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Md. comptroller’s craft beer report harshly criticial of restrictions

5.23.17 BALTIMORE, MD- Tim Scouten, Brewer at Peabody Heights Brewery. (Maximilian Franz/The Daily Record)

5.23.17 BALTIMORE, MD- Tim Scouten, brewer at Peabody Heights Brewery. Maryland’s craft brewers are chafing at some of the state regulations that limit their operations. (Maximilian Franz/The Daily Record)

The limits placed on Maryland’s craft beer industry in the legislation that brought Guinness to the state have created a poor regulatory and statutory environment for a burgeoning sector of the economy, a report from the comptroller’s office said.

The rules that govern the industry have become a sign of the state’s general attitudes toward business, said Comptroller Peter Franchot.

“(The limits) have become emblematic of the state’s business reputation,” he said.

The report did not make any specific legislative proposals. The comptroller’s office expects that to come out before Thanksgiving. But it’s clear Franchot and others are prepared to back lifting some if not all of the limits placed on craft brewers in Maryland.

Len Foxwell, Franchot’s chief of staff, suggested that the report’s title, “Maryland Craft Beer: A World without Limits,” could be instructive.

The bill that brought Guinness to Baltimore County last session, HB 1283, served as a focal point for the report.

Currently, craft breweries are limited to selling between 2,000 and 4,000 barrels of beer on premises, through their taprooms. The legislation permitted an additional 1,000 barrels if they were sold to, and bought back from, a distributor.

The comptroller’s report found that these types of limits were typical of the state’s regulation of the industry. That regulation is much tighter in Maryland than in neighboring states, particularly Delaware, Pennsylvania, Virginia and D.C., which impose no limits on brewers.

The comptroller’s office found that Virginia and Gov. Terry McAuliffe were using HB 1283 and other regulations in the state to try to convince craft breweries to move across the Potomac River. The state was offering a more favorable regulatory environment as well as financial incentives, the report concludes.

While the industry criticized the state’s new law, it did lead to the task force, something the legislative members of the panel think could help the industry.

The task force was generously stocked with members from the craft brewing industry.

“The comptroller putting this group together will hopefully help in the future,” said state Sen. Ron Young, D-Frederick.

Foxwell added to the sentiment.

“We would never have gotten together (without that bill),” he said. “This task force would never have existed.”

While the report did not make any specific legislative proposals, it did make some suggestions on how the state could better serve the craft brewing industry.

“What we can do here is advocate for legal and regulatory reform,” Foxwell said.

It pointed to changes in New York that helped grow that state’s craft brewing industry, including the creation of a governor’s ombudsman for craft brewing, who helps breweries cut the red tape.

In Maryland, that industry has had a small, but noticeable impact. A study by the comptroller’s office concluded that the state’s more than 80 breweries have created more than 6,500 jobs in the state. Those breweries have generated $228 million in wages and $108 million in taxes at the federal, state and local levels.

The industry has also had a positive impact on community reinvestment. The report found that breweries bring people to a location, rather than the location bringing people to a business. Then, breweries bring tourists to their locations.

“This pattern of reinvestment and renewal is occurring in older communities throughout Maryland and has, in the process, established a synergy between the manufacturing, tourism and retail sectors in a way that is highly unique, if not exclusive, to Maryland’s craft beer industry,” the report stated.

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