Consider Off-Sale Liquor License at 13939 Saint Francis Blvd NW; Case of Cloud X Vapes

Purpose: 

The purpose of this case is to consider an off-sale liquor license for CLOUD X VAPES.

Background: 

CLOUD X VAPES has properly applied for an off-sale liquor license at 13939 St. Francis Boulevard NW, Suite 200. Police Chief Katers has completed the background investigation and found everything to be in order. This establishment is currently licensed to sell tobacco & products related to electronic cigarettes.

The City Council tabled action on this request at a recent meeting, citing concerns with co-locating off-sale liquor sales and tobacco sales, specifically vaping/eCigs. The Council expressed a desire to consider updating regulations pertaining to the co-location of these sales. 

Notice of the public hearing was published in the Anoka County Union Herald on Friday, May 1, 2020 and public hearing was held on May 26, 2020.

Attached is the House Research file which provides some good information on the current interpretation and the ability of cities to be more restrictive relating to the the type of products that could be sold at liquor stores. 

The City Attorney has consulted with the State of Minnesota and the State on this topic. The State of Minnesota response is as follows. In short, the State of Minnesota states that municipalities may allow the sales of off-sale liquor and electronic cigarettes in the same location. However, the business may not sell off-sale liquor and products such as CBD in the same location. 

As you know, Minnesota Statute 340A.412 subdivision 14 lists items that may legally be sold in an exclusive liquor store in Minnesota.  The statute does allow the stores to sell tobacco products.  Minnesota alcoholic beverage statutes chapter 340A and Minnesota Rules Chapter 7515 do not define the term tobacco related to its allowable sale in exclusive liquor stores.  This has tasked our division with how to address the question of what is tobacco for purposes of enforcing the statute.
 
We have looked to tobacco license regulations for clarification of products that can be sold by holders of a locally issued tobacco license.  See Minnesota Statute 461.12   https://www.revisor.mn.gov/statutes/cite/461.12.  Subdivision 1 covers tobacco licensing by a local jurisdiction.  The subdivision includes electronic delivery devices such as e cigarettes. 
 
Local municipalities do issue tobacco licenses to exclusive liquor stores, and it appears that the tobacco license allows for the sale of e cigarettes.  I have attached a pdf file from the Minnesota House of Representatives House Research last updated in June of 2018 where e cigarettes are licensed and regulated as tobacco related devices.
 
The concern I have related to an e-cig operation trying to become an exclusive liquor store would be related to other items they might sell in their store, such a CBD oils and related products.  There are many products these stores sell that would not be allowed in the exclusive off-sale liquor store.
 
It is going to be a business decision on the part of the business as to whether or not they limit items they can sell by combining the current store with a liquor store or whether they open a liquor store to operate exclusive with no public access to the e-cig store.

Based on this information there are a number of paths that City could choose to take on this matter. The City Council should consider the following options.

1. Approval of the license as presented based on existing City Code provisions.
2. Approval of the current license as presented and direct staff to draft an ordinance further defining "tobacco products" permitted for sale at off sale liquor stores to be implemented prior to renewals of licenses next year.
3. Table action on the license and direct staff to draft an ordinance further defining "tobacco products" that would restrict the sales of off-sale liquor and certain tobacco products such as eCigarettes in the same location. 

Staff does note that there would be some challenges in enforcement of the above, but not out of the ordinary. Of particular note, as part of regular audits of the liquor license and tobacco license, Staff would need to ensure that the business is not selling products inconsistent with these licenses such as CBD products. 

This case is being handled as part of normal Staff duties. The Applicant is responsible for an Application Fee. 

Staff needs clear policy direction on how to proceed. If the City Council does not desire to amend City Code placing additional restrictions on the sales of off-sale liquor and electronic cigarettes in the same location, it should approve the current license. If the City Council does desire an amendment to City Code to place additional restrictions, it should table the current application pending the outcome of that process. 

At this stage, Staff would not recommend a denial of the Application. As noted above, City Code would need to be amended first giving the City Council the authority to deny this application. 

Motion to approve/deny/table an off-sale liquor license for CLOUD X VAPES at 13939 St. Francis Boulevard NW, Suite 200.

Note - if the motion is to table action, the motion should also include direction to begin a process to amend City Code.