Merchants Can Get Beer, Wine Licenses

Merchants in downtown Duluth will be able to sell or serve beer and wine to their customers during open houses, special shopping days, art classes, spa days and on other occasions due to action by the Duluth City Council at its December meeting Monday (Dec. 12). But the businesses will have to obtain a newly created license to do so.

The downtown merchants had requested the privilege of serving complimentary beer and wine to their customers on such occasions. For the past several months the city’s Alcohol Review Board and the city council had struggled with coming up a way to allow this that would be legal since the State Revenue Department had ruled that the businesses could not just give the alcoholic beverages away. They directed the city attorney to draft ordinance changes that were voted on Monday night.

The council vote was 4-0 in favor of an amendment to the city’s Alcoholic Beverage Ordinance creating an ancillary alcohol sales license. This license may be obtained by businesses in the Central Business District (CBD) and Core Preservation District-Commercial (CPD-C) zoning districts only, which would include most of downtown Duluth. This privilege would not extend to businesses citywide.

City Councilwoman Marsha Bomar recused herself since she owns Chocolate Perks, which has a beer and wine license, in the CPD-C.

The ancillary alcohol sales license amendment contains the following provisions:

• Licensees may sell or serve a patron either two six-ounce glasses of wine per day or one 12-ounce serving of beer/malt beverage per day.    
• The sale of  alcohol sales could not account for more than 10 percent of the gross annual sales of the  business.
• Hours would be limited to current regulations for sale of beer and wine in the city. (Sunday sales or serving would not be allowed because the businesses would not meet the requirements for a restaurant as required by state law.)
• Due to accounting and excise tax requirements, if served complimentary, the “transaction” would have to be assigned a value, and merchants would have to keep records of the “amount” sold. Their records would be subject to monitoring and auditing by the city.      
• Licensees would be required to obtain and hold a state license for consumption on the premises and would be subject to all of the same application and training requirements as any other licensee (i.e. undergo a background check including fingerprinting, required to purchase the beer and wine from authorized wholesalers and pay excise taxes.)    
• Licensees would have to pay a onetime $250 application fee and an annual license fee recommended by city staff of $100 for beer, $100 for wine, and $200 for both.  

An amendment to the city’s Brown Bagging Ordinance concerning private parties was voted down by a 3-2 vote. This change would allowed an unlicensed business to possess, consume and serve alcohol at a private party in their establishment on four occasions annually if the business were closed to the public, no admission fee was charged, and business was not conducted during the party. 

Councilman Greg Whitlock made a motion to deny this amendment that was seconded by Councilman Billy Jones. Both expressed concern about the difficulty of monitoring the number of parties since the ordinance would apply citywide. The vote was 2-2 with Councilmen Doug Mundrick and Jim Dugan voting against the motion. Mayor Nancy Harris broke the tie by voting for the denial motion.

Mundrick, who supported the change, noted that under the city’s current law, a business can’t have a Christmas party and legally serve alcoholic beverages on its own.

“I’m as much in favor as anyone of businesses having Christmas parties, but I’m concerned about opening it up citywide,” Jones said. “It’s not enforceable,” Whitlock added.

Businesses can hire a caterer who has a license to serve alcoholic beverages at their parties.