8th Circuit Hears Minnesota Winery Law Dispute

MINNEAPOLIS (CN) – The Eighth Circuit heard oral arguments Thursday by two Minnesota farm wineries that claim a state law harms their businesses because it prevents them from using grapes, unfermented juices and honey from other states and countries.

Alexis Bailly Vineyard and The Next Chapter Winery sued the Minnesota Department of Public Safety and its commissioner Mona Dohman in 2017, seeking an injunction to block a statute that requires businesses with a farm winery license to produce their wine with 51% of raw materials that are grown or produced in the state.

The wineries argue the law restricts the types of wine they can offer, which limits domestic and foreign commerce and obstructs the local wine market. Both say they’ve been forced to purchase Minnesota grapes at higher prices than out-of-state grapes and that they’ve had to seek exemptions from the state when unable to meet the law’s requirements.

U.S. District Judge Wilhelmina Wright found in favor of the state last year, ruling that the wineries’ alleged injury is not traceable to the mandate because they chose to obtain a farm-winery license instead of a wine-manufacturer license which does not contain the in-state requirements.

The wineries’ attorney, Anthony Sanders of the Institute for Justice, began arguments to the three-judge panel and one judge asked if a different license would indeed solve the problem.

“No,” answered Sanders. “The holder of a wine-manufacturer license… couldn’t sell to retailers at all, which they currently do. They could sell to consumers if they use a majority of Minnesota grapes, which is, of course, exactly what we’re challenging.”

He also added that the wineries do not want to be contingent upon a one-year affidavit exemption.

Minnesota Assistant Attorney General Jason Marisam also commented on the license dispute, arguing that “Minnesota doesn’t offer the license in the way that they want it, but Minnesota is not constitutionally required to offer that license.”

A judge then said he believes the wineries’ argument is that if the license is offered, it must be done in a constitutional manner.

Marisam agreed, but then explained that the wineries have no standing to bring the claim in the first place.

“The primary theory that they advance is a pre-enforcement theory. The problem that they have is this law has been on the books since 1980. No farm winery has ever been penalized or threatened with a penalty. The Department of Public Safety, DPS, has not ever requested a record from a farm winery to determine whether they’re in compliance.”

A judge then asked what would happen if the wineries violated the statute.

“The record doesn’t establish that because it’s never happened. So Mike McManus is the DPS official in charge of enforcing it, and he was asked this during deposition, and he laid out typically what would happen… basically what he said is we would never know if they were doing it,” Marisam said.

In rebuttal, Sanders argued that “essentially what opposing council was saying is that this is a hard law for us to catch you on, so maybe if you break it – you’ll be okay. My clients can’t depend on that, my clients don’t want to violate the law.”

The panel included Judges Bobby Shepherd, Jonathan Kobes and Ralph Erickson. Arguments lasted about 30 minutes, and the judges did not say when they will issue a decision.

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