ANNAPOLIS — State lawmakers will mull extensive testimony on a slew of brewing proposals that have the potential to set the course for the industry in Maryland.
More than 170 witnesses signed up to speak Friday before the packed House Economic Matters Committee about Comptroller Peter Franchot’s proposed “Reform on Tap Act” and other alcohol-related bills while the Senate Education, Health and Environmental Affairs Committee heard similar proposals in that chamber.
The most closely watched proposals all aim to respond to a divisive measure passed in the General Assembly last year that was designed to help woo a $50 million Guinness brewery to Baltimore County. The measure increased barrel limits for brewery taprooms from 500 to 3,000 per year, but also required brewers that sold more than 2,000 barrels on-site to buy the remainder from a wholesaler at a markup.
In the wake of that decision, Flying Dog Brewery in Frederick canceled plans for a new, $55 million brewery on 32 acres in the city, according to spokesman Ben Savage. The Department of Legislative Services estimated state revenue would increase by $15.8 million and local revenue would increase by $9.8 million if the expansion went through.
Like last year’s bill, this batch of proposals generated impassioned testimony for and against.
“We’re really looking forward to this being a discussion about the merits of free enterprise and the ability of our brewers to do what other brewers around the country are able to do,” said Kevin Atticks, executive director of the Maryland Brewers Association, in a phone interview before the hearing.
The dialogue included political sniping between some committee members and Franchot, who said the last bill was passed with “backroom deals.” Throughout the hearing, some legislators criticized Franchot for not enforcing all liquor regulations and pointedly questioned how much money Franchot had received from the alcohol industry.
He received substantial campaign contributions from that sector last year in cash donations, PAC donations and in-kind services, including $5,000 from Flying Dog, as well as other brewers, distillers, wineries, liquor stores and distributors.
The Reform on Tap Act, House Bill 518, would eliminate the “buy back” requirement as well as the cap on what a brewer can sell on-site. The measure would also, among other things, lift the limit on the amount of beer a visitor can buy on a visit, allow contract brewing and allow taprooms to be open the same hours as other classes of liquor licenses.
“Craft brewers are the manufacturers of the 21st century,” Franchot said in support of the bill, adding that they intentionally open in underserved areas, revitalizing them and creating jobs. They also spur the agricultural and tourism industries, he continued.
Frederick County Council members Tony Chmelik, Kirby Delauter, Jerry Donald and Jessica Fitzwater, along with other county officials from across the state, signed a letter supporting the comptroller’s proposal. Local chef Bryan Voltaggio testified in support as a way to promote Maryland products.
The Maryland Brewers Association supported the act but also championed legislation that essentially breaks out the various provisions of the act into separate bills as follows:
- House Bill 1015
- Senate Bill 839 would lift the limit on the amount of beer a brewery can sell in its own taproom and also increase the amount of beer that a brewery may from 22,500 barrels per year to 300,000 barrels per year.
- House Bill 1369/Senate Bill 867 would allow microbreweries and farm breweries to produce any amount of beer and increase the amount of beer a Class 7 microbrewery may sell for on-premises consumption from 4,000 barrels to 25,000 barrels each year and establish a 25,000-barrel annual limit on the amount of beer a Class 8 farm brewery may sell on-site.
- House Bill 1148/Senate Bill 1017 would increase the amount of its own beer that a Class 5 brewery can sell for on-premises consumption from 3,000 barrels to 25,000 barrels annually and repeal a requirement that a brewer must buy back its product from a wholesaler if it sells in excess of 2,000 barrels a year in its taproom.
- House Bill 1176/Senate Bill 1044 would allow breweries to offer samples to visitors outside of tours and events and also allow taprooms to be open longer.
Sen. Ron Young (D-District 3) withdrew related bills, Senate Bill 609 and Senate Bill 406, after the Senate Education, Health and Environmental Affairs Committee gave them an unfavorable report. Young said he believed the measures failed to gain committee support in light of the comptroller’s and industry bills also introduced.
Alcohol regulation task force
While brewers strongly supported the comptroller’s reforms, some committee members expressed skepticism about doing away with limitations on taprooms. Delegate Benjamin Kramer (D-Montgomery) and Delegate C.T. Wilson (D-Charles) both said they had concerns about the potential for increased alcohol consumption and associated public health risks. Franchot countered that the bills would increase the consumption of Maryland beer, not necessarily the consumption of beer overall.
Kramer criticized the comptroller for not including public health professionals on his 40-member Reform on Tap task force. Since the comptroller is charged with regulating alcohol, Kramer said, it was inappropriate for Franchot to champion measures that could increase the availability of alcohol. Kramer proposed House Bill 1316, supported by Mothers Against Drunk Driving, the Maryland Public Health Association and other groups, to establish a task force to study alcohol regulation in the state.
Delegate Mary Ann Lisanti (D-Harford) noted that a similar bill made it through the House last year but didn’t get to the Senate before the end of the session.
The brewers, however, focused on the economic impact of the industry. Maryland brewers have a $637.6 million impact, support 6,541 jobs with $228.3 million in wages and $53.1 million in state and local tax revenue, according to a 2016 impact study from the Bureau of Revenue Estimates, which serves as economic staff for the comptroller and staff for the state’s Board of Revenue Estimates.
The House heard another bill, opposed by the Brewers Association but cosponsored by the committee chair Delegate Dereck E. Davis (D-Prince George’s) and sponsored by committee member Talmadge Branch (D-Baltimore), that would, in practice, undo last year’s reforms for all breweries except Guinness. House Bill 1052 would reduce the amount of beer brewers can sell on-site from 2,000 to 500 barrels per year, except for a brewery producing 1 million barrels or more. High-output breweries would keep the current 2,000-barrel limit with 1,000 barrels more available to buy back from distributors.
“We think it’s backwards-looking and it turns back the clock at a time when we believe all eyes should looking forward,” Atticks said.
Savage said the “schizophrenic” approach of the General Assembly passing a bill and trying to undo it the next year created and unacceptable risk for brewers in the state. Chmelik said he saw it as an “anti-free enterprise” law that, if passed, would hurt the county’s many brewers.
There were seven active taproom licenses in Frederick County as of January, according to records from the Frederick County Board of License Commissioners. The city of Frederick holds a fairly large share of the state’s brewing licenses: 10 of the state’s 71 licensed breweries are in the city.
While several brewers including Carly Ogden, of Attaboy Beer, spoke out against Branch’s proposal, the supporters of the bill said they were seeking to help the industry by undoing the problems that caused controversy last year. It put them in the unusual position, Wilson said, of industry representatives being against both a bill they didn’t like as well as a bill that sought to undo it.
Davis expressed frustration with the rhetoric around the bill that characterized it as a job killer. He said the Legislature was trying to strike a balance between brewing jobs and the bar and restaurant industry. He noted that it was only recently that taprooms were allowed in breweries.
“It’s our work that created your industry. ... The rhetoric out there that is being spread by some is ridiculous,” Davis said.
Other bills aiming to support the craft beer industry included a measure from Delegate Carol Krimm (D-District 3A) that sought to make the relationship between brewer and distributor more flexible.
House Bill 1222 would shorten the amount of time a brewery that produces 300,000 barrels of beer or less has to wait between notifying a distributor that it intends to end its agreement and ending the agreement from 180 days to 15 days. It also removed the requirement that the brewer show good cause before ending the contract.
Ogden spoke in support of the proposed change saying it was necessary before her business could grow. She added that she and her husband moved to Maryland in order to open the brewery and had invested around $500,000 in it after saving up for five years.
“This is about jobs. Maryland jobs. Putting Marylanders first,” she said.