Hop Law

Cider Revolution in Minnesota

In Minnesota, we got a nice ruling from the federal courts – farm wineries in Minnesota do not need to use 51% Minnesota ingredients.  Farm wineries have always had an out from this obligation and could petition the state to get around it by essentially stating that they cannot meet the requirement due to lack of availability in Minnesota.  This was still a burden and thankfully, the courts did away with it with respect to farm wineries.  This means Minnesota wines may start tasting better (not that there are no good Minnesota wines, but Minnesota is also not Napa Valley or Upstate New York when it comes to wine reputation).

The problem is not over, unfortunately, for non-farm wineries.  Few realize that we could have cider or wine “taprooms” (for lack of a better word) all over the Twin Cities and the state but the growth of the industry has been substantially slowed by a little-known provision in Minnesota’s alcohol beverage statutes.  In Minn. Stat. 340A.301, Subd. 10, wineries (which includes cideries) have been allowed to sell via a taproom-style business even if not a farm-winery.  There is, however, the same type of restriction that farm wineries faced: “A licensed manufacturer of wine containing not more than 25 percent alcohol by 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.”

Basically, a wine or cider taproom could exist anywhere so long as 51% was made from Minnesota-grown agricultural products.  Minnesota, however, does not have enough ingredients available in many cases (at least from a financial feasibility perspective).  This has made it difficult for Minnesota wineries and cideries to start up and generate cash flow via direct-to-consumer sales.  This 51% requirement has resulted in changes to business models and stopped many from even opening a winery business because the economics did not work.

With the recent decision holding that the 51% requirement as applied to farm wineries is unconstitutional and that it violates the dormant commerce clause, it seems like only a matter of time until someone challenges the 51% requirement as applied to wine manufacturer’s generally.  Given the precedent from the farm winery decision, and given the same obvious constitutional problems with the requirement, we would expect the 51% requirement to be done away with in its entirety.  We won’t know until someone challenges it, but there is a strong argument for removing this 51% threshold as unconstitutional – perhaps the state legislature will even do something to remove it before a challenge in court.

We hope that the State of Minnesota will see a resurgence in wineries and cideries opening up with a greater variety of ingredients and lower costs being the keys to open the door.