Yesterday, DCBeer published an article about HB 1283, a bill in the Maryland legislature that would change regulations on Class 5 breweries. The bill has been gaining a lot attention among beer fans and breweries around the State, and with it a wealth of opposition. Among those opposed to the legislation is Comptroller Peter Franchot, who I had the opportunity to interview today. The Comptroller of the State of Maryland is in charge of, among other things, taxing and regulating all alcohol manufacture and sale in the State. Below are his views regarding HB 1283:
DCBeer (Greg Parnas): What are your views on HB 1283?
As Comptroller, I am the chief alcohol enforcement officer in the State. I want to say that everyone in Maryland should be concerned about this. The craft brewing segment is very vibrant, creating all sorts of breweries, and includes an incredibly innovative [group of] entrepreneurs. They [the craft brewers] are creating jobs, increasing tax revenue, and making great products. I have visited Union Craft, Peabody Heights, Flying Dog, all these other breweries. What is happening in the beer community is really great for Maryland.
No exact quote but he went on to describe HB 1283 as crony capitalism. If left to stand [HB 1283] will destroy the industry.
I want to put Maryland’s barrel limit in perspective. Currently, breweries are limited to selling 500 barrels a year through their tap rooms. The next tightest state, in terms of being the closest to the 500 barrel limit, is 25,000 barrels a year that can be sold through the tap room. Maryland is in uniquely narrow position. So this move to 3,000 barrels isn’t a big deal really.
Well actually the limit is 2,000 barrels with the last thousand requiring your permission. But for that last 1,000 barrels, the brewery has to purchase it from the wholesaler. How do you feel about that?
The buy-back provision is nothing but crony capitalism. That a brewery would have to purchase its own beer, after paying to manufacture it, makes no sense. It is crony capitalism. This is why citizens are so angry at Annapolis. Some well-connected interests can just come in and get what they want.
Have you spoken with Governor Hogan to share your views? Does the Governor have an opinion about this legislation?
I don’t want to put words in the Governor’s mouth, but I believe he would find this type of bill to be highly irregular. The Governor doesn’t tend to support this sort of regulation or stifling of business. I haven’t been in communication with Governor Hogan, but if I speak with him I will bring up my concerns about [HB 1283].
We spoke with Delegate Branch yesterday, who you know is the primary sponsor in the House, about the bill. He indicated that the goal was to reach a compromise between the breweries andbar/restaurants? What about the argument that breweries directly compete with bars?
No, there is no direct competition between bars and brewers. I like Delegate Branch, I do, and have a lot of respect for him, but what he has done with this bill is awful. I think the Delegate is way off with this notion of compromise. This bill is not a compromise. Delegate Branch is driving a stake through the heart of the craft brew industry and should be ashamed, really.
[HB 1283] will prevent the community building that the breweries are engaged in. When a brewery comes into an area it brings jobs, it brings added tax revenue. The breweries do not hurt bars and restaurants. They bring new customers into an area…a rising tide lifts all boats.
Is there anything else that you would like to add?
The limitation on hours will shut down a bunch of the brewery operations I know. If this bill passes it will be lights out on craft brewing in Maryland. All these millennial entrepreneurs are going to pack up and move out or look elsewhere for opportunities. [HB 1283] is a perfect example of why people are fed up with Annapolis. Some lobbyist or special interest can come in, and they have the political power to make deals in smoke-filled back rooms, and protect their interests or get special treatment.
I am the chief alcohol regulator in the State of Maryland and want the people to know that I oppose this bill.
Greg Parnas, is a contributing writer to DC Beer and local alcoholic beverage attorney. If you'd like to discuss more about this issue, or other concerns with beer and the law, please feel free to reach him at Greg@dcbeer.com.