Maryland Public Policy Institute: State of Brewery Reform in Maryland (Remarks)

Today, I moderated a small panel on the state of brewery reform in Maryland, as a part of the Maryland Public Policy Institute’s 2018 Maryland Legislative Session Policy Orientation.

It featured Len Foxwell, the Chief of Staff for Maryland Comptroller Peter Franchot and Kevin Atticks, the Executive Director of the Brewers Association of Maryland.

Unfortunately, due to a last minute conflict, Betty Buck was not able to attend.

What follows are my opening remarks from the panel…

Earlier this year, Diageo came to the Maryland General Assembly with an attractive proposal.

They would open the only North American Guinness Brewery in our state, promising to create a “Maryland beer halo” and spur beer tourism across the state.

But they would only do so if the General Assembly made changes to certain regulations.

As they stood at the time, Maryland regulations surrounding brewery production limits would not allow them to proceed.

Though the final version of House Bill 1283 paved the way for Guinness to continue with their plan to open a North American facility in Relay, Maryland, the process to get to that point threw into harsh relief the obstacles today’s independent craft brewers in Maryland face.

In addition, even with production limit increases and other positive gains, many believe the legislation will ultimately stunt the growth of craft beer in Maryland — both for current craft brewers, as well as breweries in planning.

For example, a buy-back provision that requires brewers to send beer to their wholesaler and buy it back at retail, once they cross a certain threshold, just to be able to sell it within their own taproom.

In response, Maryland Governor Larry Hogan declined to sign the bill before it passed into law.

Instead, in a letter addressed to the Speaker of the House of Delegates, Michael E. Busch, dated May 26, 2017, Hogan remarked:

“House Bill 1283 contains several troubling provisions, which will more than likely prove detrimental to Maryland’s craft brewing industry — hampering the economic growth, job creation and tax revenue it produces.

It is clear from the debate surrounding this bill that Maryland’s beer laws — dating back to the end of Prohibition – are in need of reform as they threaten to reverse the incredible growth of our state’s craft brewing industry.

Indeed, Virginia has already seized upon HB 1283 and the unfriendly perception it created to lure not only start-up breweries, but to pursue Maryland’s existing breweries.”

While we are certainly not the only state wrestling with questions of public health and the limits three-tier system, given the growth of the craft beer industry, Governor Hogan is not incorrect in his assessment of our neighbor to the south, Virginia.

At this year’s Craft Brewers Conference, hosted by the Brewers Association in Washington, D.C., I had a chance to speak with Virginia Secretary of Trade and Commerce Todd Haymore.

He had this to say:

“From our standpoint, we feel like over the last six to eight years, we’ve really tried to work with the craft beer industry to help them grow and become part of the economic development fabric of the Commonwealth of Virginia.

Then to hear about [HB 1283], which seems to be trying to slow progress and growth down in a neighboring state… frankly, it caught us by surprise.

I’ve had conversations with Maryland brewers — and I think up until this year Maryland wasn’t viewed as being as progressive as Virginia, but it also wasn’t being viewed as potentially anti-craft brewery. That’s what I’m hearing now from some people I’ve talked to, regarding this year’s legislation.” 

An anonymous brewer who once had aspirations of opening in Maryland seemed to validate Haymore’s assertions when they shared the following statement with me this past April, prior to the passage of House Bill 1283:

“After keeping an eye on this process we have determined that regardless of the outcome Maryland is simply not a place we wish to do business in and we will be moving to another state … 

This decision wasn’t easy since we have been planning this for quite some time but if the state cannot support up and coming breweries we have no choice but to move to a state that does.”

More recently, Flying Dog Brewery of Frederick, Maryland, announced in October they would be abandoning expansion plans to build a $54 million destination brewery.

In an interview with Brewbound, Flying Dog CEO Jim Caruso said such a move was not “rational,” given the current regulatory climate.

Following this year’s legislative outcomes, Maryland Comptroller Peter Franchot assembled 40 members across the Maryland craft beer industry — brewers, retailers, wholesalers, legislators, consumers and others — to form the Reform on Tap Task Force.

The primary objective of this task force is to craft a model framework and a series of recommendations to reform the laws that govern Maryland craft breweries, to be introduced at the 2018 General Assembly session.

In fact, the final meeting of the task force will take place tomorrow, after holding numerous meetings since May to debate, discuss and learn.

While the road that brought us to this point has brought difficult issues to the fore and has not been without controversy, we must look ahead to the question that now stands in front of us:

What should brewery reform look like in the state of Maryland?

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