Putting Lipstick on a Pig
It’s been a bad month in the Maryland legislature for our state’s beer industry.
This time last month, there were a bevy of beer-related bills in committee, almost any one of which would have advanced the Maryland craft beer industry. These bills were all the result of beverage giant Diageo’s desire to open a Guinness brewing facility in Baltimore County. Virtually all of them were designed to work with Guinness, and one bill in particular was a joint effort between Diageo and the Brewer’s Association of Maryland that would not just allow but foster growth of the local industry. The bill would raise tasting room sales limits to 5,000 barrels per year from 500 (the next lowest limit of any state is 25,000) and would otherwise leave the industry as is.
Diageo was happy with it. BAM was happy with it.
Apparently, the legislature wasn’t happy with it.
Instead of any one of three bills that might help the industry, the House of Delegates unanimously passed HB 1283. The bill was one step forward for the brewers in Maryland, and then a huge kick in the … . Yes, the bill that passed through the House of Delegates raised sales limits to 3,000 barrels, but not without a mind-numbingly stupid series of stipulations.
As it was written, collaborative brewing would have been prohibited, as would the serving of any beer not brewed entirely on premises. This language appears repeatedly throughout the original group of amendments to the bill that passed the House of Delegates, “sell beer FERMENTED AND brewed ENTIRELY at the location described in the license for on-premises consumption.”
The new bill also significantly cut the hours breweries were allowed to be open.
Talmadge Branch (D-45, Baltimore City), the bill’s primary sponsor, told Delmarva Now that the purpose of the bill was to put breweries in their place.
But what place?
He describes tasting rooms as being bars but provides no reason for the structure of the 3,000 barrel limit which really breaks down as 2,000 barrels. When a brewery achieves 80 percent of that limit, it must petition the Comptroller’s office for that additional 1,000 barrels of their own product, which, at that point, must be sold to a wholesaler, picked up from the brewery, taken to a warehouse, and then sold back to the brewery at a mark-up. The beer is then returned to the brewery that has to either pass that cost onto their customers, or they have to eat the cost.
Limiting breweries from selling beer brewed via a contract with a larger brewery has what, exactly, to do with putting a brewery in its place?
Roughly 15 percent of the state’s breweries rely on contract brewing as part of their business model. Is out of business the place he’s seeking?
Backers of the bill are presenting this as a compromise. But with whom? BAM and its members were blindsided by this, so it wasn’t with the industry that they are seeking to limit. And why are they seeking to limit it?
In 2014 the industry contributed $652 million in economic impact. Most breweries, due to the costs involved in opening their doors, seek out facilities that they can get on the cheap, which often means neighborhoods and towns in need of economic redevelopment. Smoketown brewing, for example, has been a boon to Brunswick and its downtown businesses.
In fairness, the Senate has been amending this trainwreck of a bill, changing the restrictions on contract brewing and grandfathering in the hours for existing breweries — but that means that new breweries in the state will be at a distinct disadvantage, forced into shorter operating hours compared to their local competition.
And even with the changes that the Senate has been making to the bill, there have already been reports of those moving on from Maryland who had been working to open. One individual, talking to Naptown Pint columnist Liz Murphy, said they were seeking another home for their project — somewhere that they would feel welcome, and where they feel the state would be working with them.
I don’t blame them. This legislation is bad for business.
Until next month, be well, and keep in contact with your legislators.