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WAMU: As Craft Beer Industry Booms, Maryland Is Losing Brewers To Virginia (AUDIO)

Audio available at https://wamu.org/story/18/03/08/craft-beer-industry-booms-maryland-losing-brewers-virginia/

In the middle of white-collar downtown Silver Spring, Denizens Brewing Company is a throwback to America’s manufacturing heyday. A forklift beeps as co-owner Julie Verratti walks the concrete floor, pointing out wooden barrels full of intriguing brews.

“We have everything from tequila barrels to bourbon barrels to mezcal to white wine to rum,” Verratti says. “You name it, if it’s had some sort of alcohol in it, we’re going to age beer in it.”

Denizens has produced a sour ale aged four-and-a-half months in tequila barrels. A Russian imperial stout aged 10 months in bourbon barrels is called the “Chapless Horseman.” Craft brewing is creative that way — not to mention economically stimulating. Denizens employs 30 people, and on warm weekends, tables outside brim with customers quaffing its popular IPAs, pilsners and lagers.

But Verratti says Maryland’s regulations are stifling brewery growth in the state. “We’re fighting tooth and nail just to be recognized as a legitimate industry,” she says.

And now, she and dozens of other Maryland brewers are taking the fight to Annapolis.

A ‘Six Pack’ Of Beer Bills

Maryland has some of the strictest brewing laws in the mid-Atlantic. The state caps how much beer certain brewers can produce, how much they can sell in their taprooms and how late they can stay open. A law passed last year created a rule that requires many breweries to buy their own beer from wholesalers.

Meanwhile, Maryland’s neighboring states offer a more relaxed regulatory environment that brewers say has launched robust beer businesses in each jurisdiction.

“We’re fighting tooth and nail just to be recognized as a legitimate industry.”

“All you need to do is look to the north or to the south, from Virginia down to North Carolina, and you will see incredible growth not only in the number of breweries but also in the size and scale of the breweries,” says Kevin Atticks, executive director of the Brewers Association of Maryland. “Every year there are new regional and national brands that are coming out of these states’ industries, and we’re not seeing that in Maryland.”

That’s why brewers have thrown their weight behind a slew of new bills that would relax the state’s brewing regulations. A chunk of that legislation — nicknamed the six pack — is backed by Atticks’ trade group. Another bill was spearheaded by the office of Comptroller Peter Franchot, which assembled a 40-person taskforce to help create sweeping legislation called “Reform on Tap.”

But the proposals are facing opposition from Maryland’s alcohol distributors and retailers, who contend that letting breweries sell and distribute more of their own beer threatens their livelihood. Through aggressive lobbying, wholesalers and store owners — many of whom also run family-owned operations — have largely succeeded in tilting the state’s alcohol regulations in their favor.

Reform on Tap is also politically challenged. Bad blood between the comptroller and members of the House of Delegates’ Economic Matters committee was on full display in a contentious committee hearing February, stirring doubts that the bill will find the support it needs.

As the brawl plays out, Franchot’s office says neighboring states are taking advantage of Maryland’s vulnerability, and swiping breweries that might otherwise do business in the Old Line State.

An Emerging Threat From The South

It’s Virginia that has Len Foxwell particularly worried.

Foxwell, Franchot’s chief of staff, says when the comptroller attended the national Craft Brewers Conference in D.C. last year, the place was crawling with Virginia officials trying to coax Maryland brewers across the Potomac.

“They were openly courting Maryland brewers with financial incentives,” Foxwell says, “and educating our brewers on the more competitive, business-friendly laws they have in the commonwealth.”

Officials in the Virginia governor’s office say Foxwell is correct — this is a game of hardball, and they’re playing to win. “We want craft breweries here,” says Cassidy Rasnick, Gov. Ralph Northam’s deputy secretary of commerce and trade for rural economic development. “We know it’s a new economic development driver, and it’s been really successful throughout [Virginia].”

As of 2016, Virginia had 164 active breweries, which together generated more than $1 billion in economic activity, according to the national Brewers Association. Maryland had 65 breweries with an economic impact of $826 million. In smaller, pricier D.C., 12 breweries were online that year, producing $235 million. Nationwide, craft brewing is a $70 billion enterprise that employs nearly half a million people, the association says.

Industry observers say Virginia has wooed at least two breweries away from Maryland: Stone Brewing and Ballast Point. The California companies now have locations in Richmond and Daleville, respectively. (Spokespeople at both breweries did not respond to interview requests.) Meanwhile, Maryland brewer Flying Dog shelved a $54 million expansion plan last year, citing “regulatory and legislative issues” in the state.

That’s why Rasnick says Maryland lawmakers need to wake up and smell the hops.

“Some of the even biggest breweries in Maryland are really not too far from moving their brewery maybe 10, 15 miles and being in a state that is [more] welcoming to them,” Rasnick says.

Julie Verratti, who’s running for lieutenant governor alongside gubernatorial candidate Alec Ross, visited Annapolis to testify in favor of Reform on Tap. She says there’s a gap between how Maryland treats big and small businesses.

While Gov. Larry Hogan tries to lure Amazon to the state with a $5 billion incentive package, legislators are squabbling over how much beer small breweries should be allowed to sell.

“There’s a lot of these big, massive Fortune 500 companies that the state will do backflips to try to get them,” Verratti says, “and then they are … hurting the local homegrown Maryland businesses.”

The brewer says Maryland’s independent beer-makers are eager to expand and create more jobs for locals. The state just needs to open the taps and let the beer flow.

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