Thanks To Government Shutdown, Minnesota About To Reinstate Prohibition

The state government in Minnesota has been shut down since July 1st due to the failure of the states Republican legislature and Democratic Governor to reach a budget deal. (Sound familiar?) As the shutdown has dragged on toward its two week anniversary its seemed like many Minnesota Republicans were content to let the shutdown continue, content they had the upper hand and that the public wasn’t missing the government all that much. That may no longer be the case. Thanks to the closure of government offices, restaurants and bars across the state are in danger of running out of alcohol within the next several weeks:

Hundreds of bars, restaurants and stores across Minnesota are running out of beer and alcohol and others may soon run out of cigarettes — a subtle and largely unforeseen consequence of a state government shutdown.

In the days leading up to the shutdown, thousands of outlets scrambled to renew their state-issued liquor purchasing cards. Many of them did not make it.

Now, with no end in sight to the shutdown, they face a summer of fast-dwindling alcohol supplies and a bottom line that looks increasingly bleak.

“It’s going to cripple our industry,” said Frank Ball, executive director of the Minnesota Licensed Beverage Association, which represents thousands of liquor retailers in the state.

The Ugly Mug, a popular bar near Target Field, doesn’t have enough beer to get through the baseball season.

“Our inventories are diminishing rapidly over the next month,” owner Erik Forsberg said. He was among a cluster of bar and restaurant owners who appealed Tuesday to a court-appointed special master to be allowed to continue buying alcohol during the shutdown. “When [the Twins are] back on Thursday and people can’t get Budweiser and they can’t get whatever, they’re just going to go somewhere else.”

Come Labor Day, cigarette smokers will be in the same bind.

The state has stopped issuing the tax stamps that distributors must glue to the bottom of every pack before it’s sold for retail.

(…)

Of the roughly 10,000 establishments that sell liquor in Minnesota, most of those who needed to renew their buyer purchasing cards managed to do so before the July 1 shutdown started. About 300 were caught with cards that expired on June 30 and no way to renew the permits.

That number will grow to 425 by the end of the month, according to state officials, and grow as more cards expire at random intervals.

“It’s definitely going to get worse,” said Jim Arlt, director of alcohol and gambling enforcement for the Department of Public Safety. “There will be more and more businesses affected.” The alcohol regulation side of Arlt’s office was laid off during the shutdown.

Trevor Berg, owner of Hoss’ All American Liquors in Walker, Minn., says his card expires this weekend. He plans to stockpile as much as he can before then, hoping it will last until mid-August — or until the budget stalemate ends.

“This is going to treadmill across the whole state the longer they hold out,” Berg said, referring to the Republican legislative leaders and DFL Gov. Mark Dayton. “It’s going to hit every bar and restaurant that needs a liquor license.”

It’s not just bars and restaurants that are being impacted by the closure of the state liquor licensing authority, the shutdown is also hitting one of the largest beer companies in the country:

The MillerCoors brewing company landed in the cross hairs of Minnesota’s government shutdown Wednesday when state officials said it would have to stop selling its beer in the state because of expired licenses.

The Department of Public Safety told the brewer it must stop distribution in Minnesota and devise a plan to pull its product from the shelves, including Coors, Coors Lite, Miller Lite, Miller High Life and 35 other name-brand beers. That would decimate choices for consumers. MillerCoors supplies 38 percent of the beer sold in Minnesota, and the state is one of the top five markets in the country for the brewing giant.

MillerCoors officials said on Wednesday they intend to fight the state and keep distributing. “We believe we’ve followed all applicable state laws on this,” said Julian Green, director of media relations for MillerCoors. “It is our feeling that if we follow all state laws then we should be permitted and have the right to sell our products in the state.”

But Department of Public Safety spokesman Doug Neville said the law is the law. “There’s really nothing in the statute that allows us to make an accommodation for anybody,” he said.

Retailers, meanwhile, were reduced to helpless spectators Wednesday, in yet another unexpected twist to a budget stalemate that has dragged on for 14 days and touched all corners of Minnesota.

“My advice would be come in and buy it now. Stock up,” said John Wolf, owner of Chicago Lake Liquors in Minneapolis. He is unsure how it will affect business, since customers may simply opt for other brands of beer.

Obviously this will impact any bar or restaurant selling MillerCoors products, not to mention the citizens of Minnesota. In any case, once the alcohol starts disappearing from the bars and the stores, I have a feeling that the GOP strategy of waiting the Governor out might not continue for much longer.

FILED UNDER: Quick Takes, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. lunaticllama says:

    I actually don’t think it will affect private consumption of alcohol all that much. It’s still legal to drink, after all, and Minnesota is surrounded by states that sell alcohol. If you buy properly marked (by relevant state authorities) liquor from Wisconsin or Canada, even in large quantities, I really doubt one could be prosecuted for illegal distribution without further evidence of intent to sell. It’s just a giant pain, but one that I know many people would do, especially if a bunch of friends pooled resources to make a long saturday jaunt more worthwhile. This will devastate restaurants and bars, however, that rely on the markup of alcohol to generate revenue.

  2. James Joyner says:

    Frankly, if the state offices that issue tax stamps are closed, then enforcement should be suspended, too. Stuff like this helps Republicans, in that it demonstrates just how much government is involved in mundane, everyday activities that would get on fine without government if it weren’t against the law to do so.

  3. @James Joyner:

    It’s a legal limbo situation, really. If your driver’s licenses expires and all the DMV offices are closed down, then are you still entitled to drive without being penalized if the cops catch you?

    Part of the issue, likely, is that the large distributors are unwilling to take the legal risk of selling to someone with an expired tax stamp. Which I can’t necessarily blame them for.

    Of course, if this happened in Virginia, the entire supply of alcohol could grind to a halt since distribution of hard liquor, including to restaurants, is handled by a state agency.

  4. James Joyner says:

    @Doug Mataconis: Yes, if all the state DMVs are shut down, people whose licenses expire should be entitled to drive until some reasonable period of time after the offices re-open. The law likely doesn’t plan for such a contingency, but that’s how rational enforcement should work.

    It doesn’t, of course, because government agencies have an interest in making your life miserable unless you give them all the funding they demand.

  5. An Interested Party says:

    I was going to suggest that a certain someone was going to tell us how this too is an argument for smaller government, but I see that James has beaten that person to that particular punch…

  6. PD Shaw says:

    In my state, I think this would be a violation of Miller’s due process rights. If you’ve been given a government license, and you timely apply for renewal for the same activity and the government fails to issue the license, the license generally remains in full force and effect until the government re-issues or denies the renewal.

  7. EddieInCA says:

    @James Joyner:

    James –

    That’s a scary position you hold, in my opinion.

    So the GOP, could, in theory, just shut down governments they control as a way of getting rid of regulations since, in your opinion, with the government being “shut down”, licenses, permits, and regulatory control would be suspended completely during that time.

    So where’s the incentive to reach a deal if things can just proceed as normal with no penalties?

  8. hey norm says:

    I don’t understand the problem. This whole thing is about no government…that’s what the Tea Stain wants. So why would bars and liquor stores need Government licensing to purchase goods? The Government is shut down, so ipso facto, there is no Government. I say we let Minnesota be the test case for what happens if and when the Stain accomplishes what it wants to.

  9. hey norm says:

    Apologies…I hadn’t seen James’ post.
    Yes, I agree. Let’s take a look and see what happens when there are no Government regulations or oversight. Let’s make Minnesota Libertarian heaven and sit back and watch the experiment.

  10. James Joyner says:

    @EddieInCA and @hey norm: I’m not arguing that there should be no regulation in general or no regulation of alchol sales, period. But this stamp business is an arcane and inefficient way of doing useful things: ensuring public safety and collecting tax revenue. The fact that the government is shut down should have no bearing on the ability of repeatable national firms and reputable local bars and restaurants to sell beer, wine, and liquor.

  11. PJ says:

    Who decides which bars and national firms are reputable?

  12. James Joyner says:

    @PJ: Ultimately, the market, with some assist from government.

    Minnesota regulators really don’t need to put their stamp on Miller beer or Bacardi rum or Macallan Scotch; those brands have international bona fides. And, while I want health inspectors to check in on the local watering hole from time to time, those who have been operating safely for years shouldn’t be unable to do business because the government is shut down.

  13. Boyd says:

    This is a stalemate between two parties, the Governor and the legislature. Why do you characterize it as legislative intransigence for not giving in to the Governor instead of executive intransigence for not giving in to the legislature, Doug?

  14. MarkedMan says:

    James, the tax stamp certifies the companies have paid their taxes. Are you saying they should have the right to not pay taxes because the Republicans shut down the government? If you are saying they should still pay taxes, well, the Republicans shut down the mechanism created to administer those taxes.

    I have to disagree with your basic premise. If you shut down the government because you can’t get your way, then it is much better for everyone if the effects are felt immediately and strongly. Giving special interest groups exceptions is just a recipe for corruption and disaster.

  15. PD Shaw says:

    Hostage situation in aisle L.

    Clean-up requested.

  16. Dustin says:

    @James Joyner: You’re talking about the sale and taxation of alcohol and tobacco, not a permit for a neighborhood block party.

  17. hey norm says:

    @ James…
    But what the Libetarians are arguing for is minimal intrusion of the state – the invisible hand of the free market will keep dis-reputable bars and stores and restaurants from operating. The market will not allow dirty kitchens, or watered down liquor, etc. This is Rand Paul’s arguement for voting against Civil Rights – the invisible hand of the free market will not allow discrimination to happen. I say let’s have at it. Minnesota can be our national test tube for the Libetarian theory of social organization. They’ve already had that bridge collapse a couple years ago – let’s see what else happens.

  18. Tlaloc says:

    Ultimately, the market, with some assist from government.

    I can’t agree with that. Ultimately these regulations did not come from a vacuum they came because the market has proven it self time and again utterly incapable of even the least bit of self regulation. They occurred because somebody did something so insanely boneheaded that government had to step in to stop it happening again.

    And as someone said above giving the right the ability to negate any and all regulation by undercutting the regulatory agencies is a recipe for disaster. We both know they’d do it, just look at their fecklessness with the debt ceiling and decades of starve the beast rhetoric.

  19. PD Shaw says:

    A lot of you seem to have a Kafkaesque notion that in a free society, people first need to comply with a regulatory system, whether or not it actually exists. Poor Joseph K Brewing has to wander the Castle with his $30 licensing fee to prove his innocence, but no one will take it.

    Indeed, Kafka couldn’t make this stuff up:

    MillerCoors, the maker of Miller High Life and 38 other beers, found itself caught in typical government red tape when it was informed that it had overpaid a state-mandated registration. Minnesota makes brewers register every three years for each product that they sell in the Land of 10,000 Lakes. The cost is only $30 per brand, a drop in the bucket to such a brewer, which might be why it accidentally overpaid.

    By the time the state notified MillerCoors of the error, and the company had resubmitted the registration and signed a new check with the proper amount, Minnesota’s government had been shut. The state employees who could have approved the registrations were at home, possibly drinking beer, as they had been laid off since the state could not legally pay them.

    Minnesota, however, did not lay off alcohol enforcement officials who have instructed MillerCoors to devise a plan to get their cases of Coors, Blue Moon and other brands off the shelves in supermarkets and liquor stores.

    The governor doesn’t have enough money to accept checks; but keeps enforcement officials on the payroll.

  20. John Burgess says:

    If nothing else, this is a strong argument for fewer regulations. Sure, tax and inspect, but not to the point where when the taxers and inspectors can’t work, everything that tails from it gets shut down, too.

    And yes, that enforcement gets funded while licensing does not should alert MN voters where the government’s priorities are. They should act accordingly next election day.

  21. Tlaloc says:

    A lot of you seem to have a Kafkaesque notion that in a free society, people first need to comply with a regulatory system, whether or not it actually exists.

    The regulations exist, the problem is someone screwed up the apparatus that administers it.

    If all the highway cops are pulled that doesn’t suddenly mean you can and should drive 120 mph, it just means when you’re an ass and do nobody punishes you for it, and you end up killing a lot of people eventually. There’s nothing kafka-esque about it.

  22. ponce says:

    Ultimately, the market, with some assist from government.

    China just executes any business owner who kills members of the public with their products