Maryland Is Doing its Best to Destroy its Craft Beer Industry For Good This Month

Back in April of 2017, we wrote about how Maryland had just finished attempting to screw the state’s craft brewers via a new piece of legislation known as House Bill 1283. Introduced in secret and hidden from the state’s brewers until it had already passed the House of Delegates, the bill was amended in the state Senate thanks to a last-ditch effort by craft beer activists. These amendments managed to alter its affects from “devastating” to merely “complicated and imbalanced.” On one hand, HB 1283 gave breweries something they wanted—the ability to sell more beer to the public directly from their taprooms. But on the other hand, it introduced a patently unfair “grandfathering” system, in which already existing breweries would be held to one legal standard in terms of hours of operation, but new breweries would be punished with reduced hours of operation for their audacity in wanting to open a new small business.

Why did this happen? Well, in a single sentence: It happened because state legislators were more interested in courting big business than serving their local breweries. Specifically, it happened to make Maryland the most attractive possible home for Diageo’s destination Guinness brewery, despite the fact that Diageo as a company has largely sided with the craft brewers against the state of Maryland. That’s right: Even though Diageo isn’t asking Maryland legislators to screw over the state’s craft brewers on their behalf, they’ve elected to do so anyway, while crafting legislation that exempts the Guinness brewery (and no one else) from additional regulation.

Enter, HB 518 and HB 1052—dueling house bills that will determine the future of the state’s brewing industry, both of which will be heard by Maryland’s House Economic Matters Committee on Feb. 23. One (HB 518) is supported by the state’s craft brewers (and apparently Diageo as well), and is aimed at loosening restrictions on beer sales, and modernizing the state’s beer laws to be similar to other states that have made craft beer into a major tourism driver. The other bill, HB 1052, is supported by the state’s most powerful alcohol distributorships, and the lobbying/campaign contribution power they wield. This is perhaps a relevant time to point out a few of the corruption scandals that have wracked Maryland’s legislative body in the last few years.

“HB1052 would inflict actual harm on a majority of the brewing industry,” said Kevin Atticks, executive director of the Brewers Association of Maryland, in an interview with Baltimore Magazine. “Rather than wasting our time and energy debating a tone-deaf, mal-intentioned attempt to distract from real conversations aimed to grow our manufacturing industry, we’re focusing on our legitimate, reasonable, reform efforts.”

ALERT: HB518, the #ReformOnTap Act and #HB1052 will be heard by a House committee on Friday, 2/23. Join us and show your support for Maryland Brewers! If you can’t attend but wish to submit written testimony, please email me at [email protected]. pic.twitter.com/SMCG43213b

— Peter Franchot (@peterfranchot) February 9, 2018

Let’s compare the contents of the two bills via direct bullet points. HB 518, favored by the craft brewers, would do the following:

– Remove all limits on beer production, taproom sales and take-home sales;
– Repeal the “buy-back” provision that requires brewers to purchase their beer from distributors at a marked-up cost if they exceed the 2,000-barrel limit on taproom sales;
– Lift unnecessary restrictions for take-home sales;
– Let local jurisdictions set guidelines for taproom operating hours;
– Allow smaller brewers to self-distribute;
– Remove restrictions on contract brewing that inhibits start-up businesses.

Meanwhile, HB 1052, which Diageo/Guinness directly says they do not support, would do the following:

– Reduce the amount of annual taproom sales allowed from 2,000 to only 500 barrels, with the sole exception of Guinness (because this is clearly fair);
– Directly prohibit contract brewing of any kind;
– Restrict sample sizes at all breweries to only “three ounces per style or brand.”

In a supreme act of irony, the introduction of HB 1052 came right after Maryland Governor Larry Hogan declared this month “FeBREWary” in the state, a month for “Maryland Craft Beer Lovers.”

The below blockquote is from Maryland Comptroller Peter Franchot, a champion of HB 518, who said in a Facebook post that HB 1052 would “for all intents and purposes, destroy the craft brewing industry in the State of Maryland.” This is a man who has been attacked by paid shills for his support of the local craft beer industry, and responded with one of the most devastating rebuttal letters that I have ever read on any subject. I highly recommend reading it, if only to understand how the clout of Big Beer has been put to use against elected officials in positions such as Franchot’s. Says the comptroller:

“As bad as House Bill 1283 was, House Bill 1052 is so much worse. It would send the message, once and for all, that our state’s government is hostile to our current and future craft brewers, and indifferent to the jobs, economic growth and neighborhood reinvestment they provide. One of Maryland’s great breweries – UNION Craft Brewing – has already stated publicly that this bill could jeopardize its future here in Maryland.”

After reading that comment, I reached out to UNION Craft Brewing’s co-owner, Jon Zerivitz, to discuss the two bills. As a leader of one of the state’s best-liked craft brewers, makers of cult beers such as Double Duckpin DIPA, he’s been shepherding his company through a major, multimillion dollar expansion, which includes dedicating two-thirds of the space in their new brewery building to a mixed-use manufacturing space that will be called the “Union Collective.” That space will be host to an array of other small businesses, including an ice cream manufacturer, a distillery, a coffee roaster, a hot sauce maker and a climbing gym, but the passage of HB 1052 would put all of those things into immediate jeopardy, forcing the brewery to buy its own beer back from distributors after the first 500 barrels sold out of its new 7,000 square foot taproom.

“It makes me feel sad, to feel disillusioned, to question our choice to start up here in the state at all,” Zerivitz said to Paste. “I feel like we do nothing but bring a better quality of life to Baltimore. Just to get our local politicians to visit us here is difficult enough, but to listen to us is apparently much harder. All the manufacturing had left Baltimore, and here we are trying to bring it back. We could have just invested in ourselves and built a beautiful brewery, but instead we chose to buy a 155,000 square foot warehouse in the heart of Baltimore and bring in all these other Baltimore manufacturers. We just wanted to give a little bit of that craft beer community love to some other small businesses, rather than watching them move to the outskirts of the city. To have our local government stand in the way of that kind of progress is really sad to me.”

Zerivitz doesn’t blame Guinness, saying that Diageo has been caught in a conflict between breweries and representatives. He says many of the Guinness brewers have visited and toured the facilities at Union, making clear a desire to become part of the local craft beer scene. He simply says that he “just asks them to tell the powers that be to throw some of that lobbyist weight they wield behind Maryland’s craft breweries, so hopefully they do.”

Photo via Getty Images, Ilya S. Savenok

So, who is actually behind HB 1052, which would reduce the amount of beer that breweries are allowed to sell in their taproom by a gaudy 75 percent? That would be Democratic delegates Dereck Davis and Talmadge Branch, who co-sponsored the bill. Also reportedly proponents of the bill, and outspoken critics of Comptroller Franchot: Senate President Thomas V. “Mike” Miller and House Speaker Michael E. Busch—both of whom just so happen to have family members who own liquor stores or alcohol distributorships. In particular, comments from Dereck Davis on HB 1052 are downright insulting to Maryland craft breweries, claiming that his bill set to dismantle their rights is something he’s doing because they asked for it. In an interview with Washington’s Top News, he said the following, first speaking about the passage of HB 1283 in 2017:

“The comptroller as well as others in the craft beer industry … complained vociferously, quite honestly, about what they thought were harmful effects that the passage of that legislation would do on their industry,” Davis said. “All House Bill 1052 does is repeal what we did last year. What they quite frankly told us was a negative. We left the provisions in as it related to [Guinness owner] Diageo in Baltimore County, because they were the real reasons why we did the bill [last year].”

This is an absolutely stunning “go f*** yourself” aimed at not only the entire Maryland craft brewing industry, but also at the voter base, which along with local media, has given strong support to Franchot’s proposed policies—which I remind you, would simply be bringing Maryland in line with other states that have built successful craft beer-based tourism industries. In the blockquote above, Davis purposefully misunderstands and mischaracterizes craft brewers’ objections to HB 1283 in 2017, even as he prepares to strip them of their current legal rights with HB 1052, somehow claiming that they want to have the amount of beer they can sell reduced. He doesn’t even acknowledge the existence of HB 518, which would have the opposite effect of his own legislation, and goes before the House Economic Matters Committee on the same freaking day, Feb. 23. Folks, this is what it sounds like when a local government lawmaker wants to strangle an emerging industry.

Case in point: Look up the publicly searchable campaign contributions received by Davis, and what do you find? Well, you find a tie for the largest contribution in the last two years between a number of donors—and my, oh my, there’s a lot of “beverages” involved here. On the first page alone, we have individual donations of $2,700 from two different people at Deutsch Family Wine & Spirits, plus $2,700 from Horizon Beverage Co. and another $2,700 from Beltway Fine Wine & Spirits. The next page has two more $2,700 contributions from alcohol distributors or retailers. The page after that has a couple more. And so on. It’s there for anyone to look up. Amazing how stances on legislation tend to synch up with campaign contributions, isn’t it?

Nice of them to put the alcohol industry stuff right near the top, so you don’t have to look far. Click to zoom.

“I think there are so many conflicts of interest going on here, and deep cronyism,” said a discontented Zerivitz. “The distributors in Maryland, many are 100-year-old family companies, and they go back very far with many of the legislators. That’s just how Maryland operates. I really think our path forward here is to get people motivated to vote in primaries and get some of these guys out of office. Without doing that, I think we’re going to keep ending up at compromise status quos forever. And even if we stay exactly where we are now, it will still be an unfavorable landscape for new breweries. We’re just barely getting to the point now where we can be considered to have a decent beer scene, and now it feels like they’re trying to make us backtrack.”

Voting in primaries is all well and good, but there aren’t going to be any elections before Feb. 23, when these bills go before committee. What Maryland’s craft brewing industry needs right at this moment is attention and action—focused, decisive action from its residents, who need to be contacting their legislators to find out where they stand on the issue. If HB 1052 somehow passes, it will likely be the death knell of at least a few well-liked Maryland breweries. At the very least, it will demonstrably hurt every one of them in some way. Conversely, if HB 518 passes, it could be the dawning of a new era of modernized craft brewery laws for the state.

As a result, this month could be the most important in the history of the state’s beer industry. Here’s hoping that February of 2018 is eventually remembered by Maryland beer fans in fond terms, rather than mournful ones.

Jim Vorel is a Paste staff writer and resident craft beer obsessive. You can follow him on Twitter for more drink writing.