As brewing industry grows, Grand Forks weighs new license
Half Brothers Brewing Company's CEO, Chad Gunderson, wants a new liquor license—one the city doesn't even offer yet.
Gunderson's business opened its 17 N. Third St. location in October, filling the empty space once held by Dakota Harvest Bakers with food, music and downtown Grand Forks' second brewery. And across North Dakota, Gunderson said there's plenty more on the way.
Half Brothers has a city license to serve a wide range of alcohol, including on- and off-sale beer and wine. But its state licensing is more restrictive, limiting it to selling only the beer it produces. Gunderson wants a new city liquor license tailored to brewpubs, a move he said helps align local and state law, potentially saving his business thousands in less expensive local fees and, most importantly, giving the brewery industry official local recognition.
Gunderson's case offers a window into the complex world behind the barroom tap, in which brewers in one of North Dakota's emerging industries often chafe at a competing network of regulations facing them at multiple levels. Gunderson said that, since 2010, he's watched the industry explode in Minnesota, and expects the boom to continue in North Dakota.
City Council members voted in a Monday committee meeting to explore Gunderson's idea, and is expected to debate a newly drafted licensing ordinance as soon as mid-December. But while some on the council see a business-friendly move, others are hesitant to make city code more complex for just one request.
Much of Gunderson's argument hinges on the city's winery license, which costs far less than the more generalized license his business has now. Gunderson's current costs were a $5,320 issuance and an annual fee of $1,670, but the city's winery license has a $1,065 issuance fee and $615 in annual costs—not counting application fees. He pointed to both Fargo's and Bismarck's city codes, which allow for brewery licenses with similar fees.
"The licensing fee is rather expensive, compared to other cities in North Dakota," he said after Monday's vote. "I wouldn't say it's a direct reason why we're bringing this up. We want to be in line with the state. That's the biggest thing. There's a direct winery license—there should be a direct brewery license as well."
The city's vote in committee vote saw a rare 4-3 split, with council members Dana Sande, Ken Vein and Danny Weigel dissenting. Weigel said Half Brothers' needs are already met by the current license structure, and without more businesses coming forward, it's hard to justify rewriting city code.
There's some precedent for what Half Brothers is asking for, though. Bismarck City Attorney Charlie Whitman said the city has passed a similar, though more modest, tweak of its own this week that shifts its own brewery-specific liquor license in line with the state-level licensing used by brewers—the change, Whitman said, helps avoid confusion as to what local brewers can and can't do.
At the heart of the matter are two types of state licenses—a "microbrew" scheme that allows a business to sell a range of alcohol, like beers and wines, but heavily limits their off-sale business; and a "brewer taproom" license, which limits sales to its own beer, but allows bigger off-sale volumes. Half Brothers has the latter.
Matt Winjum, co-owner of Rhombus Guys Brewing Co., said his business has the former, and has its off-sale curtailed as a result. While he's open to Gunderson's ideas, he'd prefer that the state loosens its rules first.
"If you're having a graduation party or whatever and you want to get a keg, you can't come directly to the brewery and purchase it from me," he said.
Gunderson said the North Dakota Brewers Guild, of which he's a former leader, attempted to loosen brewery regulations like these in the last legislative session, but said they weren't successful. He attributes some of the resistance to beverage distributors, who occupy a distinct part of North Dakota's complex regulatory system.
The last big changes to Grand Forks' liquor licensing process were in 1993, City Attorney Howard Swanson said, when total license types were reduced, caps on the number of issued licenses were removed and new "issuance" fees were instituted. Today's code includes a core of generalized licenses and "specialty" licenses that cater to specific buildings and situations, such as the Alerus Center or a winery.
"If the issue is one of the fee, then it makes sense to create a specialized license to reflect that business model," Swanson said. "However, everything they're doing as far as the sale—the retail side of the equation—fits within our general license."
City Council member Bret Weber is one of the council members who supports the change in Grand Forks' code. It's a "unique enough" business model, he said, that it deserves the city's recognition. And, he said, it's a marker of local vibrancy.
"Frankly it's one of the things I like to see when I visit a new town," Weber said, comparing it to other local cultural landmarks like coffee shops and bookstores. "What's the local beer like?"