E-Malt.com News article: USA, MD: Maryland craft beer producers want lawmakers to help them grow

Adam Benesch, a co-founder of Union Craft Brewing in Hampden, would like to take his Duckpin Pale Ale to a farmers' market and let consumers taste and buy it.

John Knorr, co-owner of Evolution Craft Brewing in Salisbury, just wants to brew more beer.
Both want the General Assembly to pass legislation that would help Maryland's burgeoning microbrewery industry continue to grow, Baltimore Sun reported on February 22.

Bills that would open farmers' markets and county fairs to tastings and sales by the state's beer producers and raise the limit on how many barrels brewpubs can produce top the 2014 wish list of the Brewers Association of Maryland. A House subcommittee is expected to consider the production limit bill on February 24.

"We're here because we're a growing industry — both here in Maryland and across the country," J. T. Smith, the association's executive director, told a Senate committee.

The legislation faces stiff opposition from the state's powerful liquor lobby, which sees both bills as a threat to the venerable three-tier liquor distribution structure. That system has kept Maryland's producers, wholesalers and retailers mostly separate since the end of Prohibition — with a few exceptions the distributors aren't thrilled about.

"It has been undermined progressively," Jay Schwartz, lobbyist for the Maryland State Licensed Beverage Association, told the committee.

Maryland's craft beer industry has grown steadily since Hugh Sisson opened the state's first brewpub on Cross Street in 1989 — enabled by a 1988 law that Schwartz called "the first crack in the dike."

The number of breweries in the state has grown from about a dozen a decade ago to nearly 30 today, as sales of and demand for local craft beer boomed, according to the association.

Growth has been particularly explosive over the last five years, with the industry expanding at a 35 percent rate annually, Smith said. The industry now employs 375 people in brewery operations statewide.

One of the fastest-growing producers has been Evolution, which in 2012 moved its brewery from Delaware to Salisbury, where Knorr and his brother Tom operate five restaurants. Knorr said the brewery has grown at a 50 percent rate each year since it opened in 2009 and now occupies 30,000 square feet in the Eastern Shore city's downtown.

Evolution's problem, Knorr said, is that it is growing so fast that by late 2015 or early 2016 it will bump up against the legally imposed maximum production level of 22,500 barrels for a producer with a brewpub license. The Knorrs, backed by the brewers association, want lawmakers to raise that limit — adopted by the legislature in 1997 — to 60,000 barrels.

"We don't want to see this cap slow us down," Knorr said.

He said his company needs the bill passed this year because obtaining financing to expand the operation and ordering new fermentation tanks could take about 18 months.

The bill would affect all 18 beer producers in the state with brewpub licenses, including the Brewers Art and Oliver Breweries in Baltimore. Smith said Evolution, whose flagship beer is Lot No. 3 India Pale Ale, is the only Maryland brewpub now close to hitting that limit.

Smith said brewpubs in surrounding states are not affected by similar limits on their growth. He and Knorr noted that some of the best-known and widely distributed craft breweries, including Delaware's Dogfish Head, started out as brewpubs.

Knorr said his brewery is limited to selling 4,000 barrels a year through one of its restaurants — a cap he is not seeking to raise. The rest, he said, is marketed through wholesalers, including sales to his chain's four other restaurants.

That's why the opposition of the state's beer wholesalers' association puzzles him.

"We just want to sell more beer to our distributors, but our distributors are against us — or their lobby," Knorr said.

But Nicholas G. Manis, lobbyist for the Maryland Beer Wholesalers Association, said that if the Knorrs want to expand, they should sell their restaurants and convert their brewpub permit into a full-fledged brewery license.


26 February, 2014