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Brewery DiuscussionCITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members From: Kris Luedke, City Clerk Nancy Anderson, City Planner Copy: Mike Mornson, City Manager Date: April 9, 2013 Subject: Brewery Discussion The purpose of this discussion is to determine whether the City Council has an interest in allowing for Brewer type licenses in the City of Hopkins. These licenses may include Brewpub with or without an off -sale malt liquor license, Brewer off -sale malt liquor license or a Brewer Taproom license. Background Staff has received inquiries regarding the possibility for a Brew pub license in the City of Hopkins. Staff would like direction from the City Council in regards to this matter. Currently the Hopkins City Code allows for eight types of liquor license including: on -sale, temporary on -sale, off -sale, club, on -sale wine, 3.2 % malt liquor on -sale, 3.2 % malt liquor off - sale, and Temporary 3.2% malt liquor on sale. In order to allow additional licenses, the liquor ordinance and fee schedule would need to be amended. MN Statute 340A.301 allows for Municipalities to issue, with approval of the State Alcohol and Gambling Enforcement Division, a liquor license for On -sale Brew pub, Off -sale Brewer or Brew pub and Brewer taproom license to establishment within its jurisdiction. The attached brewery table lists the different brew type licenses with additional information pertaining to each and possible factors to consider. Zoning The zoning ordinance defines a bar/tavern: a bar, also called a pub or tavern, is a business that serves food and drinks, especially alcoholic beverage such as beer, liquor, and mixed drinks, for consumption on the premises or adjacent outside seating areas. A bar/tavern is allowed in the B-2, B-3, and B-4 zoning districts. 1010 First Street South Hopkins, MN 55343 Memo April 9, 2013 Page 2 The zoning ordinance does not have a percentage for food and alcohol as the liquor license does. Under this definition a brew pub would not be allowed because a brew pub does not serve food. The question for the City Council discussion tonight is if a brew pub is licensed within the City, in which zoning district should they be allowed? The staff recommends that if brew pubs are licensed within the City, they be allowed in the B-2 zoning district. The B-2 zoning district is the downtown area from 8th to 11th Avenues and approximately 1St Street North to 1St Street South. Attachments: Brewery Discussion Table Excerpt from LMC Liquor Licensing and Regulation Brewers MN Statute 340A.301 Manufacturers and Wholesalers License Brewery Discussion for April 9, 2013 License Description Additional Conditions Factors to Changes needed to Zoning Type Consider allow in City On -sale A city may issue to a -Must have a state license. -Currently city has 50/50 -Amendment to City -Allowed in Brew pub restaurant operated -Manufacture fewer than 3,500 barrels of liquor to food ratio for Code chapter 7 to any area that license on a brewer's malt liquor a year. restaurant. Should % be allow for new allows premise. reduced to accommodate licenses. restaurants. brew pubs? -New fees set for license. Brewer A city may issue an -Must have a state license. -Should off -sale liquor -Amendment to City -Breweries are license off- liquor license to -Malt liquor sold must be produced & license be issued to Code chapter 7 to currently a brewery if it meets packaged on premise. brewer? allow for new allowed in specific criteria. -Manufacture fewer than 3,500 barrels of -Should other retail licenses. Industrial malt liquor a year, provided off -sales may activities, e.g. open -New fees set for areas. not total more than 500 barrels. houses, be allowed in license. -Packaging must meet specific requirement industrial areas? commonly referred to as "growler". -Off-sale may only be sold during hours permitted by law for off -sale liquor stores. Brewer A city may issue a -Must have a state license. -Should additional -Amendment to City -not allowed taproom brewer taproom -May only have one taproom license. perimeters for hours of Code chapter 7 to license license which allows -Malt liquor sold on -sale for consumption operation be set? allow for new on -sale of malt must be produced by the brewer on -Should a brewery be licenses. liquor produced by a licensed premise. allowed in the City? -New fees set for brewer on the -A restaurant is not allowed at a brewery license. premises or adjacent with a taproom. to a brewery location owned by the brewer. Brewers and brew pubs 1. On -sale brew pub licenses Minn. Stat. § 340A.301, subd. 7(b). A city may issue a restaurant operated on a brewer's premises of manufacture (or "brew pub") an on -sale intoxicating liquor or 3.2 percent malt liquor license if the brewery meets the following criteria: • Possesses a liquor brewer/manufacturer license issued by the state. • Manufactures fewer than 3,500 barrels of malt liquor in a year, at any one licensed premises, for consumption on the premises or for off -sale from the premises. • Does NOT have an ownership interest, in whole or in part, in any other licensed intoxicating liquor or malt liquor manufacturer, brewer, importer or wholesaler, except for a similarly licensed restaurant -based brew pub. In addition, the licensee cannot be an officer, director, agent, or employee of a licensed manufacturer, brewer, importer, or wholesaler. Retail sales under this license at on -sale or off -sale (discussed below) may not exceed 3,500 barrels per year, provided that off -sales may not total more than 500 barrels. 2. Off -sale brew pub or brewers licenses Minn, stat. § 340A.30), subd, With the consent of the state, a city may issue a brew pub an off -sale 7(b). intoxicating liquor or 3.2 percent malt liquor license as well if the brewery meets either of the following criteria: • Possesses an on -sale brew pub license as discussed above and meets the criteria. • Manufactures fewer than 3,500 barrels of malt liquor in a year under a valid brewer/manufacturers license issued by the state. Retail sales under this license at on -sale or off -sale may not exceed 3,500 barrels per year, provided that off -sales may not total more than 500 barrels. With a brew pub off -sale license, the brewer may only sell at off -sale malt liquor manufactured on the premises. Sales made under this license must meet certain specific packaging requirements detailed in state statute. Off -sale sales of malt liquor must 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. 3. Temporary on -sale intoxicating liquor licenses for brewers Minn. Stat, § 340A.404, subd. With the approval of the state, a city may issue to a brewer who 1 o(e). manufactures fewer than 3,500 barrels of malt liquor in a year a temporary license for the on -sale of intoxicating liquor in connection with a social See Pact I1[ -B-5 Temporary intoxicating liquor licenses. event within the municipality sponsored by the brewer. This license is subject to the same restrictions as other temporary intoxicating liquor licenses, but has its own insurance requirements. 4. Brewer taproom license Mintz. Stat. § 340A.301, subd. Cities may provide an on -sale malt liquor license to certain state -licensed 6b. brewers. The so-called "taproom license" allows on -sale of malt liquor produced by a brewer on the premises or adjacent to a brewery location owned by the brewer. Only relatively small, independent brewers are Minn. Stat. § 340A.601, subd. eligible for a taproom license, so cities interested in this license should S. consult the statute. A city must notify the state within 10 days of issuing a taproom license. A city with a municipal liquor store cannot currently issue a taproom license to a brewery without a restaurant, because a brewery itself is not a hotel, club, or restaurant. MINNESOTA STATUTES 2012 340A.301 340A.301 MANUFACTURERS AND WHOLESALERS LICENSES. Subdivision 1. Licenses required. No person may directly or indirectly manufacture or sell at wholesale intoxicating liquor, or 3.2 percent malt liquor without obtaining an appropriate license from the commissioner, except where otherwise provided in this chapter. A manufacturer's license includes the right to import. A licensed brewer may sell the brewer's products at wholesale only if the brewer has been issued a wholesaler's license. The commissioner shall issue a wholesaler's license to a brewer only if (1) the commissioner determines that the brewer was selling the brewer's own products at wholesale in Minnesota on January 1, 1991, or (2) the brewer has acquired a wholesaler's business or assets under subdivision 7a, paragraph (c) or (d). A licensed wholesaler of intoxicating malt liquor may sell 3.2 percent malt liquor at wholesale without an additional license. Subd. 2. Persons eligible. Licenses under this section may be issued only to a person who: (1) is of good moral character and repute; (2) is 21 years of age or older; (3) has not had a license issued under this chapter revoked within five years of the date of license application, or to any person who at the time of the violation owns any interest, whether as a holder of more than five percent of the capital stock of a corporation licensee, as a partner or otherwise, in the premises or in the business conducted thereon, or to a corporation, partnership, association, enterprise, business, or firm in which any such person is in any manner interested; and (4) has not been convicted within five years of the date of license application of a felony, or of a willful violation of a federal or state law, or local ordinance governing the manufacture, sale, distribution, or possession for sale or distribution of alcoholic beverages. The Alcohol and Gambling Enforcement Division may require that fingerprints be taken and may forward the fingerprints to the Federal Bureau of Investigation for purposes of a criminal history check. Subd. 3. Application. An application for a license under this section must be made to the commissioner on a form the commissioner prescribes and must be accompanied by the fee specified in subdivision 6. If an application is denied, $100 of the amount of any fee exceeding that amount shall be retained by the commissioner to cover costs of investigation. Subd. 4. Bond. The commissioner may not issue a license under this section to a person who has not filed a bond with corporate surety, or cash, or United States government bonds payable to the state. The proof of financial responsibility must be approved by the commissioner before the license is issued. The bond must be conditioned on the licensee obeying all laws governing the business and paying when due all taxes, fees, penalties and other charges, and must provide that it is forfeited to the state on a violation of law. This subdivision does not apply to a Minnesota farm winery, licensed under section 340A.315, that is in existence as of January 1, 2010. Bonds must be in the following amounts: Manufacturers and wholesalers of intoxicating liquor except as provided in this subdivision $ 10,000 Manufacturers and wholesalers of wine up to 25 percent alcohol by weight $ 5,000 Manufacturers and wholesalers of beer of more than 3.2 percent alcohol by weight $ 1,000 Copyright 0 2012 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 2 MINNESOTA STATUTES 2012 340A.301 Manufacturers and wholesalers of fewer than 20,000 proof gallons $ 2,000 Manufacturers and wholesalers of 20,000 to 40,000 proof gallons $ 3,000 Subd. 5. Period of license. Licenses issued under this section are valid for one year except that to coordinate expiration dates initial licenses may be issued for a shorter period. Subd. 6. Fees. The annual fees for licenses under this section are as follows: (a) Manufacturers (except as provided in clauses (b) and (c)) $ 30,000 Duplicates $ 3,000 (b) Manufacturers of wines of not more than 25 percent alcohol by volume $ 500 (c) Brewers who manufacture more than 3,500 barrels of malt liquor in a year $ 4,000 (d) Brewers who also hold one or more retail on -sale licenses and who manufacture fewer than 3,500 barrels of malt liquor in a year, at any one licensed premises, the entire production of which is solely for consumption on tap on any licensed premises owned by the brewer, or for off -sale from those licensed premises as permitted in subdivision 7. A brewer licensed under this clause must obtain a separate license for each licensed premises where the brewer brews malt liquor. A brewer licensed under this clause may not be licensed as an importer under this chapter $ 500 (e) Wholesalers (except as provided in clauses (f), (g), and (h)) $ 15,000 Duplicates $ 3,000 (f) Wholesalers of wines of not more than 25 percent alcohol by volume $ 3,750 (g) Wholesalers of intoxicating malt liquor $ 1,000 Duplicates $ 25 (h) Wholesalers of 3.2 percent malt liquor $ 10 (i) Brewers who manufacture fewer than 2,000 barrels of malt liquor in a year $ 150 (j) Brewers who manufacture 2,000 to 3,500 barrels of malt liquor in a year $ 500 If a business licensed under this section is destroyed, or damaged to the extent that it cannot be carried on, or if it ceases because of the death or illness of the licensee, the commissioner may refund the license fee for the balance of the license period to the licensee or to the licensee's estate. Copyright © 2012 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. MINNESOTA STATUTES 2012 340A.301 Subd. 6a. Permits and fees. Any person engaged in the purchase, sale, or use for any purpose other than personal consumption of intoxicating alcoholic beverages or ethyl alcohol shall obtain the appropriate regulatory permit and identification card from the commissioner as provided in this subdivision. The fee for each permit, other than one issued to a state or federal agency, is $35 and must be submitted together with the appropriate application form provided by the commissioner. Identification cards and permits must be issued for a period coinciding with that of the appropriate state or municipal license and are not transferable. In instances where there is no annual license period, cards and permits expire one year after the date of issuance. The authority to engage in the purchase, sale, or use granted by the card or permit may be revoked by the commissioner upon evidence of a violation by the holder of such a card or permit of any of the provisions of chapter 340A or any rule of the commissioner made pursuant to law. Subd. 6b. Brewer taproom license. (a) A municipality may issue the holder of a brewer's license under subdivision 6, clause (c), (i), or 0), a brewer taproom license. A brewer taproom license authorizes on -sale of malt liquor produced by the brewer for consumption on the premises of or adjacent to one brewery location owned by the brewer. Nothing in this subdivision precludes the holder of a brewer taproom license from also holding a license to operate a restaurant at the brewery. Section 340A.409 shall apply to a license issued under this subdivision. All provisions of this chapter that apply to a retail liquor license shall apply to a license issued under this subdivision unless the provision is explicitly inconsistent with this subdivision. (b) A brewer may only have one taproom license under this subdivision, and may not have an ownership interest in a brewery licensed under subdivision 6, clause (d). (c) A municipality may not issue a brewer taproom license 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 brewer that brews more than 250,000 barrels of malt liquor annually or a winery that produces more than 250,000 gallons of wine annually. (d) The municipality shall impose a licensing fee on a brewer holding a brewer taproom license under this subdivision, subject to limitations applicable to license fees under section 340A.408, subdivision 2, paragraph (a). (e) A municipality shall, within ten days of the issuance of a license under this subdivision, inform the commissioner of the licensee's name and address and trade name, and the effective date and expiration date of the license. The municipality shall also inform the commissioner of a license transfer, cancellation, suspension, or revocation during the license period. Subd. 6c. Microdistillery fee. The commissioner shall establish a fee for licensing microdistilleries that adequately covers the cost of issuing the license and other inspection requirements. The fees shall be deposited in an account in the special revenue fund and are appropriated to the commissioner for the purposes of this subdivision. Subd. 7. Interest in other business. (a) Except as provided in this subdivision, a holder of a license as a manufacturer, brewer, importer, or wholesaler may not have any ownership, in whole or in part, in a business holding a retail intoxicating liquor or 3.2 percent malt liquor license. The commissioner may not issue a license under this section to a manufacturer, brewer, importer, or wholesaler if a retailer of intoxicating liquor has a direct or indirect interest in the manufacturer, brewer, importer, or wholesaler. A manufacturer or wholesaler of intoxicating liquor may use or have property rented for retail intoxicating liquor sales only if the manufacturer or wholesaler has Copyright 0 2012 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 4 MINNESOTA STATUTES 2012 340A.301 owned the property continuously since November 1, 1933. A retailer of intoxicating liquor may not use or have property rented for the manufacture or wholesaling of intoxicating liquor. (b) A brewer licensed under subdivision 6, clause (d), may be issued an on -sale intoxicating liquor or 3.2 percent malt liquor license by a municipality for a restaurant operated in the place of manufacture. Notwithstanding section 340A.405, a brewer who holds an on -sale license issued pursuant to this paragraph or a brewer who manufactures fewer than 3,500 barrels of malt liquor in a year may, with the approval of the commissioner, be issued a license by a municipality for off -sale of malt liquor produced and packaged on the licensed premises. 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. The malt liquor shall be packaged in 64 -ounce containers commonly known as "growlers" or in 750 milliliter bottles. The containers or bottles shall bear a twist -type closure, cork, stopper, or plug. At the time of the sale, a paper or plastic adhesive band, strip, or sleeve shall be applied to the container or bottle and extend over the top of the twist -type closure, cork, stopper, or plug forming a seal that must be broken upon opening of the container or bottle. The adhesive band, strip, or sleeve shall bear the name and address of the brewer. The containers or bottles shall be identified as malt liquor, contain the name of the malt liquor, bear the name and address of the 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. A brewer's total retail sales at on- or off -sale under this paragraph may not exceed 3,500 barrels per year, provided that off -sales may not total more than 500 barrels. A brewer licensed under subdivision 6, clause (d), 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, or wholesaler, or be an affiliate thereof whether the affiliation is corporate or by management, direction, or control. Notwithstanding this prohibition, a brewer licensed under subdivision 6, clause (d), 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: (i) manufacture licensed under subdivision 6, clause (d); (ii) manufacture in another state for consumption exclusively in a restaurant located in the place of manufacture; or (iii) 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 subdivision 6, clause (d), on January 1, 1995. (c) Except as provided in subdivision 7a, no brewer as defined in subdivision 7a or importer may have any interest, in whole or in part, directly or indirectly, in the license, business, assets, or corporate stock of a licensed malt liquor wholesaler. Subd. 7a. Permitted interests in wholesale business. (a) A brewer may financially assist a wholesaler of malt liquor through participation in a limited partnership in which the brewer is the limited partner and the wholesaler is the general partner. A limited partnership authorized in this paragraph may not exist for more than ten years from the date of its creation, and may not, directly or indirectly, be recreated, renewed, or extended beyond that date. (b) A brewer may financially assist a malt liquor wholesaler and collateralize the financing by taking a security interest in the inventory and assets, other than the corporate stock, of the Copyright 0 2012 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. MINNESOTA STATUTES 2012 340A.301 wholesaler. A financial agreement authorized by this paragraph may not be in effect for more than ten years from the date of its creation and may not be directly or indirectly extended or renewed. (c) A brewer who, after creation of a financial agreement authorized by paragraph (b), or after creation of a limited partnership authorized in paragraph (a), acquires legal or equitable title to the wholesaler's business which was the subject of the agreement or limited partnership, or to the business assets, must divest the business or its assets within two years of the date of acquiring them. A malt liquor wholesaler whose business or assets are acquired by a brewer as described in this paragraph may not enter into another such financial agreement, or participate in another such limited partnership, for 20 years from the date of the acquisition of the business or assets. (d) A brewer may have an interest in the business, assets, or corporate stock of a malt liquor wholesaler as a result of (1) a judgment against the wholesaler arising out of a default by the wholesaler or (2) acquisition of title to the business, assets, or corporate stock as a result of a written request of the wholesaler. A brewer may maintain ownership of or an interest in the business, assets, or corporate stock under this paragraph for not more than two years and only for the purpose of facilitating an orderly transfer of the business to an owner not affiliated with the brewer. (e) A brewer may continue to maintain an ownership interest in a malt liquor wholesaler if it owned the interest on January 1, 1991. (f) A brewer that was legally selling the brewer's own products at wholesale in Minnesota on January 1, 1991, may continue to sell those products at wholesale in the area where it was selling those products on that date. (g) A brewer that manufactures malt liquor in Minnesota may, if the brewer does not manufacture in Minnesota in any year more than 25,000 barrels of malt liquor or its metric equivalent, own or have an interest in a malt liquor wholesaler that sells only the brewer's products. (h) When the commissioner issues a license to a malt liquor wholesaler described in paragraph (a) or (b), the commissioner may issue the license only to the entity which is actually operating the wholesale business and may not issue the license to a brewer that is a limited partner under paragraph (a) or providing financial assistance under paragraph (b) unless the brewer has acquired a wholesaler's business or assets under paragraph (c) or (d). (i) For purposes of this subdivision and subdivision 7, clause (c), "brewer" means: (1) a holder of a license to manufacture malt liquor; (2) an officer, director, agent, or employee of such a license holder; and (3) an affiliate of such a license holder, regardless of whether the affiliation is corporate or by management, direction, or control. Subd. 8. Sales without license. A licensed brewer may without an additional license sell malt liquor to employees or retired former employees, in amounts of riot 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 Copyright © 2012 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 6 MINNESOTA STATUTES 2012 340A.301 volume nor less than 51 percent wine made from Minnesota -grown agricultural products may sell at on -sale or off -sale wine made on the licensed premises without a further license. Subd. 9. Unlicensed manufacture. Nothing in this chapter requires a license for the natural fermentation of fruit juices or brewing of beer in the home for family use. Subd. 10. [Repealed, 1995 c 198 s 17] History: 1985 c 305 art 5 s 1; 1985 c 308 s 1; 1Sp1985 c 16 art 2 s 3 subd 1; 1986 c 330 s 4; 1987 c 152 art 1 s 1; 1987 c 249 s 1,2; 1990 c 554 s 4-6; 1991 c 249 s 1,31; 1992 c 513 art 3 s 53; 1993 c 350 s 7; 1994 c 611 s 7-9; 1995 c 198 s 4,5; 1996 c 418 s 1; 1997 c 179 art 2 s 2; 2002 c 321 s 5; 2003 c 126 s 2,3; ISp2003 c 2 art 4 s 23; 2005 c 25 s 1,2; 2005 c 131 s 1,2; 2005 c 136 art 8 s 12; 2006 c 210 s 3; 2007 c 89 s 3; 2009 c 120 s 2; 2011 c 55 s 3-5 Copyright 0 2012 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved.