LBO: brewer, winery and micro‑distillery credits help businesses but net effects remain uncertain

The Legislative Budget Office presented Dec. 10, 2025, a bundled evaluation of three excise‑tax credits for small breweries, small wineries and micro‑distilleries, concluding the credits likely support small alcohol producers but that the extent of the effect cannot be established as causal from available evidence.

Jordan Peoples of the Legislative Budget Office introduced the review and said LBO staff prefilled background fields and grouped the three credits for efficiency because they share an objective: to "promote development and survivorship for small breweries, small wineries, and micro‑distilleries." Vlad Florimo, an LBO economist, reviewed the statutory mechanics: the small brewer credit (enacted 1985) provides $460 per barrel up to 25,000 barrels; the small winery credit (2017) provides up to $36,275 for qualifying small wineries; and the micro‑distillery credit (2014) provides a per‑liter credit for in‑state distillers producing below a statutory threshold.

LBO staff reported counts and claim levels as of Sept. 25, 2025: 229 breweries, 121 wineries and 49 distilleries, and observed that some credits go to out‑of‑state producers (about 15% of brewer credit dollars, LBO said). Using three methods — a producer survey, Department of Public Safety license data, and comparisons with other states plus BLS data — the LBO found mixed evidence. In the producer survey, roughly 78% of respondents described the credit's impact as "very positive" and many said the credits supported survival and competitiveness. DPS licensing data show Minnesota alcohol producers have average survivorship of about 7.8 years versus 5.8 in five comparable states LBO examined; the office said that difference is notable but cannot be attributed solely to the tax credits.

The LBO also ran input‑output modeling to estimate potential economic magnitudes. For a 2025 credit cost of roughly $2.2–2.3 million, staff reported the model produced about 14 jobs and $1.7 million in total economic output. An alternative scenario that would have repealed the credits and reallocated the revenue to general government spending produced a modeled outcome of about 23 jobs and $2.5 million in output. LBO staff and a director responding to questions said model outputs are illustrative of potential magnitudes — not direct cause‑and‑effect proof — and that government spending patterns often generate different sectoral job impacts.

Representative Robbins pressed on the jobs math, noting that, by the LBO numbers, the modeled jobs correspond to roughly $158,893 per job and asking LBO to run an additional scenario modeling the effects of returning the foregone revenue directly to taxpayers. Senator Bill Weber asked whether Minnesota has experienced a net loss of microbreweries in recent years; LBO staff said they can analyze licensing data and will follow up with the commission.

LBO staff said the credits likely support small producers but that the evidence does not establish the number of businesses that would have failed without the credits and offered several possible modifications for legislative consideration, including targeting credits to outcomes beyond production (jobs, capital investment), reducing administrative filings for businesses, and increasing awareness among eligible producers.

The commission will receive fillable evaluation forms for these credits and others; members will return their assessments to LBO, which will aggregate anonymized results for public deliberation and votes scheduled in January.