A Gut Punch for Maryland Brewers and Beer Drinkers
I’m a beer snob. Fortunately for me, Maryland has a lot of fantastic, small breweries. Companies like Jailbreak, Union, Key, Manor Hill, Flying Dog, DuClaw, Calvert, and many many many others. We’re lucky in that we have a lot of variety in craft breweries, with many companies having tap rooms where you can go sample their products and buy some to take home with you.
House Bill 1283, which was passed by the House of Delegates earlier this month, is a mixed bag. On one hand, it raises the amount of beer certain breweries can brew annually. On the other, it cuts back their operating hours and ability to serve beer made off-site.
But, it cuts back hours from midnight and 2 a.m. at some breweries to 9 p.m. during the week and 10 p.m. on the weekends. It would also limit the amount of beer made off-site, including at contract or partner breweries, that can be sold on-site at a brewery.
The bill specifically targets what are known as “Class 5” breweries in Maryland. The Brewers Association of Maryland describes these as:
The Class 5 Brewery license is meant to be predominantly a brewing facility, with limited accommodation of the public on-site. The M5 (= manufacturer Class 5) is allowed to brew an unlimited amount of beer, and has the following restrictions/allowances:
- $1,500 fee, annual;
- Provide up to 6, 3-oz samples to visitors who have participated in a guided tour or who are attending a promotional event;
- Sell up to 288-oz of beer per person for off-premise consumption (“to go”) to persons who have participated in a guided tour or who are attending a promotional event;
- Sell growers to go in 32-oz up to 128-oz containers;
- Obtain a special event permit for up to 12 events per year at which beer brewed on site may be sold by the glass;
- Obtain a county-issued permit for on-premise consumption of up to an aggregate 500 barrels per year;
- May obtain a distribution license to wholesale up to 3,000 barrels of beer annually if the licensee produces less than 22,500 barrels annually
This of course would absolutely crush small craft brewers in the state of Maryland and would end innovation, as breweries would no longer be able to collaborate with other brewers to create new products available for consumption in these breweries. These collaborations with other companies both from Maryland and beyond, are great sources of revenue and publicity for these small-time brewers.
The bill is so bad that even the Washington City Paper, no foe to government regulation on businesses, is against it. The bill puts a hamper on the proposed Guinness brewery in Baltimore County that would restrict it from distributing the famous Guinness from its home brewery in Ireland, and possibly make them reconsider their investment in Maryland. But right now Governor Larry Hoga and Comptroller Peter Franchot,are the only elected officials speaking out against this bad, bad bill..
Naptown Pint has all of the sordid details of how we got here but as usual corrupt backroom deals in Annapolis plays an oversized influence in all of this. But the bottom line about this is the following:
HB 1283 is not just unfair, it’s malicious and punitive in its goal of undermining the Maryland craft beer industry.
What’s even more disturbing is that it seeks rollbacks of current laws on the books – pertaining to operating hours and contract brewing – without providing any data, facts or statistics to back up the baseless claims that Class 5 brewery taprooms are a menace to our economy.
Essentially, this bill tells Maryland craft brewers to jump through a bunch of hoops – which may include layoffs, dashed plans for growth, significant financial hardship or closing their doors entirely – and for what? To quiet the whispered, unsubstantiated anecdotes of “hardship”?
How is that fair?
How bad is this bill? The Seventh State came out today for serious changes to the bill, where Adam Pagnucco points out how we got here on this bill:
One of the biggest opponents of liberalizing rules on craft breweries is the Maryland State Licensed Beverage Association, which represents restaurants and small alcohol retailers. The group is particularly influential in Annapolis as its PAC has contributed over $180,000 to state politicians since 2005. The association sees craft brewers as competition for its members. From a zero-sum perspective, every pint purchased in a brewery tap room is a pint not purchased in a restaurant or package store. But that view doesn’t recognize the synergies between these types of establishments as well as their differences. Diageo’s brewery has the potential to be a major tourist facility, bolstering the entire local economy. And if a consumer purchases a new product at the Diageo site and likes it, he or she will be motivated to buy that same product at restaurants and stores. That means more business for everyone.
So where did this bill really come from? It came from liquor interests getting to Senate President Mike Miller and Speaker Mike Busch. How do we know? Take a look at this language tucked away in the bill:
ANY BEER THAT THE LICENSE HOLDER SELLS FOR ON–PREMISES CONSUMPTION IN EXCESS OF THE 2,000–BARREL LIMIT UNDER SUBPARAGRAPH (II) OF THIS PARAGRAPH SHALL BE PURCHASED FROM A LICENSED WHOLESALER
And there you have it. The entire point of the bill is to force breweries to buy their own beer back from licensed wholesalers so they can distribute it in the brewery that the beer was brewed in. The bill is getting pushed because the liquor lobby, who has their claws in a lot of legislative leadership in Annapolis, wanted to make sure their wholesalers make more money. So they created this insane system that limits the amount of beer Class 5 brewers can distribute on their property unless they first sell the beer to a distributor and buy it back.
It’s a typical backroom Annapolis deal; it’s Crony Capitalism at its most pure.
The most disturbing thing about all of this is the fact that the Republicans in the House of Delegates were asleep at the switch when they passed this bill out of the House, as HB1283 passed by a vote of 139-0. This bill institutes the same type of crony capitalism and government regulation that most of these House Members have joined Governor Larry Hogan in fighting against for the last two years, so their yay votes on this bill have to be a misunderstanding or a mistake.
The Senate heard the bill today, but let’s hope that some common sense happens before this bill gets to the Governor’s desk. This bill has no business becoming law as it has the potential to crush innovation, put people out of work, and negatively harm Maryland’s economy in what is a growth sector. There is no reason to place further restrictions on Maryland’s Class 5 brewers. The Senate should reject this legislation; if they don’t, Governor Hogan should veto it. And if it’s vetoed, the Brewers Association of Maryland should work to petition this bill to referendum and defeat it at the ballot box in 2018.
HB1283 is bad for business, bad for brewers, and bad for Maryland.