Maryland small brewers squaring off in Annapolis with alcohol industry (original) (raw)

Calling state lawmakers “ham-handed” idiots is not a typical recipe for passing proposed legislation in the Maryland General Assembly.

But that’s how Comptroller Peter Franchot has characterized lawmakers whose support he needs for a bill that he says would give small craft beer makers a better chance to compete against the “corporate beer monopoly.”

The comptroller says he is fighting for the up-and-coming small craft beer business while the General Assembly is supporting a traditional alcohol industry dating back nearly a century.

But the delegates scheduled to discuss the comptroller’s bill at a Friday hearing in Annapolis have not taken kindly to the Democrat’s slights. And they have hit back in what Franchot has dubbed on his Facebook page as “The Fight for Maryland Beer.”

“There will be fireworks” at the hearing, said Kevin Atticks, executive director of the Brewers Association of Maryland, which represents craft breweries.

Lawmakers are upset that Franchot’s so-called “Reform on Tap” bill proposes to rewrite alcohol regulations that they rewrote just last year. The comptroller wants to increase the amount of beer small breweries can sell beyond what was allowed by last year’s regulations — a compromise forged with established bars, liquor stores and distributors.

In response to Franchot’s proposal, two delegates retaliated with a bill that would undo last year’s reforms. Two other lawmakers introduced a measure that calls for examining whether the comptroller’s office is even the best state agency to oversee the alcohol industry.

Franchot quickly hit back at that idea in a letter published this week by the Dorchester Banner, a Cambridge newspaper.

“Just when we thought the Annapolis political bosses couldn’t be any more ham-handed in their tactics … this,” Franchot wrote. “House Bill 1316, introduced by Delegates Warren Miller (R-Howard County) and Ben Kramer (D-Montgomery County) would actually set up a Task Force to consider stripping my Office of our responsibility to regulate Maryland’s alcohol industry.”

He said the desperate move, which he described as “idiocy,” was an “obvious response to my efforts, together with small businesses, consumers and community leaders across our state, to reform our state’s antiquated, dysfunctional beer laws.”

At issue is the way Maryland regulates the alcoholic beverage industry. Since Prohibition, most beer, wine and liquor in Maryland has been sold through a three-tiered system — producer, wholesaler and retailer (including bars and restaurants).

Brewers want to sell as much as they can directly to the public because it means greater profits, and more choices for beer-thirsty consumers. The wholesalers and retailers want to preserve a system that protects their businesses and, they contend, also public safety and health. Limits set by the system create checks and balances that promote temperance, the industry says.

The brewers won a qualified victory last year during discussions that began because the owner of Guinness announced plans to open its North American headquarters in Baltimore County. The legislation paved the way for that brewery and taproom in Relay but also increased the amount other local beer makers can sell through their taprooms.

Franchot contends that the new law, which left both craft brewers and distributors unhappy, remains more restrictive than those in surrounding states and has hurt Maryland’s business image.

His proposal to remove limits set last year on beer production, taproom sales and distribution to bars and liquor stores emerged from a task force that has been working for nine months — without, lawmakers point out, input from them.

Franchot and others say that without the massive advertising budgets of international beer brands, independent microbreweries like Baltimore’s Union Craft or Peabody Heights need to operate taprooms to reach customers, even though that circumvents the traditional roles of the industry’s distribution and retail segments.

In recent weeks, the comptroller has called on beer brewers and lovers to descend on Annapolis to convince lawmakers of a need to help upstart breweries take advantage of a national surge in the craft beer business.

“The Maryland General Assembly will see the extent of the public support for reform in Maryland,” said Len Foxwell, Franchot’s chief of staff.

Franchot’s opposition to the new regulations began almost as soon as they were approved last year, and he was joined in his displeasure by Republican Gov. Larry Hogan. Both officials criticized the legislation as not doing enough to promote Maryland’s beer business.

Hogan allowed the bill to become law without his signature. Franchot set out to explore changing it by convening his task force, made up mostly of alcohol industry representatives, in May. He unveiled his legislative proposal in November: It would eliminate limits on beer production and taproom sales and expand small brewers’ ability to choose a distributor, or to distribute their beer themselves.

After hearing months of complaints from Franchot and brewers about the compromise they helped secure last year, many in the House of Delegates say they are peeved, if not downright angry, as Franchot and the beer industry have sought more changes.

Del. Talmadge Branch, a Baltimore Democrat, and Del. Dereck Davis, a Prince George’s County Democrat who chairs the House committee that will hear the beer legislation, responded with a bill to roll back most of the provisions adopted last year.

“We’ve heard all year about how awful [the legislation] was,” Davis said.

“We’ve felt really bad about it,” he added sarcastically. “If you all were pleased with the way things were, we don’t want to cause you any pain, so we’re just putting things back to the way they were.”

Del. Benjamin F. Kramer, a Montgomery County Democrat, has proposed a task force to study whether the comptroller’s office “is the most appropriate agency to ensure the safety and welfare of the residents of Maryland.” Kramer insists it isn’t a political move, but one that emphasizes the risks alcohol poses to public health — a factor critics say was not a priority in Franchot’s proposal.

“We are talking about a legal drug here,” Kramer said. “It would appear at face value that has been lost, evidently, from [Franchot’s] perspective.”

Barbs have been traded in both directions. In a recent Facebook post, Franchot wrote that as bad as last year’s legislation was, Branch’s proposal is far worse, sending a message “that our state’s government is hostile to our current and future craft brewers, and indifferent to the jobs, economic growth and neighborhood reinvestment they provide.”

In the Dorchester Banner letter, Franchot criticized Kramer’s bill, while trying to avoid “giving this stunt too much dignity.” He also took aim at the more established beer distributors and other businesses that he says unfairly benefit from the state’s existing regulatory regime.

“Only in Annapolis would the corporate beer monopoly have the audacity to demand a new state regulator because of a policy disagreement they have with the current one,” he wrote.

Just as beer lovers have rallied around Franchot — two Frederick breweries named new varieties in his honor, Saison du Franchot and Franchot Comes Alive — opposition has built up against him. The Maryland Teamsters will oppose the “Reform on Tap” plan Friday, saying it “jeopardizes the livelihood of union workers” who work for distributors moving beer on forklifts and trucks.

Eric Best, vice president of the Maryland Beer Wholesalers Association and a member of Franchot’s task force, said he would be at Friday’s bill hearings in opposition to the comptroller’s proposal.

“This law is serving the economic interest of one group” — small brewers, Best said.

Franchot said he plans to testify in person at the hearing.

Apart from the more controversial items on the agenda are several bills that are similar to elements of Franchot’s plan, proposing to repeal various restrictions and limits. Davis said the committee would consider all of the proposals.

“We want to have a strong, thriving craft beer industry — a responsible craft beer industry,” he said. “We’re not going to just eliminate all regulations.”

Originally Published: February 22, 2018 at 12:00 PM EST