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A Miner Detail: The 2019 Annapolis Session Winners and Losers [EXCERPT]
April 12, 2019
Baltimore City Paper: What's On Tap: Comptroller Peter Franchot discusses Maryland's beer laws, his task force on changing them, and more
October 11, 2017
Primarily Maryland's chief tax collector and accountant, Comptroller Peter Franchot has in recent months become a leading advocate for the state's breweries—so much so that three have named beers in his honor.
"Most politicians collect honorary degrees at commencements, I collect beers," he jokes in a phone interview.
If you're curious, they are: The Watchdog by Chesapeake Brewing Company, Franchot Comes Alive by Barley and Hops, and Saison du Franchot by Monacacy Brewing.
A call to arms came in a piece of State House legislation, House Bill 1283, which was initially crafted to increase barrel production—a necessity with Guinness planning to open its first U.S. brewery in Baltimore County—and ended up with a whole new set of restrictions that brewers and industry officials deemed catastrophic. Franchot casts the rejiggering of the bill as the work of "a couple of well-connected lobbyists in a smoke-filled backroom."
On top of that, local governments have, since the end of Prohibition, passed limits on the business of booze that are especially prohibitive to competition.
"The state and the counties, for the last 70 years, have added bits and pieces of statutory language to the law books of the state, and the result is just a minefield of restrictions on local brewing," says Franchot. "And none of it is meant to protect the public or have a health and safety basis to it. All of it is to protect monopolies who are running the show."
All of the state's 81 current breweries were grandfathered in to a new requirement that all taprooms must close at 10 p.m., but the damage had already been done to the state's reputation, Franchot says. Last April, in response to House Bill 1283, Franchot's office started the Reform on Tap Task Force, bringing together 40 brewers, legislators, industry officials, and distributors to discuss "modernizing Maryland's beer laws and promoting economic growth across the state."
The task force has met eight times thus far, discussing subjects such as manufacturing laws, beer tourism, contract brewing, the three-tier system of manufacturers, distributors, and retailers, and a host of other topics. City Paper's beer issue seemed like as good a time as any to check in with Franchot on the progress of the Reform on Tap Task Force. We talked about the impact of Maryland's breweries, what his report might say, and more.
City Paper: Your last session is on Oct. 25. How soon can we expect a report after that and who will write it?
Peter Franchot: The end of the year and I will write it.
CP: At this juncture, do you have a good idea of what it will say?
PF: Not specifically.
CP: Are there certain recommendations or changes that have been coming up again and again that you think are essential?
PF: Well, you can pretty much gauge that based on the subject matters of the task force meetings we've had. My experts who are staffing this task force have taken everything down and compiled their thoughts and recommendations, and by the end of the year I will approve the ones that I think are most appropriate and pass them to the legislature and urge them to approve them.
I'm not in a position to really get down in the weeds on exactly what the recommendations will say, but it will be pretty much a clean sweep of all of the restrictions and impediments on craft brewing that have nothing to do with health and safety or underage drinking or protecting citizens or the taxpayers.
And hopefully the legislature will understand that this is a tremendous economic step that can grow very rapidly and attract new businesses and new residents from all around the country to come to Maryland. We have to correct the negative perception that 1283 created nationally, which I think we can do. I think the package that we will present will have something for all the stakeholders. I'm not against the three-tiered system, such as it is. I'm just saying that a rising tide can lift all boats, and I think everybody, even those that are emotionally opposed to any kind of change, will recognize that there's something in the recommendations for everybody.
CP: So if a brewery wanted to start tomorrow, they would have a lot more red tape to go through?
PF: It's a knife in the back to any new entrants into the craft-brewing sector. A group like Flying Dog, in Frederick, or Attaboy, a new brewery in Frederick also—Flying Dog would never have moved from Colorado and Attaboy would never have moved from California to come to Maryland to brew beer had they had even a whiff of 1283. So the law has proven to be a huge negative for the state of Maryland. Virginia and other states are actively recruiting our breweries as we speak to go to a state that is more welcoming and appreciative. We need to do some other actions in order to establish this state, along with North Carolina and Oregon and California, as the go-to state for craft brewing.
Why is that so important? First of all, craft brewing is very popular as a sector. But it has, in my view, an additional benefit, because the state's business reputation overall was damaged by House Bill 1283. Opening up the state's beer laws will spill over into other perceptions of Maryland's business reputation. But particularly the millennials and those generations that are coming up, that are going to provide new entrepreneurial, innovative ideas, separate from beer, when they get the perception that Maryland gets it as far as craft brewing—and frankly, craft distilling and craft wineries also—I think it will have an enormous benefit overall for the state's business reputation nationally.
But part of this beer issue, because it combines everybody, it appeals to everybody around the state, except, obviously, for people that want prohibition or something. But I find that citizens of all stripes—it could be Hillary Clinton voters, it could be Donald Trump voters, doesn't matter—they all like the concept of Maryland-produced craft beer. I find it to be an issue that is very easy to talk about with the voters. And that's not the reason, obviously, I'm doing it; I'm the regulator, I still have responsibilities to be fair and vigilant and protect the public, and I do that. But I enjoy being an advocate for the future of the state's business reputation.
CP: What can you tell me about the history of these regulations and how did we get to this point before House Bill 1283?
PF: Well, everybody's aware of how businesses that have a certain share of business will seek to use regulations and statutes to protect their share of the market against competition. But the genius of the private sector's system is based upon competition, and what happens over the decades of a very powerful alcohol lobby in Annapolis is that they're able to pass all sorts of provisions that protect the incumbents' share of the market and prevent new people from coming in.
And you saw that alive and well in House Bill 1283, where they say, OK, you can only sell your own beer that you produced with your own money and your own labor, you can only sell it at your own tap room on certain days and certain hours. I mean, has anyone ever seen the state restrict how much milk you can sell and what hours you can sell it in? No. They say, Well, alcohol is a heavily regulated product, and that's why they have these impediments. No, they're lying. The reason they have the impediments is that their lobbyists are well connected enough to damage what they view as competing businesses, which are brewery tap rooms. It has nothing to do with health and safety. For 70 years, that's been the order of the day and now we're going to try to turn the boat over and scrape all the barnacles off the bottom and make it all shiny new and very fast in the water and put it back in the water.
CP: What did you hear during the course of testimony or during task force presentations that surprised you most?
PF: I've heard most of the arguments before, since this is my now 11th year as comptroller. I have a lot of friends in the three-tier system and they have communicated to me their points of view, so nothing really surprised me at the gathering. There's a certain muted undercurrent to the meetings because nobody wants to—particularly from the brewers' perspective—nobody wants to be too aggressive, because under the current statutes and provisions, the brewers are pretty much at the mercy of the distributors, so nobody wants to offend anybody.
CP: At the first session, which I attended, the mayor of Salisbury talked about the effect of breweries on his town in revitalizing the downtown area. In your estimation, what is the impact of a brewery, whether it opens in a city like Baltimore or a small town?
PF: I think they're game-changers, partly because they're magnets for millennials and young families. They just provide a very good strategic partner for any kind of community-strengthening efforts. I was in Hyattsville, in Prince George's County, on Saturday going to their arts festival, and they have combined it with a festival around ales. It was the Hyattsville Arts and Ale Festival. And having gone to previous Hyattsville art festivals, [I can tell you] the foot traffic was double this year because they combined with local breweries like Franklin and others over there. Beer is a hot commodity, so to speak, among lots of people that the state is very interested in presenting its best foot forward with.
I hark back to a couple of months ago, I went to Monument City Brewing Company over on the east side of Baltimore City, they were opening up their new brewery. That was a ribbon-cutting in a driving rain with a tent set up outside the new brewery, in an industrial area, Highlandtown, and there had to be 350 young people with families there celebrating the ribbon-cutting. A lot of energy in the air. And it's always the same feel.
I've visited recently the Brewer's Art, Monument City Brewing Company, Oliver Brewing Company, Peabody Heights Brewing, Union Craft, Key Brewing, Heavy Seas Beer. They're all in the immediate Baltimore region and they're all dynamic, entrepreneurial, innovative entities that are manufacturing—let me underline that, we keep talking about trying to recruit manufacturers to Maryland; we have them, all these breweries are manufacturing beer.
I just urge the decision makers in the state, as far as the policies, to understand that the craft brew industry is not coming to Annapolis with their hand out asking for money, asking for special favors, trying to wall out their competition and get something for themselves. They aren't interested in that at all. All they want is the legislature to get out of their way and stop the games and the gamesmanship and let them brew beer and sell beer to the public.
CP: Ultimately the same people you will have to convince are the same people who passed this bill. Do you think you can convince them?
PF: Yes, I do. Politics is a stimulus response profession, I guess you'd call it. And I believe a lot of people around the state are going to weigh in on the need for these reforms. And believe me, craft brewing is a very stimulating item. I have every confidence to think that the legislature, particularly next session, which is in an election year, will be responsive, because if you look when we decide what we're going to recommend, everybody's gonna recognize that it helps everybody. It's a win-win. But yes, you're right, there's still a certain amount of "We have the power to squash this sector, so we'll do it just because it feels good." And that's—hey, welcome to Annapolis.
CP: As you no doubt know, distilling has been coming back in a big way in recent years, and Maryland has had a pretty continual wine presence. Do you think the resulting report will have spillover into that? Or do you need to consider new things for those parts of the spirits industry as well?
PF: Distilleries are still very much in a beginner mode. We have 21 distilleries in the state, and they're gonna explode if we can get some economic development proposals that benefit them as well as the brewers. We're considering some of those. There are 90 wineries, and a half dozen of them are currently producing wine that is better than anything produced in California or France. They haven't been recognized because Maryland has been prejudiced by some of its wine history, where mostly sweet wines were produced. But the Maryland wine industry is about to take off like a rocket based on the products that are being produced right now. That's another story.
In answer to your question, what we're proposing for beer will also be helpful to the wine and distilling sectors, because we're going to have some economic development proposals for Maryland crafted and manufactured alcohol products.
CP: I imagine you've gotten to try a lot of beer doing this, touring all these different breweries. What's your favorite?
PF: Galaxy Maid by Attaboy.
CP: What about it?
PF: It was a summer IPA. I thought it was really remarkable coming from, essentially, a brewery that's been in operation for less than a year. And I don't mean to pick favorites, I love every beer produced in Maryland. That was a special beer among all the special beers that I've sampled. It's a tough job I have. Somebody has to do it, though.
This interview has been edited for clarity and condensed.