Tight regulation is making survival harder for craft breweries amid the shutdown

Minnesota’s tight liquor industry regulation has been a proven issue for producers for some time. But the COVID-19 pandemic has made that even worse.

Breweries have expressed that they might not be able to stay in business if the stay-at-home order is extended beyond May 13th. The current stay-at-home order runs until May 4th, but there is a chance it might be extended.

Most breweries make a huge percentage of their revenue through taprooms or brewpubs. But those have been shut down at the moment. Some breweries have resorted to doing deliveries and pick-up orders, while others have stopped selling wholesale to liquor stores to boost profits.

If the shutdown is extended it means that some breweries would not have cash on hand to pay for the expenses.  As one owner of a brewery has expressed;

Breweries typically have one to three months of expenses on hand. But when revenues drop 60 to 70%, you can’t sustain that beyond eight weeks. Unless they can get really creative for capitalization, government help is not a long-term option. I’m glad the SBA loan is forgivable, but the option to take on additional loans is not good.

About 150,000 craft brewery workers have been furloughed showing how tight funds are. While the government small business loan offered some relief, it won’t be a long-run fix. help,  Breweries need to be able to open their taprooms to stay in business. Taprooms are the lifeline of the brewery business.

Legislators also need to realize that a lot of these issues are arising because liquor laws in Minnesota are irrational. Therefore, long-term reform is necessary.

In our state, for example,  craft breweries are limited to only selling growlers and crowlers, but customers are preferring to buy the packaged 12 to 64-ounce containers that are only sold in liquor stores. Additionally, large breweries cannot even sell those growlers or crowlers according to a Minnesota law that allows off-site sale only for breweries producing less than 20,000 barrels of beer a year.

If these impediments did not exist, brewers would have had more flexibility in changing their operations to fit current events. But such has not been the case. Instead, breweries, which are already restricted in to-go sales have had their main source of revenue taken away with no sign of relief.

These rules are illogical; whether in a pandemic or not. They restrict trade and restrict choice, potentially raising prices. Just because this has come to light during the pandemic does not mean that these laws do not present hurdles during normal times.

Legislators need to make amendments to some of these laws, like allowing breweries to sell in the 12 to 64-ounce containers, in order to ensure the survival of breweries during the pandemic. Such changes would help brewers but also go a long way in simplifying liquor laws, offering flexibility, and potentially offering consumers more choices even after the pandemic is over.