I'm Ken Buler and this is In Business, a weekly news discussion and feature presentation and we thank you for joining us.

Make mine a fit was the last advertising slogan for ficker beer brewed right here in this big copper kettle since 1881.

The 10-second TV ad voiced by John Leforge showed a bottle of beer being poured into a glass and those words make mine of Fitkers.

Well, the bottle ran dry in 1972, ending what was Minnesota's longest continuous brewery.

Oh, there was that little interruption.

It was the 18th Amendment, the Volstead Act, that dried up America in 1920 and began a 13-year failed experiment called prohibition.

And we all know how that worked out.

Well, there's a new prohibition on the horizon.

The one passed as part of the bill that ended the longest government shutdown in American history.

The amendment would basically outlaw the fastest growing segment in the adult beverage market.

It was introduced by Senator Mitch McConnell, a Kentucky Republican who's retiring.

This new prohibition is set to go into effect on November 12th of this year.

And that's our program this evening on In Business.

Welcome to In Business.

I'm Ken Beer.

Thank you for joining us.

Fitkers was one of only a handful of breweries that survived prohibition and returned to brewing beer in 1933.

To make it through, the owners turned from beer to candy and soft drinks.

They opened a boxing ring, a training gym, and found creative ways to keep the business alive.

That kind of strategy probably won't work today if a new federal ban on hemp infused beverages goes into effect later this year.

Tonight, we're taking a closer look at the proposed federal hemp ban set to begin, by the way, in November, and what it could mean for breweries and beverage makers here in the Northland.

To learn more, we'll tour a local brewery and see firsthand how THC infused drinks are made, and what a ban would mean for one of the region's largest brewers.

Our discussion continues with a local cider house and a representative from the Minnesota Craft Brewers Guild.

And later, we'll take you inside an underground speak easy in a most unlikely place.

A reminder of how Duth kept spirits high by keeping spirits flowing during Prohibition.

Our first stop though, right here in Duth.

This is in business.

Uh we're in the western sections of Duth, Minnesota, beautiful Lincoln Park, and we're with Brian Tonus.

Brian is the guy that had the Ben Paddle in Ben Paddle and is one of the founders and CEO and one of the people that worked on producing THC drinks.

Thank you for letting us come by and tell us how all this works.

Yeah, so we're in the uh main production facility here at Van Paddle.

Uh you know, about a half a block away from our tap room uh in the original space, but we first opened 13 years ago.

Um, we produce beer here, but we also produce on beverages.

Um, it's a larger and larger percentage of what we produce as the industry changes, as the beer industry fluxes and everything.

And so, we produce everything here.

Basically, the process starts off over here in the brew house, just like when you're producing beer.

Um, only we're just producing water as the base stuff.

So, we can add flavor ingredients, we can add sugar, we can add various other things.

Um, so think of it as kind of like making soda, right?

If you pop So, we start off on the brew house.

Uh we boil the water, the filtered water that we use to use the same water to make these beverages as we do our beer, 100% Lake Superior water.

And so uh we filter it uh we boil it to sterilize it.

And at that point in time, we go through the process of basically trying to remove all the oxygen from it just like a lot of other beverages that are made cuz oxygen will kill any beverage that you're putting in new package or stuff.

So that's what happens here.

That part of the process takes roughly about an hour to an hour and a half.

Um, and then from there we move on down and we cool everything down in a uh heat exchanger.

Um, and then it rolls down this process through here.

We start injecting uh CO2 into it, start removing uh a little bit more of the oxygen lidic.

We can also do uh uh pH adjustments to get the beverage to where we want it flavor-wise.

This not only helps with shelf stability, but also uh the flavor side of the beverages as well.

What part of the process then is the uh THC ingredient added?

So the TFC uh is added after we make it through this entire part of the process.

We come down into these tanks right here which are the bright tanks.

This is where the process differs a little bit from beer.

Uh beer we produce basically word which is unfermented beer.

We add yeast and we ferment it for anywhere between 2 to 4 weeks depending on the beer we're producing.

We skip that entire process for this beverage.

And so the beverage goes right into these tanks.

Uh we scrub them to make sure we remove as much oxygen as possible.

uh carbonate them.

Uh we testing throughout the entire part of the process.

Everything's done in a food safe manner uh like we do all of our other beverages.

Um and that is when we add the flavoring and then the last thing we do is we add the THC and you know there's some other you can add CBD, CBN uh uh TBG um into it.

And so what we do is we take we take a sterilized uh brink and we add the uh the emulsion into we do all the calculations to make sure that we hit the potency exactly where it needs to be.

Uh we take it and we uh basically mix it into the tank, stir the tank up with everything in there.

We have a mixing protocol that we go through.

So it's a brick of the K product.

We get it in liquid.

You get so so what the uh the processors that we use uh we have two of them.

They're located in the Twin Cities that we use.

They use predominantly Minnesota Wisconsin based hemp.

Um, so they take the raw flour from the hemp plant and they process it, they extract out all the oils and then they distill that into the different canibonoids you can get out of hemp.

Small percentage of it is THC.

Uh, they take that, they distill it, separate it out and then they put that through an emulsifying process.

Uh so they combine it with different emulsifiers that are food based uh food grade emulsifiers to basically make the particle size as small as it can possibly be so it stays in solution within the beverage.

So we we do that and we uh infuse everything in there and at that point once we get the infusion done that's when we take samples out or we send them off to independent labs to make sure that we hit our dosing correct.

Um, one thing we did find out is that certain materials, raw materials that you add flavor-wise in there can interact the overall with the uh the product and and decrease the potency a little bit.

So, sometimes we need to give things a little bit of a bump to make sure that we're at the proper dosage for what's on the cans, the beverages we're producing.

Brian Tonis, one of the founders of Ben Paddle, it's CFO.

And your brewing experience goes back a long way.

Yeah.

Roughly 25 years.

And now you're in charge of production for Ben Paddle.

How did you ever get into doing THC products?

Um, you know, it's I I definitely enjoyed the products back in college.

Um, and uh, being in the beverage industry, uh, when the laws uh, changed in 2018, we started to look at it um, as a uh, as a beverage company.

Um, and then, you know, as the laws changed in the state of Minnesota, we were ready to dive straight in.

You know, the uh, the industry, the beer industry specifically has uh, has changed uh, quite a bit since co.

So, production has been down a little bit.

uh people have been exploring other you know other beverages other other means of relaxing and uh we decided to jump in jump in head first and now if this prohibition goes into effect what does that do to Ben paddle well uh production of least beverages uh makes up about 40% of our revenue as a company and so if prohibition does go through we are going to look drastically different as a company if that happens uh means layoffs uh means maybe even possible closing our production facility um you know, laying off a bunch of employees.

Uh I don't really like to think about it, but it's definitely something we need to look at as uh as the deadline draws near.

Welcome back to In Business.

To continue our conversation about the potential impact of a federal hemp ban, we're joined by Adam Ruland, co-owner of Wild State Cider, and Bob Gallagan, director of government and industry relations for the Minnesota Craft Brewers Guild.

Thank you both for being here.

Bob, uh, you started with the brew pubs back in the day and the guild is growing now in 26 years to over 250 members.

If a ban on hemp infused beverages goes through, how does that change your industry?

Uh, rather drastically.

Um, I I do want to be very clear that obviously not all of our members are are operating in this space.

Um, you know, numbers are kind of hard to to come by, but we estimate about 70% of them uh are.

Some of them it makes up a a little bit of their uh production or or sales about 10% but there are a fair amount of folks out there where it makes up a majority of of what they're making now.

Um so it would it would greatly impact uh the the industry and and a lot of I think one of the more surprising things is some of the the names and the players that it would really heavily impact.

It's some of the larger and and kind of more historic breweries um who are who are in this game already.

So, we'll come back to that a little bit more in a minute, but um I want to know where were you when you found out about this potential ban.

And were you surprised?

Yeah.

Uh I was actually up here in the Northshore uh trying to take some time and and disconnect uh when all of a sudden Mitch McConnell attached this to an appropriations bill, which is not necessarily how we were anticipating this happening.

Um I will say, you know, uh we we passed language in 2023 and uh you know, I go to DC at least once, twice a year, and we've been trying to have this conversation.

We've been trying to promote the Minnesota model and and uh kind of you know show people the success that we've seen here in Minnesota.

It's always been a topic of discussion uh that we know was going to happen in Washington as to how this was going to play out and what it would look like.

So the the topic of actual hemp ban has always been kind of hovering in the air and and how do we deal with it.

Um but having said that again kind of the pathway that it took uh was not preferable and that kind of came out of nowhere and threw I think everyone in the industry for a a bit of a loop.

Adam, you started Wild State Cider in 2019.

When you put that into motion, did you ever think you'd be making uh hemp infused products?

Not at all.

It wasn't wasn't on the radar for us.

And we actually got into the industry um you know, very excited about cider becoming a national cider business.

And when the uh Minnesota regulated these products um prior to 2023, we started seeing some activity.

And you know, we're very cautious about jumping onto a trend and and having it fizzle, but we saw more and more people doing this um and realized maybe there's something here.

We need to explore it further.

And I believe the product name is Birdie.

Birdie.

Yep.

And we've got a new product called Otter.

So there's two brands now coming out of our operation.

And how has that grown to be a percentage of your overall business uh with the cider?

Every year uh since we started has been an increasing amount of our business.

It's the fastest growing part of our business and we'll be at just under half um finishing off 2025.

So this ban would have a drastic effect on you too just like we heard from Ben Paddle.

Yeah.

You scale up your business for the volume you're producing and to have half of your business sort of at risk is a huge concern as you can imagine.

We are on in business and we're talking with Bob Galligan from the Minnesota Craft Brewers Guild along with Adam Ruland from Wild State Cider right here in Duth.

And Bob, according to the guild, the Minnesota brewers rank 11th in the nation as far as the economic impact they bring to the state, in this case Minnesota.

Without THC products, what happens to that ranking and the breweries that make it happen?

So, really, really good question, Ken.

Actually, um the the actual number that that uh ranking comes from uh is all through TTP reporting.

Uh and all we have to report to the the federal government is going to be our beer because that's alcohol uh production.

Currently, we don't have to report uh THC numbers to to anybody.

Um so, as to how that would all shake out, it would be interesting to see.

But I will say, you know, again, with some of the larger players uh having to kind of pull back on production or um you know, having to lay off staff and whatnot.

I would imagine we would see that number um you know, dwindle a little bit.

Having said that, you know, Minnesota has always punched above its weight uh when it comes to the actual craft beer numbers.

um I think we would continue you know seeing us in that range but having said that things would definitely change and I think we would definitely see some some shifts for sure in production numbers.

One of the things that I would like you to explain is if this hemp ban goes into effect uh how can that be in Minnesota where a state that's already approved cannabis sales?

Yeah.

Um so the thing that Minnesota did uh the very first state to do so actually uh was we actually crafted language that very specifically separated hemp from cannabis.

um you know, it comes from ultimately the same plant.

It's just hemp has a lot less THC uh product in it.

It's kind of a younger cousin, I guess, in in in some ways.

Um and so by addressing that actual uh difference in definition, that allowed us to operate in a a whole different model um because it was federally legal.

So when you step into the cannabis space, you then are subject to like tax provision 280E, which says you can't write off any of your business expenses.

Uh you know, we hold a TTB license.

uh we could not hold that TTB license any longer because it's a a federal uh illicit product now that we would be operating in.

So basically what this ban does is it it takes that um legal definition of hemp and it kind of throws everybody into cannabis at that point.

There's really no no point in staying in the hemp market at that one.

And does this potential ban affect other products that are hemp made and what might they be?

Yeah, it it uh impacts everything hemp based.

Uh I think one thing that not a lot of people realize um is that actually part of the reason why even uh cannabis geneticists can can work and and work in their seeds and uh ship those across state lines is because it's technically hemp.

It doesn't have a high THC potency.

So the genetics market on the cannabis side would be absolutely decimated.

Uh and also the minor cannabonoid market.

So CBD, CBN, CBG, um all of those would be great greatly impacted if not borderline impossible uh to produce under this this new language.

So there are other aspects beyond the actual hemp beverage world that this really heavily impacts.

Let's go back to Washington DC for one more quick question, Bob.

And that is there are two bills as I understand it that have already been introduced in the House.

One uh would reverse altogether the uh the ban and the other one would uh delay it two years.

Um which one do you like best or better yet what's your legislative strategy?

Uh our legislative strategy is get it done.

uh we're going to see what that looks like uh per se, but ultimately we are strong champions of of regulation.

Um I mean the main concerns that people have with these products are completely valid.

We want to make sure that children don't have easy access to these products.

We want to make sure they're correctly labeled, correctly tested.

Um so we want to we want to see a bill of some sort that that really solidifies that and allows people to feel comfortable uh where they p purchase these products no matter uh where in the country.

Um, having said that, if we also just need a little bit of time to really figure out what that regulation looks like, we certainly are not opposed to that.

Um, the endgame ultimately remains the same and we we're anxious to get to work on what it looks like.

Adam, what are your customers saying about this?

Are they familiar with it?

Is it something they talk about?

Do you hear from uh your uh guests what they're saying?

What they're saying about this?

Yeah, you know, there's a lot of um attention that we see as people in the industry to this ban and what's happening, but surprisingly, you know, I think there's so many other things going on that are attracting people's attention politically right now and just in general that I don't think customers are fully aware of what's about to happen and the broad impacts that this has, not just on not being able to get their beverages a year from now when the ban goes into place, uh, but also other products that they might be purchasing and not have any idea that they could be impacted.

How do you personally feel about this?

Are you worried?

Uh, absolutely.

You know, there I have employees there.

This is my livelihood.

There's so much on the line.

So, you know, for us, it's important that as a business, we think that uh we're positive that change will happen.

A delay or a bill regulating further.

Um, but at the same time, we were hopeful that a ban would never happen, and here we are.

So, as a business, you know, we're certainly looking for ways to diversify.

We're not going to put all our eggs in this basket.

We have a year's time to figure it out.

Uh but obviously we would love to continue growing this segment of our business.

And there is also a uh like the craft brewers association or guild.

There's also a cer association.

I assume they're working on this too.

Yeah, there's a cider association.

There's only a few citeries in Minnesota of um a certain scale.

So there's a different group actually called the Minnesota Hemp Beverage Producers Association.

This is a new group that's focused on, you know, the Brewers Guild has a broad membership base.

We are members even though we produce cider.

Um this hemp beverage group is very specific to people that are manufacturing hemp products and we have state issues that we're focused on but obviously we're very focused on our existence you know being being around in in a year from now.

Bob, one of the things that's been talked about is and you said it earlier Minnesota is a leader in the regulation and that is one of the things that maybe that two-year postponement would allow the federal government to set standards.

uh explain a little bit about Minnesota's legal environment and what the regulations are that may be adapted nationwide if it works.

Yeah, and there's a lot of discussion to be had uh in Washington DC on a number of issues, but obviously in Hempu uh as to what what regulation might look like.

I think at the end of the day, everyone wants these products to be 21 plus uh uh marketplace available.

I think everybody does want some sort of potency cap cap.

what that cap looks like I think is is up for discussion and people have differing views but ultimately you know we want to make sure again that that whatever the consumer is purchasing they know uh what they're purchasing that ultimately I think is is the end game um and we just want to see ultimately regulation we we know that you know as as this whole entire episode is focused on we know prohibition does not work we know that regulation does um and so really kind of not copy and pasting but really taking a step from the alcohol industry as to how we have regulated this um and how we report it and how we test it I think is in is crucial and I think really important and I think a a really good stepping off point is the Minnesota model.

The Minnesota model was uh crafted how uh a lot of conversation and a lot of drama uh as most large bills are.

Um uh ultimately in in 2023 when the cannabis bill was reintroduced um it was kind of known that that something was going to move just because the the Democrats had the trifecta.

Um, we wanted to make sure that just hemp wasn't left out of that uh that language, especially because in 2022 there was a bill that kind of opened the doors uh for Minnesota producers here in the state.

That is part of the reason why a lot of our breweries kind of stepped into that uh that space.

And then our legislative priority number one is always don't lose any rights you're currently granted.

Uh so the uh the the hard work then fell on our shoulders to actually get regulating uh because we wanted to make sure that we were protecting our ability to do this.

So, we worked with a lot of stakeholders, including cannabis folks um and other alcohol folks uh in trying to find what what the Minnesota model would look like.

And like I said, we did not get it perfect.

We are well aware of that, especially after this licensing period in October.

Uh but having said that, again, I think it is a good stepping off point.

Bob uh Gallagghan is uh with the Minnesota Brewers Guild and we thank you for being here.

Uh Adam Ruland is one of the co-founders of Wild State Cider here in Duth.

We thank you both for coming.

We know that both Minnesota senators Amy Clolobashar and Tina Smith have come out in favor of reversing section 781 banning THC beverages and other hemp infused products like gummies, edibles, and certain other concentrates.

We reached out to Congressman Pete Stalber's office here in the northern part of his district and also at his office in Washington DC for a comment and have yet to hear back.

Before we head to tonight's final story, here's a quick look at some top business news from across the region.

Douglas County officials are considering higher penalties for businesses that fail to renew required licenses on time.

The county's health board has recommended increasing the late fee from $85 to $125, citing a sharp rise in late renewals after the past several years.

The proposal, though, still requires additional approval by county leaders.

The city of Duth has been awarded 11.2 2 million in federal infrastructure funding to rehabilitate the aerial lift bridge.

The grant brings the city close to full funding for a $20 million project that will replace walkways, repair the bridge deck, and extend the life of one of Duth's most iconic landmarks.

On the Iron Range, Hibing Tacanite will lay off 45 workers in February.

The Cleveland Cliffs operated mine cited restructuring and operational needs for the job cuts which include both hourly and salaried positions.

And in Hermantown, the city council has approved a permit for a new cannabis cultivation facility.

The indoor grow operation will be built near Highway 53 and will supply a Duthbased retail location.

During Prohibition, businesses were forced to adapt or disappear and duth found its own creative ways to survive.

We started our program this evening talking about a new form of prohibition and we're going to end with a look back at the original Great American Experiment.

To do that, we visited a very trendy place today with a history of being a very trendy speak easy back in the day.

Duluth was dry long before the passage of the Volstead Act.

It was July 1st, 1917 and Duth went dry.

Now, an earlier law already had forbid the sale of alcohol to women.

Now, Superior, they got into it real early.

1915, the city of Superior decided to give up the booze, but Superior's in Wisconsin, so the idea only lasted less than a year, and they repealed that law.

But the law did come into effect nationwide, and Duth Superior, they were already experimenting with being dry cities.

Now, of course, it didn't end drinking.

It just went underground.

That's why we're here in the Ralph Skellar in the basement of one of the Loo's historic buildings because as I said drinking didn't stop.

It just went underground into the basement.

And in the basement of this building built in 1889, kind of important.

And why?

Well, because in the first year of Prohibition 1920, John Murphy is arrested.

He's indicted.

He's tried.

He's convicted of smuggling booze.

And why is that important?

Well, you see, John Murphy at the time was the chief of police.

His office was right upstairs.

Prohibition wasn't for the rich.

Take the example of the Kitchie Gami Club just down the block.

Downstairs in the basement of the Kitschy in the tap room, there were little individual lockers where members could hide their own stash of hooch and then have it for any special occasion they wanted, which could be any night of the week.

Up in Bo on Minnesota's Glorious Iron Range, and CBS did a story on this a couple of years ago when they were remodeling what is today Annabelle's antique mall.

In the basement, they found a secret passageway, a tunnel that connected to another building next door.

Why?

Well, because back in the day when that was a hardware store, there was a speak easy in the basement.

And that tunnel, the perfect escape route when the feds came to crash the party.

Watertown, South Dakota, took that to a whole new extreme.

They used the steam tunnels under the entire downtown to hide hooch, move booze, and have a party, and of course, evade detection.

Minnesota has a lot to do with prohibition.

Mitch McConnell of course introduced the possible new prohibition.

But in Minnesota, ah we got Mitch beat.

We had Andrew Volstead after whom the Volstead Act is named.

He was a seventh district Minnesota congressman and the abolitionist of prohibition.

He was the prohibition prohibitionists.

And even after the bill was passed and bared his name, when it was finally repealed and he went back to private life, he went back to busting booze.

What'll happen this time?

I already said there's a bill that's been introduced that would extend the deadline past November 12th for the imposition of this bill.

What will happen?

Well, we'll wait and see.

I'm Ken Miller.

Thanks for watching In Business.

If you missed any parts of tonight's show, you can always watch it at pbsnorth.org or listen on Mondays at 5:30 on the North 1033.

Thanks again for watching and until next time, let's take care of each other.