Ocean City Today

Reform on Tap Act would lift craft brewery restrictions in Md.

By Josh Davis | Jan 25, 2018
Photo by: JOSH DAVIS/OCEAN CITY TODAY Ocean City Mayor Rick Meehan presents a Maryland General Assembly citation to Shore Craft Beer founder Ann Hillyer during an event at the Clarion, last Wednesday. Hillyer introduced a new Shore Craft Beer Challenge during the event and teased upcoming FeBREWary craft beer lover’s month happenings.

Editor's note: The original version of this story substituted Maryland Attorney General Brian Frosh's name for Comptroller Peter Franchot's. We regret the substitution.

(Jan. 26, 2018) Shore Craft Beer founder Ann Hillyer is leading an effort locally to support the Reform on Tap Act of 2018, drafted by State Comptroller Peter Franchot and designed to help Maryland brewers better compete with brewers in neighboring states.

The craft beer industry in Virginia, for instance, produces more than 10 times the revenue it does in Maryland.

According to a report on the state comptroller website, the new legislation would level the playing field by removing limits on beer production, as well as taproom sales and take-home sales, and allowing smaller brewers to self-distribute.

It would also lift “unnecessary restrictions for take-home sales,” allow local jurisdictions to set guidelines for taproom hours, eliminate franchise law requirements, remove restrictions on contract brewing “that inhibits start-up businesses,” guarantee upon request issuance of Class B or Class D licenses to microbreweries, and repeal provisions requiring brewers to “buy back” their beer from distributors at a marked-up cost if they exceed the 2,000-barrel limit on taproom sales.

Franchot created the Reform on Tap Task Force last year and released a 41-page findings report “In response to the passage of House Bill 1283 during the 2017 Legislative Session and the strong public outcry for reforms of Maryland’s antiquated beer laws.”

HB1283, according to a summary released by the Department of Legislative Services, “makes numerous changes to on-site sampling and sale of beer by a Class 5 brewery.”

The 40-member task force included elected officials and representatives from breweries, distributors, restaurants, bars and retailers. Eight public meetings were held, including two allowing consumer input.

“Current laws and regulations pose an existential threat to the industry’s future growth in Maryland; and with it, the jobs, economic activity, tax revenue and tourism opportunities generated by this community of innovators and entrepreneurs,” Franchot said in a statement. “In the absence of comprehensive reform, Maryland’s reputation within the national craft brewing industry will continue to suffer and the economies of our neighboring states will benefit at our expense.”

Hogan, upon signing House Bill 1283 into law last year, sent a letter to the Maryland General Assembly stating, “It is clear from the debate surrounding [House Bill 1283] that Maryland’s beer laws – dating back to the end of Prohibition – are in need of reform as they threaten to reverse the incredible growth of our state’s craft brewing industry… I urge the General Assembly to explore modernizing our state’s brewery laws, and lift legislative impediments to Maryland’s craft brewers so that their industry can continue to grow and thrive.”

Locally, Hillyer is trying to amass signatures on the Shore Craft Beer website for an online petition supporting Reform on Tap. A similar petition exists on the Maryland Comptroller website.

“The comptroller has really gone out on a limb to support craft beer legislation. He got brewers and distributors and retailers to the table,” she said.

Since then, however, “the distributors are coming out hard and fast against this,” Hillyer said. Many brewers have also been reluctant to show public support.

“They support the legislation, but they won’t push hard for support, because they’re afraid of ticking off the distributors,” Hillyer said. “The distributors are definitely losing power with the legislation if they go through as it is … but I think what’s being missed is with better legislation for breweries, we’ll have more breweries open longer with more visibility and more tourism.”

More tourism, she said, means more people drinking in bars, eating in restaurants and staying in hotels.

“I think in the long run the distributors will be way better off if we can really build our craft beer businesses in Maryland,” Hillyer said.

She argued relaxing some of the regulations of craft beer could greatly increase revenues in the state.

Virginia Governor Terry McAuliffe announced last year the state was home to 206 licensed breweries that annually contribute more than $9.34 billion to the state economy.

According to the Franchot report, “Maryland craft brewers produced more than $637.6 million in total economic output, supported 6,541 Maryland jobs, generated more than $228 million in annual wages and generated $108 million in federal, state and local tax revenue” in 2016.

“The Reform on Tap Task Force compared Virginia to Maryland, to Delaware, to Pennsylvania – all the adjoining states and what our legislation looks like compared to theirs…,” Hillyer said.

She said craft beer related tourism in Virginia measured about $2 billion annually. Maryland does not measure the tourism impact.

“Virginia is coming after our brewers, because they’re restricted in Maryland,” Hillyer said. “Maryland lost two major breweries [last year] and Virginia got them. And Flying Dog [in Frederick] decided they weren’t going to expand … until Maryland can figure out their craft beer laws.

“I understand on the face of the law why the distributors are upset, but nobody is communicating that this is a much bigger deal than the fight between the brewers and the distributors,” she continued. “They’re afraid of something that, I think, has proven not to be a problem … it’s understandable, but I think it’s wrong-headed and it’s wrong for the state. I think anybody who supports craft beer should be signing this petition.”

Hillyer said she plans to gather as many signatures as possible on the Eastern Shore and then deliver the petition to the comptroller’s office.

“I don’t have any delusions that this legislation will pass this year. It’s got a lot of people lining up against it, including [Senate President] Mike Miller and [House Speaker] Mike Busch,” she said. “Hogan, I was told, is sitting back and watching and letting everybody fight it out.

“Nobody, including the breweries, are making a big push to get the comptroller’s legislation supported. And in my opinion, if we don’t make noise the legislators are not going to think it’s an issue,” Hillyer added. “I think you sign the petition and, whether we get legislative change this year or not, at least then people know that it matters.”

Hillyer said local supporters of the petition include the Ocean City Hotel-Motel-Restaurant Association Board.

“That’s a real testament to businesses, because those are bars and restaurants and that’s who the legislators think are feeling competitive with the breweries,” she said.

Worcester County Tourism Director Lisa Challenger and Berlin Economic and Community Development Director Ivy Wells also support Reform on Tap, as does Burley Oak Brewing Company owner Bryan Brushmiller.

“I’m absolutely in favor,” Challenger said. “I’m all for making [legislation] better, so we can be more competitive with our neighboring states, like Virginia.”

Wells said most people likely do not understand the legislation. She called on local brewers to help educate their customers.

“I think the general public maybe doesn’t understand what the difference is,” she said. “To have some kind of, this is what it does, this is what it doesn’t do, in layman’s terms [would be helpful] so the average Joe could understand it … I think it all boils down to awareness. I think it’s a general lack of understanding.”

While she continues to try and drum up support, Hillyer admitted getting ax to sign the petition has been difficult. As of last Tuesday, she reported less than 20 signatures, despite a healthy push on social media.

“That’s terrifying,” she said. “We’ve promoted it. We’ve put it out there. Everybody’s afraid to sign it.”

“I think tourism is the overarching economic driver that would convince everybody that this is a big deal and should be a big deal, and we should support our brewers,” Hillyer added. “I think the biggest thing is making noise, so the comptroller knows he has support and so the legislators know we care about this issue.”

To sign the petition, visit www.shorecraftbeer.com/petition.

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