In Minnesota, a Winery Can Operate a Brewery, But a Brewery May Not Be Able to Operate a Winery; Wait, What?

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Waconia’s Schram Vineyards is in the news for becoming Minnesota’s first combination brewery & winery.
The first reaction by some will be “wait a minute, I thought that in Minnesota you couldn’t operate both a winery and a brewery?!”

My response: not exactly.

Farm wineries are given a special status in Minnesota’s liquor laws, a policy chosen specifically to encourage and support the fledgling farm winery industry.  In fact, did you know that farm wineries are allowed to sell off-sale on Sundays?  I know, I’m as surprised as you are that society as we know it has not crumbled because of it….

But I digress.  Back to the question at hand – how can a farm winery operate a brewery but a brewery cannot operate a winery?  The answer lies not in Minnesota’s liquor laws, but in Minnesota’s corporate farming law, Minn. Stat. §500.24.

Minnesota law permits “farm wineries.”  Under the statutory definition, a “farm winery” is a winery operated by the owner of a Minnesota farm and producing table, sparkling, or fortified wines from grapes, grape juice, other fruit bases, or honey with a majority of the ingredients grown or produced in Minnesota.  In other words, in order to obtain a winery license, you have to own a Minnesota farm.

Note the verbiage “operated by the owner of a Minnesota farm”, as that is the key phrase in this differentiation discussion.  Under Minnesota’s corporate farming statute, corporate farming is essentially prohibited in Minnesota with the exception of “family farm corporations”, “authorized farm corporations”, family farm limited liability companies and “authorized farm limited liability companies”.   As such, almost all (and likely all) brewery entities do not qualify to operate a farm – nor do they want to – and are thus precluded from obtaining a farm winery license.  And, since products such as cider and mead are defined under Minnesota law as “wine”, breweries cannot make those products either.

It will be interesting to see if other Minnesota farm wineries follow Schram’s lead and get into the craft beer business.  If they do, I would not be surprised if the Minnesota breweries seek changes in the law to allow them to make products that today are considered “wine.”

 

 

 

 

Posted in Blog, Brewery Law, Business Law