Let’s Get Caught Up, Shall We?

Over the weekend, a new version of House Bill 1283 passed over to the Senate. The problem? It’s bad for Maryland craft beer – very bad.

It’s to the point that, while Diageo/Guinness is happy action has been taken, they also have concerns about the bill’s current state, as it goes against their original intention to elevate the beer industry of Maryland as a whole – not just for themselves.

Heck, even an anonymous employee of a local wholesaler thinks there’s a problem.

Enter Stage Left, Maryland Comptroller Peter Franchot

This afternoon, I had a chance to speak with Peter Franchot, Maryland’s Comptroller, to get his take on the situation. (What’s a comptroller? They’re kind of like the CFO of a state, and their duties include the oversight of alcohol manufacturing, as well as regulation and taxation.)

Comptroller Peter Franchot (right) speaking at the kickoff of FeBREWary – Maryland Craft Beer Lovers Month – earlier this year. Franchot is accompanied by Kevin Atticks of the Brewers Association of Maryland (left) and Governor Larry Hogan (middle).

Given Franchot’s track record of being supportive of Maryland craft brewers, it should come as no surprise that he has very strong feelings about what’s happening.

In this interview, he shares what he thinks of the current version of HB 1283, what we should do about it, and who really stands to gain from the “back room” dealings that brought us to this point in the first place.

Below is a transcript of our conversation.

Question: As I, and others close to the industry know, your relationship with Maryland craft beer is not new – but for those who are unfamiliar, how would you describe it?

Comptroller Peter Franchot: I’m a huge champion of the innovative entrepreneurs that are represented by our vibrant craft brewing industry. Many of them are young people who are highly-skilled, who are bringing new products every day to the forefront. They’re creating tax revenue for the state of Maryland. They’re creating jobs for the state.

More than that, they’re also giving back philanthropically and strengthening communities.

Question: With that in mind, how do you feel about what’s happening right now with the revisions of House Bill 1283?

Franchot: As it stands currently, HB 1283 is a bad bill. It’s not a compromise. It’s not a meeting in the center. It’s not a well-intentioned effort. HB 1283 drives a stake through the heart of the craft brewing sector in Maryland.

And, it’s obvious by the way. It limits operating hours – which makes no sense – and significantly curtails the ability of these craft breweries to complete their business model.

I think the bill overall – and I don’t mean to overstate it – but the bill overall is a travesty.

It’s the reason everyone is so upset with Annapolis. They see something like our thriving craft brewing industry being threatened by a bunch of powerful back room politicians and lobbyists.

I can’t see it ending any other way but badly for the state of Maryland.

HB 1283 benefits a few very well-plugged-in lobbyists and individuals. It absolutely undermines our craft brewing industry. The message of this bill is that craft brewers are not welcome, are not appreciated, and they should get out of Maryland.

That’s the message of the bill, but it’s all got this big lease of, “Oh, we’re trying to adopt a middle ground.” This is not a middle ground, this is a big cup of poison, and I hope the craft brewing industry realizes it for the threat that it is.

Question: That actually goes to the heart of another concern I have. This bill isn’t really maintaining status quo; it goes out of its way to roll back hours that were previously in place. Even more than that, it’s doing so not only without input from brewers, but also without any documented data showing harm or loss to wholesalers or retailers.

So, we’re now in this position where brewers potentially have to negotiate against rollback. But why do we even have a proposed rollback at all? Especially one that proactively punishes brewers with a business-impacting restriction of hours, without imposing the burden on others to prove any actual damage beyond unsubstantiated anecdotes or subjective assessments of brewery impact?

What’s your response to that?

Franchot: That’s because there is no damage. There is only benefit to local retailers and to local establishments. Frankly, they should take all the barrel limits off, they should take all of the limitations away – and there still would not be any damage done to retailers, wholesalers or distributors.

Why? Because a rising tide lifts all boats.

Question: If that’s the case, however, why is this happening?

Franchot: Because a few well-connected, crony capitalists and lobbyists are getting together with leadership, and demanding that this bill be passed.

This is a group of people in a smoke-filled back room, who are engaging in a bill that’s been rewritten to benefit a few, very well-plugged in insiders. It’s a huge threat to the craft brewing business, and hopefully the Senate will wipe out the operating hours concerns and the barrel limits because none of them are justified.

They need to pass a bill that indicates the craft brewing industry is welcome in Maryland. That it’s appreciated in Maryland. That we think it has great growth potential. We should not be hitting the craft brewing industry over the head with a beer barrel and tell them in effect, “You’re not welcome here in the state.”

Question: Another concern is that this new version of HB 1283, which passed unanimously before moving to the Senate, was positioned in the House as having brewery support – meaning that Maryland brewers were in support of these changes being made.

I had one delegate go on record with me saying that they were under the impression that “this brewery bill was a compromise.” Instead, it actually to came light afterward that the brewers were not on board with this compromise at all, and they felt completely blindsided.

What are your thoughts on this, considering this bill has such far-reaching implications, and it appears that some were pushing a narrative that was patently untrue to get this passed?

Franchot: Couldn’t agree with you more, patently untrue. Anyone who cares about Maryland craft beer at all – and doesn’t want to see Maryland become a third-world Banana Republic, where a couple of powerful people dictate the fate of a very vibrant, new economic activity – must get involved.

They should be calling and getting online and sending messages to every member of the Senate. The Senate can change this bill so that it is pro-craft brewer.

In so doing, they would do the state of Maryland a huge favor by helping its economy. People believe passionately in this new sector, and if they knew that it was being treated like some plaything of a dictator of another country, seeking a payoff… if they knew what was going on in Annapolis, they’d be shocked.

The proof of all of the fallacy of what this bill is all about is that the next closest state to Maryland, – which has a 500-barrel [taproom] limit – is a state that has a 25,000-barrel [taproom] limit. That’s the next closest state. A lot of states don’t have any barrel limit, and they have flourishing craft brewers.

That’s what we need in Maryland. But if this bill passes in its current form, it would be the end of the craft beer sector in Maryland. Why would an innovative entrepreneur relocate to Maryland to brew beer if they see this kind of legislative gamesmanship going on?

Question: I spoke with Julie Verratti, who’s the cofounder of Denizen’s Brewing Company, which is actually a Class 7 brewery out in Silver Spring. While they are not really impacted by the rollbacks imposed by [HB] 1283, she’s still concerned.

In a recent discussion with me, she said, “If this bill becomes a law, it’s going to set a very, very bad precedent for brewers in the state. It’s going to harm business and cause loss. If they don’t change it, it’s going to severely damage our Maryland craft industry.”

What is your message to brewers like Julie – and others who are impacted and also share her concerns – about what’s happening right now? What do you say to your brewers?

Franchot: Her point is absolutely appropriate; it’s going to do harm. I would go a step further, however, and say it will essentially eliminate the segment and probably cause a number of craft breweries to move from the state of Maryland.

Why would the legislature do this? Well, you have to go ask them.

But there are only two or three people who are responsible for this. I know the entire legislature voted for it, but that’s not the way the place works. I’m sorry to report that this is just a couple of cronies getting together and doing something because they can.

It’s a tiny little top-down group of well-connected folks that are so plugged in, that they’re able to do this. Tiny. Literally, I could count on one hand the people that are responsible for this travesty.

Question: Now that this bill has moved to the Senate, what is your message to legislators?

Franchot: Increase, don’t decrease the operating hours. Remove the barrel limit – or at a minimum, increase it to the next closest state, which is 25,000 barrels.

Remove any pay-to-play operation with the distributors of the state. Put in language saying that the state of Maryland appreciates and welcomes, and wants to see the craft brewing industry grow. That we want to see Maryland craft breweries flourish and multiply because a rising tide lifts all boats in our economy.

Question: To switch gears, there are a lot of consumers who are feeling a range of emotions about what’s happening right now. Sometimes it’s hurt, sometimes it’s anger. But the one I’ve noticed most of all, is now a significant mistrust of the system and the legislature, as it pertains to Maryland craft beer.

They feel betrayed. What do you tell them?

Franchot: Well, they’re absolutely right. Here is a bill that is painted to be a well-intentioned, helpful compromise, when in fact it’s a knife right in the back of the Maryland craft brewing industry.

They have every right to be distrustful – but rather than be sad, they should be angry.

I know I’ve already said it, but you need to contact your senators and let them know what your feelings are about this bill. Mention it by name – House Bill 1283 – and indicate that it’s something you’re going to maintain a vigilant eye on it.

And to the senators, it’s a very simple message:

Correct the games that are being played over in the House. Protect the General Assembly from looking like a third-world Banana Republic, and do the right thing by a wonderful group of entrepreneurs who have come into our state, and have successfully put us on the map with some wonderful beer products.

And how do we repay them? A big slap in the face from a group of back room lobbyist bullies. Shameful.

Question: Is there anything else you would like to add?

Franchot: Personally, as comptroller, I apologize to the craft industry for this type of treatment, and I sincerely hope that their advocacy will result in the Senate completely turning the table on the bulls of the alcohol industry.

They should tell them the state of Maryland is not going to be pushed around by these votes. Put out a bill that has the right elements in it. Stop hiding behind falsehoods, like HB 1283 in its current form is a middle ground.

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Want to Get Involved?

This bill is currently slated on the senate calendar for discussion on Wednesday, March 29 at 1 p.m., in front of the Education, Health and Environmental Affairs Committee – so, call your state senators today.

Tell them to restore operating hours for Class 5 breweries, remove the limitations surrounding contract brewing and stop imposing arbitrary, behind-the-times taproom barrel limits.

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Editor’s Update, March 28, 2017

Maryland Comptroller Peter Franchot has released a statement regarding his attendance at a rally tonight at Key Brewing in Dundalk, supporting Maryland beer (and hosted by the Brewers Association of Maryland), as well as his intent to testify on this issue in front of the Senate Education, Health and Environmental Affairs Committee on Wednesday, March 28, 2017, at 1 p.m.

Click on the image to read the full statement.

Editor’s Update, March 31, 2017

Maryland Comptroller Peter Franchot has released his testimony from the Senate hearing earlier this week for this bill.

Click on the image to read the full statement.