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06.06.2014  
 

Minnesota Wine Legislation Update

Improving regulations in the state 'where the grapes can suffer'

 
by Linda Jones McKee
 
 
“michael
 
Minnesota farm wineries such as Chankaska Creek Ranch & Winery can produce 75,000 gallons of wine under new legislation.
Saint Paul, Minn.—The omnibus liquor bill signed by Minnesota Gov. Mark Dayton on May 13 didn’t give brewers, micro-distilleries or farm wineries everything they were asking for, but it did include some provisions that will benefit the state’s farm wineries. The number of gallons a farm winery may sell per year was increased by 50%; off-site warehousing of wine products is now permitted, and a provision was included that corrects a double-taxation problem concerning Port-style wines.

Since the original bill that permitted the establishment of farm wineries was passed in 1980, those wineries have been limited to selling 50,000 gallons per year. While Kent Schwickert, a member of the legislative committee of the Minnesota Grape Growers Association, MGGA, and owner of Chankaska Creek Ranch & Winery in Kasota, Minn., said he would have preferred to have the limit raised to 250,000 gallons, the legislators chose to increase it to 75,000 gallons. Irving Geary, president of the MGGA and a partner in Wild Mountain Winery in Terrace Falls, told Wines & Vines that this change “gives opportunities for wineries to keep expanding. No winery is pushing the 50,000-gallon limit yet, but I know several wineries are now planning to become larger in the next few years.”

Geary said farm wineries in Minnesota are viewed as small boutique wineries designed for agro-tourism. To secure a farm winery license, wineries must be in an agricultural setting with 10 acres of agricultural land. In addition, 51% of the fruit used in making wine must be from Minnesota. The state also has a commercial wine license, which permits wineries to be located anywhere and purchase fruit or wine without restrictions about origin. The commercial license, however, is considerably more expensive.

Previously, farm wineries had to store their products on winery premises. With the new legislation, a farm winery’s off-site warehouse must be a secured facility that meets state requirements such as giving the state proper notification about the location of the warehouse.

Schwickert’s Chankaska Creek Winery is an example of one winery that will benefit from the change in taxation for Port-style wines. In past vintages, the Minnesota Department of Revenue viewed the brandy that Schwickert used to stop the fermentation in his Port-style wine as a taxable product, not as a part of the process of making the wine. Under the new bill, brandy will be considered an ingredient in Port-style wine, and the finished product will be subject to the sales tax.

“The farm winery law we have is a good one,” Geary said. “It was designed to be. For example, wineries can be open on Sunday, while liquor stores can’t. Farm wineries can sell both wholesale and retail, and can self-distribute. Initially some distributors weren’t happy about this, but as more wineries are getting bigger, some are choosing to work with distributors.”
      
An issue Geary said he hopes the state will address in the future is winery signage. He said each county has its own rules on signage, and the state is also different. “I’d like to get MNDOT (the Minnesota Department of Transportation) to allow state signs,” he said. “Currently they won’t work with a winery if the county won’t allow signs.”

Minnesota today has 47 wineries, according to the Wines Vines Analytics’ winery database, and several more are about to open. “Wineries still struggle with the old image of Minnesota wines being sticky sweet or awful,” Geary said. “But many wineries here are winning gold and double-gold medals at international wine competitions across the country. We need to keep our marketing campaigns going and promote Minnesota as a wine region.”

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