, and the business’ financing information.
Once the brewery is established, the business can pursue the related retail licenses to sell beer in a brewer’s taproom and through growler off-sale.
In order to brew beer, the business must get Federal and State approval. First, the business must submit its federal forms to brew beer. These forms are called the Brewer’s Notice (see footnote v) and the Brewer’s Bond (see footnote vi). (For more detailed information related to federal licensing, see footnote vii).
Next, the business applies for its State license to brew beer. This form is called the Application for a Wholesaler’s/Manufacturer’s Intoxicating Liquor License (see footnote viii). The State license form requires information regarding zoning permits, so the business should have its zoning permits in place before pursuing its license to brew beer. Additionally, certain inspections are required to brew beer in the State of Minnesota, including inspections made by the Department of Agriculture and the Department of Public Safety Alcohol & Gaming Enforcement Division. (For more information regarding the State licensing process, contact the Minnesota Department of Public Safety Alcohol & Gambling Division).
Finally, the business can register its brand label and apply for growler and taproom licenses through the city. These forms may vary. In order to sell beer in a brewer’s taproom in St. Paul, for example, the business must submit a form for Certification of an On Sale Brewer’s Taproom License and Sunday License as well as a City of St. Paul Class N License Application (see footnote ix). (For more information on registering a brand label and pursuing a growler license in the City of St. Paul, see footnote x).
How Much Does It Cost?
Each situation has its own complexities and there are many aspects to discuss to understand the details of your situation and advise you accurately. We have an experienced attorney here who would be happy to analyze your situation’s circumstances and advise you of your legal rights and options. This can generally be accomplished during a one-hour meeting (which can be by phone). Our fee for a one-hour meeting is $300. Work beyond that initial hour is at usual hourly rates. We do not offer free consultations on this type of work.
[i] See “Evaluation Report: Liquor Regulation.” Office of the Legislative Auditor, State of Minnesota. (http://www.auditor.leg.state.mn.us/ped/pedrep/liqreg.pdf)
[iii] Minnesota Tax Identification Numbers (Sales & Use Tax Number) may be obtained from the State of Minnesota Business Records Department, 600 Robert Street North, Saint Paul, MN (651-296-6181).
[iv] City of St. Paul, for example: http://www.stpaul.gov/index.aspx?nid=2147
[v] https://ttbonline.gov/permitsonline/ or call 877-882-3277 to request forms. Online application is preferred. Applicant will have to set up a user account in order to submit application.
[vi] Business must submit either a Surety Brewer’s Bond (http://www.ttb.gov/forms/f513022.pdf) or a Collateral Brewer’s Bond (http://www.ttb.gov/forms/f513025.pdf).
[vii] Federal requirements for brewery license
There are two Federal forms required to obtain a license to brew beer: (1) the Brewer’s Notice and (2) the Brewer’s Bond. The Federal licensing process is conducted through the Tax and Trade Bureau (“TTB”). A business can apply for the State license at any time during the TTB application process. However, it is recommended that an applicant start at the Federal level as that process takes longer and is required as part of the State license process. The Federal application process can take up to three months. For information regarding Federal licensing requirements, contact TTB at 877-882-3277 or submit questions to TTBInternetQuestions@ttb.gov.
(1) The Brewer’s Notice
TTB recommends filing the Brewer’s Notice online through the TTB website. The online application is recommended because there are several different forms that an applicant needs to obtain and submit for the paper filing, and the online process satisfies of all of these forms through a series of questions and is considered less cumbersome and more convenient than filling out the paper forms.
To submit the Brewer’s Notice online
The online permit can be found at https://ttbonline.gov/permitsonline/. The business will need to (1) create an account, (2) create an application, (3) provide the owners/officers information. Once these first three steps are finished, the applicant is issued a Record Number. The Record Number will start with “OOI-2012.” Next, an applicant will create the actual brewery application. The business will need to provide a valid Federal ID number (http://www.sba.gov/content/obtain-your-federal-business-tax-id-ein) and information detailing the business’ financing. An applicant is then issued a Tracking Number. The Tracking Number will start with “BR-2012.” This number must be included with the bond so that the bond is associated with the correct application.
To submit the Brewer’s Notice in paper
Prepare and send TTB Form 5130.10 Brewer’s Notice (http://www.ttb.gov/forms/f513010.pdf) and other forms, including TTB Form 5130.22 (http://www.ttb.gov/forms/f513022.pdf) and the Brewer’s Bond form.
To request a packet with all required forms and instructions:
TTB National Revenue Center
8002 Federal Office Building
550 Main Street
Cincinnati, OH 45202-3263
Toll Free: 800-398-2282
(2) The Brewer’s Bond
The second Federal form is called a Brewer’s Bond. An applicant must choose to submit either a Surety Brewer’s Bond (http://www.ttb.gov/forms/f513022.pdf) or a Collateral Brewer’s Bond (http://www.ttb.gov/forms/f513025.pdf). The Brewer’s Bond must be submitted by mail to TTB. An applicant must include their Tracking Number from the Brewer’s Notice on this form.
[x] Register brand label
Submit the Brand Label Registration Form and fee (https://dps.mn.gov/divisions/age/forms-documents/AlcoholDocuments/brandlabelregistrationapplication.pdf).
Pursue license to sell growlers
In order to sell growlers in the City of St. Paul, the business must be considered a microbrewery and total retail sales of growlers must be less than 500 barrels of beer annually. There are two forms that must submitted in order to obtain a license to sell growlers in the City of St. Paul: (1) Application for Small Business Off Sale Intoxicating Liquor License (https://dps.mn.gov/divisions/age/forms-documents/AlcoholDocuments/applicationsmallbreweroffsale.pdf) and (2) City of St. Paul Class N License Application (http://www.stpaul.gov/DocumentCenter/Home/View/3437).
For questions regarding City of St. Paul requirements, contact the Department of Safety and Inspection.