Sharp divide on proposal to expand liquor sales to grocery, retail stores

Lawmakers are entertaining the idea of allowing liquor sales in retail stores, a proposal that drew clear dividing lines Wednesday between grocery stores claiming to be mom-and-pop shops and liquor store groups struggling to compete in an evolving, consumer choice-heavy market.

With just five days left in the legislative session, the House Commerce and Regulatory Reform Committee heard HF4152, sponsored by Rep. Jim Nash (R-Waconia), which would allow municipalities to issue off-sale intoxicating liquor licenses to food retailers, like grocery and convenience stores, enabling them to sell beer, wine and Minnesota-made distilled spirits. Unlike current law, which caps the total number of off-sale liquor licenses issued by municipalities, the bill wouldn’t limit the number of licenses to food retailers.

The committee didn’t take any action on the bill, with regular references to “next year” and “next session.” Its companion, SF3600, sponsored by Sen. Karin Housley (R-St. Marys Point), hasn’t seen any action by the Senate Commerce and Consumer Protection Finance and Policy Committee.

Every grocer that spoke in favor of the bill — which included brass from Mackenthun’s, Kowalski’s, Jerry’s Foods and Lunds & Byerlys — painted their business as a mom-and-pop store, a small retailer in need of legislative help to compete. Most mentioned how much they help support local nonprofits and community groups.

“I see us as a mom-and-pop, quite honestly. We are a small, local neighborhood business,” said Kris Kowalski Christiansen, CEO of Kowalski’s Markets, which boasts 11 locations and 1,600 employees. “We do need some help as well, as a mom-and-pop… I see this (bill) as a natural evolution of the Minnesota marketplace.”

WATCH Full video of the committee hearing 

Dana Glade, director of retail operations for Jerry’s Foods, said his company, which is a franchise of Cub Foods, is “community-minded” and needs to “diversify our offerings … to stay relevant.” Kim Mackenthun, owner of Waconia-based Mackenthun’s Fine Foods, went through a list of organizations his three stores help promote, and then said they “need to reinvent” to “stay relevant.”

Some legislators on both sides of the aisle weren’t too sympathetic.

“We pass this, and every muni and every small mom-and-pop liquor store is out of business,” Rep. Greg Davids (R-Preston) said. “We know where this is headed. I think we have to have the debate: Do we just shut down munis and small mom-and-pop shops and just market to the grocery stores and retail stores? Because that’s where it’s headed. So we can cut a lot of pain and heartache if we’re just honest and say, ‘We want to shut down the mom-and-pop shops and munis.’”

“This goes against small business in a really, really horrific way,” Rep. Paul Rosenthal (DFL-Edina) said. “This is just going too far, too fast.”

But Nash and other proponents like Rep. Ron Kresha (R-Little Falls) pointed to the change in consumer demands – and Thomas Reinhart, vice president and legal counsel for Kwik Trip, pointed to a recent survey showing 76 percent of Minnesotans support this proposed policy change.

Touting an “overwhelming response,” Nash said, “You’ve seen the craft beverage industry — wine, beer and spirits — really has changed the landscape with what consumers want in Minnesota.”

Meanwhile, the Minnesota Licensed Beverage Association, which has previously fought changes to the state’s liquor system, sometimes unsuccessfully, voiced concern about the proposal. And Jennifer Schoenzeit, owner of Minneapolis-based Zipps Liquors, said the bill “creates winners and losers” and is “designed to enrich big business.”

Thief River Falls Mayor Brian Holmer said a change to issuing municipality off-sale licenses could cause the town to lose its municipal liquor store, which contributes significantly to tax rolls.

“I will be letting our constituents know what you’ve done to us,” Holmer warned about passing the bill. “As far as our property tax increases.”