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After Minnesota in 2013 became the only state in the nation to create a special regulatory regime just for rare coin dealers, many stopped doing business in Minnesota, while others set about trying to repeal or drastically change the law, which they said was too onerous.

The dealers failed to persuade regulators for months and even after threats of lawsuits, so they chose another tack: They hired a blue-chip lobbying firm to change the law. They were rewarded with a legislative victory in May that will give them some regulatory relief starting Friday, when the new law kicked in.

The new law exempts businesses and collectors that sell less than $25,000 in rare coins from the tough 2013 standards, clarifies who needs to comply and eases regulations for many small businesses that sell at coin shows.

The coin dealers’ victory illustrates how to do business at the State Capitol even with a polarized Legislature prone to stasis: Hire lobbyists with relationships, line up key lawmakers, neutralize the opposition.

The story of the coin dealers and their legislative adventures began when some dodgy dealers used the aftermath of the financial crisis to exploit desperate Minnesotans — senior citizens especially — by overpromising and underdelivering on investments.

The Legislature and specifically Rep. Debra Hilstrom, DFL-Brooklyn Center, whose day job is prosecutor, swung into action in 2013, creating a tough new regulatory structure intended to protect consumers.

The law required criminal background checks for dealers and banned from the industry anyone convicted of a financial crime in the past decade.

Dealers also must post a surety bond that can be tapped by consumers in the event of misbehavior. Dealers who violate the law could be charged with a misdemeanor and fined $10,000 per incident.

As soon as the original law passed in 2013, small local dealers said it was overly burdensome, while coin dealers around the country said it threw too wide a net — encompassing anyone who dealt with Minnesota consumers — creating confusion for dealers from here to Florida.

They quickly went to work on it.

“It was our highest legislative priority during the past 18 months,” said Philip Diehl, former director of the U.S. Mint, president of a Texas-based precious metals company and the incoming chairman of the Industry Council for Tangible Assets, a national trade association for the rare coin and precious metals industry.

Diehl said the problem for many companies was that the law, which applied to anyone selling to a Minnesota consumer, was unclear about who constituted a Minnesota consumer.

“We pulled out of business in Minnesota for the same reason a lot of people pulled out,” Diehl said of his company, U.S. Money Reserve.

Some dealers’ first instinct was to be aggressive on the lobbying front.

“They came in with a hardball approach,” said Ross Corson, a spokesman for the state Commerce Department, which was charged with enforcing the law.

Industry representatives talked repeal and threatened litigation, saying the law violated the Constitution’s commerce clause because only Congress — not the states — can regulate commerce from one state to another.

“We said, ‘There’s nothing to talk about,’ ” said Corson, who added that commerce officials feared a return to a much looser market for rare coin dealing, a multimillion-dollar industry in the state.

The GOP-controlled House included a repeal provision in a budget bill funding the Department of Commerce in 2015, but it died there.

That’s when some in the industry decided to change course.

Diehl from the national trade group said they began discussions with the Commerce Department on statutory language that would make it easier to comply. The biggest problem was clarity, he said.

“We answer the phone,” Corson said, meaning that commerce officials were willing to listen. Talks went on for months as the 2016 session neared.

That’s when the coin dealers brought in the big guns.

“We needed guidance on who to talk to, the appropriate people to get on our side. Lockridge was crucial,” Diehl said, referring to Lockridge Grindal Nauen, a powerhouse lobbying firm with relationships on both sides of the aisle in both chambers.

Hilstrom — who authored the original tough statute — was included in discussions.

Sensing the bill had momentum at the Capitol and in the administration, Hilstrom said, “Sometimes you minimize the damage.”

“I think we were a value-add because of our bipartisan approach,” said Ted Grindal of the lobbying firm.

It worked with legislative leaders, key committee chairs, regulators and other administration officials.

Grindal said the bill is a good example of how the Legislature can work effectively. All parties were consulted and given some say in the final product, and the bill was heavily vetted before reaching legislators.

Commerce officials were satisfied, Corson said, because the bill continues to protect consumers and the marketplace, gives the agency clarity on how to enforce the regulations and expands the scope from merely “coins” to other valuables like ingots, closing a major loophole.

All that work wasn’t cheap.

The Industry Council for Tangible Assets raised $160,000 for the lobbying effort, Diehl said.

Grindal said his firm’s fee was “significantly less” than that.

J. Patrick Coolican • 651-925-5042