Oliphant breaks down legal barrier with launch into Minnesota market

OliphantKDK09

Somerset, Wisconsin’s, Oliphant Brewing is beginning distribution in Minnesota starting today, Nov. 7 // Photo by Kevin Kramer, The Growler

Oliphant’s dynamic duo, co-owners and co-brewers Matt Wallace and Trevor Wirtanen, have wanted to expand their distribution footprint into Minnesota since they began their brewery over two years ago.

“If we were where New Glarus is, we’d consider being a Wisconsin-only brewery, but it’s right there, looking at us in the eyes,” Wirtanen says. It’s hardly an exaggeration—the brewery is just minutes away from the Minnesota-Wisconsin border in Somerset, Wisconsin.

While selling their beer in their home state (Wirtanen is from Stillwater, Wallace from Woodbury) was in the back of their minds since day one, it wasn’t until early this past summer that the two employed the help of lawyer Elliot Ginsburg, who is part of a trio of brewery and distillery law specialists known as the Hoppy Lawyers.

OliphantKDK13

Oliphant owners Matt Wallace (left) and Trevor Wirtanen // Photo by Kevin Kramer, The Growler

Oliphant posed a simple question to Ginsburg: Can Oliphant self-distribute its beer in Minnesota?

“So I pulled up Minn. Stat. 340A.301, Subd. 9(g), which is the statute that authorizes self-distribution in Minnesota,” Ginsburg wrote to The Growler via email. “I didn’t see anything that would prohibit self-distribution by a Wisconsin brewery, so I told Matt and Trevor that I thought they could do it, but that I generally like talking to the Alcohol and Gambling Enforcement Division (AGED) to get approval in cases where we’re trying something new or something that isn’t frequently done.”

This is where things got a little tricky. As a brewery producing below the 20,000-barrel self-distribution limit, Ginsburg told AGED that he thought they could self-distribute under the statute. AGED countered that the statute only applied to brewers licensed within Minnesota, and also prohibited out-of-state brewers from self-distribution via a requirement that they go through a Minnesota-licensed importer.

Ginsburg got to work opening up discussion with AGED on the matter.

“Basically, 340A.301, Subd. 8(b) says a brewer cannot have an interest in a wholesaler except as provided in Subd. 9,” says Ginsburg. “This means that a brewer cannot self-distribute except as provided in Subd. 9. 340A.301, Subd. 9(g) provides that a brewer (with certain limitations) can self-distribute.

“So by applying 340A.301, Subd. 8, but not Subd. 9, self-distribution was not permissible,” Ginsburg explains further, “but our position was that if Subd. 8 applies, so does Subd. 9, which carves out the right to self-distribute.”

OliphantKDK14

Oliphant’s taproom // Photo by Kevin Kramer, The Growler

There was another key issue relevant to Ginsburg’s argument: the dormant commerce clause, which grants Congress the power to regulate commerce “among the several states.”

Ginsburg explained that this clause, “Essentially prohibits a state from passing laws that discriminate against interstate commerce. In the alcoholic beverage context, for example, New York violated the dormant commerce clause by allowing in-state wineries to ship directly to consumers, but not out-of-state wineries. In order for it to be constitutional, New York had to treat out-of-state wineries the same as in-state wineries when it comes to direct shipping.”

OliphantKDK03

Kegs of Oliphant beer are bound for Minnesota // Photo by Kevin Kramer, The Growler

So in the case of Oliphant, Ginsburg said their position was “that allowing in-state breweries to self-distribute, but prohibiting out-of-state breweries from self-distribution, would discriminate against interstate commerce by making it easier for in-state breweries to do business in Minnesota than for out-of-state breweries. There’s a complicated history here, but the basic idea is that a state can’t discriminate against interstate commerce by treating in-state businesses more favorably.”

After consulting its attorney, AGED responded favorably a few weeks later to what Ginsburg calls a constitutional argument—Oliphant could self-distribute if it obtained a wholesaler and importer license in Minnesota, which it received in October.

The changes are happening quickly, and it’s all been a bit of surprise considering Wallace knew Wisconsin stalwarts like South Shore Brewery of Ashland, and Pitchfork Brewing of Hudson, had encountered a firm “no” from the government when they sought the same thing.

“Now it’s opened up, and now they can do it too,” Wallace says. “It was just a matter of someone getting someone with the legal skills to poke a hole in this sort of unconstitutional law that was there.”

Wirtanen hopes that a lot of small craft brewers will follow suit and jump across the border now that Oliphant set the precedent. Before Oliphant waded into the new market, though, it had to become more efficient in how it brews.

“We made some shifts around the layout of the brewery where we’re able to brew more days of the week, kind of doubling our capacity,” Wirtanen says. “Basically we’re able to work more, and we added some equipment for efficiency like an automatic keg washer.”

This transformation of sorts is also a prelude to an expected expansion.

“We’re setting ourselves up so maybe in less than a year or so we’ll start adding more steel fermenters, brite tanks,” Wallace says. “This was the step needed to prepare the next phase for growth.”

Kegs of Oliphant beer will hit Minnesota first before Crowlers of beers like Teenage Muten Ninja Roshi hit store shelves toward the end of the year.

Twin Cities residents who haven’t taken the nearly 40-minute trip to Somerset to try Oliphant’s beers, or just want to toast the brewery’s success in coming to a new market, can do so tonight, Monday, November 7 at 7pm at Lolo American Kitchen in Stillwater.

Whether patrons make it to the launch or not, keep an eye out for the light-blue colored Crowlers housing beer clearly named by children of the ‘90s who love their pop culture. And possibly expect more Wisconsin breweries to make the jump across the river.

Photos by Kevin Kramer, The Growler

 
Capitol Beverage January 2018 Banner