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Frederick News-Post: After tense session, comptroller and lawmakers say they'll push on with brewery reform

March 31, 2018

ANNAPOLIS — As legislators passed a bill to scrutinize the comptroller’s role in alcohol regulation, the proponent of sweeping brewing reforms said he would be back for another round.


In light of Comptroller Peter Franchot’s unsuccessful Reform on Tap push, an attempt to do away with beer production and consumption limits at brewpubs such as Flying Dog and Attaboy Beer, lawmakers passed a bill to study the comptroller’s role in alcohol regulation. House Bill 1316 came back from the Senate without any changes on Thursday.
While bill sponsor Delegate Benjamin Kramer (D-Montgomery) has said it was inappropriate for the alcohol regulator to support measures to increase the availability of alcohol, Franchot, speaking before the bill passed, called the idea of pulling the responsibility out of his office a joke.


The bill’s passage was the latest twist in a brewing battle fermenting since last legislative session, when the General Assembly increased barrel limits in brewery taprooms from 500 to 3,000 per year to accommodate the new $50 million Guinness brewery in Baltimore County.


That legislation included a requirement that brewers that sell more than 2,000 barrels on-site buy the remaining 1,000 from a wholesaler at a markup. Flying Dog Brewery in Frederick County, which did not return calls for comment, canceled plans for a new, $55 million brewery in the city in the wake of that decision. The Department of Legislative Services estimated state revenue would increase by $15.8 million and local revenue would increase by $9.8 million if the expansion went through.


While it’s not clear what the next legislative session — and election — might bring, it’s all but certain that the efforts to further revamp Maryland’s brewing policy will not move forward this year.


Last month, the House Economic Matters Committee voted down Reform on Tap. Additionally, with just over a week left in the 2018 session, bills from the brewing industry that essentially break out the provisions of Reform on Tap look like they will languish in committee without action.


Economic Matters chair Dereck Davis (D-Prince George’s) said the committee wasn’t comfortable with Reform on Tap or its counterparts.


“They were sweeping changes,” he said.


The committee also killed another proposal that would have rolled back last year’s changes. House Bill 1052 was drafted in response to brewers’ complaints about the barrel limits and would have undone the increase, which some in the alcohol manufacturing industry viewed as retaliation for speaking out against regulation.


Davis said that, looking forward, the legislators would review brewing policy and the committee was looking forward to working directly with the brewers when things are “calmer.”


The conversation around Reform on Tap this year became heated as some lawmakers objected to the comptroller, a regulator, becoming involved in policy. In turn, Franchot and some representatives of the brewing industry accused the delegates of making “backroom deals” with the distributing industry.


Supporters and opponents of Franchot’s proposal both accused the opposition of being influenced by campaign donations. Last year, Franchot received $35,500 directly from the alcohol and bar industry, according to a Frederick News-Post review of campaign finance reports. That represented 8 percent of his total receipts, but did not include potential campaign contributions from attorneys or lobbyists representing those businesses.


Davis took in at least $17,125 from the opposing sector, which was also a little over 8 percent of his total contributions. Among that was $4,250 directly from distributors, the sector most opposed to Franchot’s bill.


Sen. Ron Young (D-District 3), who is chair of the comptroller issues subcommittee, said the issue became a personality clash.


“Some egos got involved,” he said.


Speaking last month after his own proposal that would have tied barrel limits to production got an unfavorable report, Young said distributors had a lot of influence over key decision-makers, but he hoped similar proposals could come back next year.


Franchot said he believed the inaction on this year’s bills was a message from the legislators to him.
“It’s predictable that they did it,” he said.


Franchot said he would like to bring back the proposed reform next year and make it, “bigger, stronger, bolder.”
While it is too early to throw out concrete ideas, he floated the possibility of more incentives for brewers, including perhaps a week with no liquor tax.


Kevin Atticks, of the Brewers Association of Maryland, wrote in a text exchange that it was too soon to know what next year might bring, but the brewers had been clear in their message to lawmakers.


“We are looking forward to further educating our legislators about the value and benefits breweries bring to Maryland, and remind them just how far behind our laws have become,” Atticks wrote.
 

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