BERLIN – Efforts to reform craft beer regulations in Maryland are in full force along the Eastern Shore, but distributors in the industry are voicing their concerns.
Last year, Comptroller Peter Franchot formed a “Reform on Tap” task force in response to the 2017 passage of House Bill 1283, which imposes certain restrictions on breweries with a class five brewery license.
As a result of that task force, Franchot has introduced the Reform on Tap Act of 2018, which, among other things, would remove limits on beer production and sales and buy-back provisions that require brewers to purchase their beer from distributors if they exceed the 2,000-barrel limit on taproom sales.
Ann Hillyer, founder of Shore Craft Beer, said Franchot’s legislation would improve regulations that limit craft breweries in Maryland.
“There are a bunch of rules that constrain the breweries,” she said.
Hillyer said these regulations limit the economic impact craft breweries could have on the state of Maryland. According to the National Brewers Association, Maryland ranked 47th in economic impact, 36th in the number of breweries and 25th in gallons produced per adult age 21 and over.
“We stack up very poorly,” she said. “The comptroller came out very forcefully and said we need to change to allow the craft breweries to be the economic drivers that it could be.”
Hillyer explained Franchot’s task force and proposed legislation has since drawn criticism and backlash from distributors in the industry. As a result, she said, few breweries have come forward to publicly support the comptroller’s efforts.
“They (breweries) don’t want to make their distributors angry because they fear it will affect their distribution,” she said. “I believe the argument is it’s become the distributors versus the breweries.”
Rob Burke, president of Eastern Shore Distributing, said his company continues to have a good relationship with the national and local craft breweries it represents.
“We work with our craft partners to make sure they succeed,” he said, “because if they don’t succeed, we don’t succeed.”
He argued, however, that Franchot’s task force failed to give distributors, retailers and public health officials equal representation.
“There were 40 individuals on the panel and there were only four wholesalers that were represented and a few retailers that were represented,” he said. “The majority of the people that were on there were craft brewers and legislators.”
Burke argued that the proposed legislation would negatively impact the three-tier alcohol distribution system (made up of producers, distributors and retailers) put in place following the repeal of prohibition to protect consumers and businesses.
“Each individual partner works together to ensure that the system is working properly …,” he said. “The system works very well, so I would caution against changing it too much.”
Burke said Maryland lawmakers should determine the success of House Bill 1283 before moving forward with new legislation.
“The new regulations that were passed last year in the legislature haven’t really had a chance to work,” he said. “Until you see if they are good or bad, why do you change them?”
Hillyer argued, however, that Franchot’s proposed legislation would benefit both breweries and distributors in the form of tourism. She said the better craft breweries do, the more craft beer distributors will sell.
“Shore Craft Beer is trying to make the shore a top-10 craft beer destination,” she said. “I think what we should be focused on is craft beer tourism.”
She said many local craft beer companies and events draw visitors to the area. She said 75 percent of tickets to craft beer events and festivals on the shore are sold to participants who live more than 100 miles away.
“It brings people here, they stay and it brings in money,” Hillyer said.
In an effort to garner public support for craft beer reform legislation, Franchot has begun a petition drive with the goal of collecting 6,541 signatures. That figure represents the total number of jobs the craft beer industry supports in the state of Maryland.
While results of the petition will be released on Feb. 1 in conjunction with the kickoff to “FeBREWary,” Hillyer said Shore Craft Beer has created its own petition to change craft beer regulations. The petition, however, has received few signatures. It can be viewed at https://shorecraftbeer.com/petition/
To that end, Hillyer has gathered the support of the Ocean City Hotel-Motel-Restaurant Association (OCHMRA) to share the petition amongst its members.
“It’s definitely a tourism movement,” OCHMRA Executive Director Susan Jones said, “so the more we can help the craft beer industry the more it helps tourism.”
Hillyer added, “The shore needs to make a statement because if we don’t support the comptroller now it might be harder the next time around,” she said. “I think that every Marylander should care.”