Bars Count Shots as Minnesota Shutdown Threatens Booze Reserves

Trevor Berg says he’ll have no choice but to close Hoss’ All American Liquor store in Walker, Minnesota, if the state government shutdown drags on: The $20 permit Berg needs to restock his wares expires July 17.

“As the shelves go bare, I’ll tighten the noose up on my own neck,” Berg, 43, said in a telephone interview from Minneapolis. “The more I sell, the faster I’m going to go bankrupt.”

There are 300 bars, restaurants and liquor stores so far that can’t purchase alcohol because their so-called buyer’s cards expired, and the state can’t renew them with workers forced to stay home and computers offline, said Doug Neville, a Public Safety Department spokesman. The state has told MillerCoors LLC to pull 39 varieties of beer because the brewer didn’t renew $30 brand-label registrations, Neville said.

Many restaurants and bars have only a couple weeks’ supply and must stop selling alcohol or close if the shutdown persists, said Bob Pallansch, a member of the Minnesota Licensed Beverage Association Board. Crippling an industry that produced $329.1 million in tax revenue last year may outrage the public enough to force a settlement, he said.

“Throughout the state of Minnesota, the local tavern, bar and grill are kind of the social hub,” Pallansch, 65, said in a telephone interview from Grey Eagle, a town of about 320 where he owns the Double “R” Bar and Grill. “If they’re locked up, it’s going to be a big outcry.”

Road Trip

The stalemate, the longest of the nation’s six state government shutdowns since 2002, began July 1 after Democratic Governor Mark Dayton and Republican legislative leaders failed to resolve an impasse about how to address a $5 billion budget deficit. Republicans want spending cuts alone, and Dayton is pushing for taxes to preserve services.

Dayton yesterday traveled to Rochester, which is home of the Mayo Clinic, and Albert Lea, about 10 miles (16 kilometers) from the Iowa border, to meet with people with disabilities and senior citizens to “discuss what is at stake in the state budget,” according to an e-mail from his office.

Meanwhile, legislative Republicans sent out an e-mail with charts showing the impact of the shutdown on areas including schools and parks in those two cities. It didn’t mention a booze drought.

Although businesses can sell alcohol with city liquor licenses, they can’t purchase new product without the state buyer’s card, Neville said in a telephone interview from St. Paul. Cards for 300 of 10,000 businesses have expired since the shutdown began July 1, and that will increase to 424 by the end of the month, Neville said.

Beating the Deadline

Atlanta-based Delta Air Lines Inc. (DAL) renewed and received its Minnesota buyer’s card before the government shut down on July 1, Leslie Parker, a spokeswoman, said in an e-mail.

Chipotle Mexican Grill Inc. (CMG) has renewed the buyer’s cards expiring for its Minnesota locations and received them before the shutdown, Chris Arnold, a spokesman, said in an e-mail.

The Costco Wholesale Group warehouse in Burnsville knew its card was expiring and renewed it in time, Brian Roberts, the assistant general manager, said in a telephone interview.

The Minnesota Licensed Beverage Association has posted a “special compliance notice” on its website reminding retailers that if their permit expires, they must go dry.

“If a wholesaler is willing to sell to you illegally, you should not be tempted,” the notice said. “You must respect the legal requirement of a buyer’s card.”

Less Filling

There may be less beer available to purchase even for those authorized to do so. The state told MillerCoors it must pull its 39 brands, including Miller, Miller Lite, Coors Light and Foster’s, from bars, restaurants and stores because its brand- label registrations expired and can’t be renewed during the shutdown, Neville said.

The registrations, which cost $30 each and must be renewed every three years, are required to manufacture, distribute or sell alcohol, Neville said. The state has asked the company, a joint venture between SABMiller Plc (SAB) and Molson Coors Brewing Co. (TAP), for a plan showing how it will remove the beer and wants that to happen “within days,” he said.

The company disputes the claim that it failed to file the paperwork and fees in time and is talking with state officials, Julian Green, a spokesman for the company, said yesterday.

Running a Tab

In fiscal 2010, the most recent data available, the Minnesota Department of Revenue collected $253.5 million from liquor retailers in gross receipts and sales tax and $75.6 million in excise taxes from wholesalers and distributors, according to an e-mail from Lynn Andrews, a spokeswoman.

Berg and Erik Forsberg, who owns the Ugly Mug, a Minneapolis bar and restaurant, said they will ask a judge to let businesses deposit their $20 renewal fee in trust and continue buying alcohol until the shutdown ends and the state can process the renewals.

Sitting outside The Ugly Mug having a cocktail, Paul Lawson, 24, said he was shocked that the stalemate is affecting bars and restaurants, which pay liquor, sales and income taxes, as well as the lottery and other ventures that make money for the state.

“Why have they shut down the profit centers that bring in all the taxes?” said Lawson.

To contact the reporter on this story: Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.