Franchot seeks to soften rules on craft brewers

If legislation introduced by Maryland Comptroller Peter Franchot passes next year, it will uncork regulations on micro-breweries that he called stifling and increase the economic benefit to Maryland from millions to billions of dollars every year.

Franchot plans to propose the 12-point Reform on Tap Act of 2018 during the Maryland Legislative Session, in an effort to no longer limit sales or how much can be taken home from breweries in Maryland.

Beer production wouldn’t be limited and city officials could no longer set what hours taprooms can be open.

Franchot unveiled his proposal last month, saying the current regulations are hurting a business that has great economic potential.

“I am the chief alcohol regulator in the state. I enforce regulations and laws in the state and … I have become knowledgeable about the 80 independent family owned breweries in Maryland,” Franchot told the Salisbury Independent during a phone interview this week.

“I love the innovation and entrepreneurship of the sector. I think it has a large growth potential.  Right now there is about $800 million in economic activity and that could be several billion in a few years,” he said.

His proposal will address “decades of inconsistent, antiquated statutes and regulations that have been added to Maryland law and have collectively resulted in a  large impediment to the growth of these independent breweries,” he said.

John Knorr, who, with his brother Tom, owns Evolution Craft Brewing Company in Salisbury and 10 restaurants locally and in Baltimore, told the Salisbury Independent his is “definitely in favor” of Franchot’s initiative.

“The laws … of many years ago are just not relative in this market any more. Fifteen years ago there were just a handful of micro-breweries. In this climate it is harder than it was for them to navigate. Now there are restrictions on volume, on hours,” he said.

The Knorrs, who have a Class 7 license, fought in the legislature “to have the limit raised so we could sell our distributors more beer,” he said.

“It was the dumbest thing I ever heard in my life, having to fight to sell more  beer and employ more people,” he said.

Knorr is on the comptroller’s Reform on Tap Task Force, composed of a handful of brewers, distributors and public figures.

“He put together a collective of industry professionals to drill down on what the true issues were and came up with proposals for legislative change to get Maryland in parity with neighboring states or to be the leader in neighboring states,” Knorr said.

Both he and Franchot said less stringent rules in neighboring states – Delaware, Virginia and Pennsylvania, plus Washington, D.C. – are aggressively and successfully luring micro-breweries away from Maryland.

Legislation to loosen regulations has been brewing for a the past few years, Knorr said. Then, the end of last year Franchot “got fired up because they were going back and forth with legislation that could have been made a lot better and easier,” he said.

“There has been huge growth in local alcohol business. Maryland wineries and distilleries are really firing up. There has been a lot of growth in that industry. People who used to buy a spirit from Europe or a spirit from Canada, now they are looking to buy a spirit from the mid-Atlantic, a spirit from Maryland,” Knorr said.

Beers from EVO are sold in 25 markets in the country and now also in Japan.

“We’ve grown a ton and we’re on the path for more growth. We have 80 employees in the brewery and restaurant at EVO and 500 employees company wide,” he said. EVO opened in Delmar, Del., in 2009, then moved to its current location, on South Salisbury Boulevard, in 2012.

“When it comes to these regulations, Maryland is light years away,” Knorr said and Franchot agreed.

“The distribution franchise law is unbelievably out of date. It puts Maryland at a complete disadvantage with Virginia, Delaware, Pennsylvania and the District of Columbia and, frankly, every other state in the country,” Franchot told the Salisbury Independent.

His proposed legislation “would allow the state to advertise itself as the No. 1 state in the country for small, independent breweries to locate,” Franchot said.

Regulations were originally written to be strict, he explained, to protect the public from alcohol and from underage drinking and driving.

“That was in the public interest. What happened was, other members of the alcohol industry accumulated tremendous power in the legislature and passed statutes and regulations not affecting public safety,  but preserving a competitive advantage they had. That’s where this briar patch of regulations started,” Franchot said.

His legislation, he said, is the most broad-based and potent support for any policy legislation he has seen in his political career.

“I kid people  and say I somehow managed to unite the Trump voters and the Clinton voters in a common cause,” he joked.

“I believe it’s been very well received by the public. The legislature is committed to  looking at this objectively. And once they do they will see the wisdom of moving forward.

“We can get out of their way and allow the wonderful manufacturing sector, allow them to grow, or continue the old, ‘You have to come and beg for every crumb you need’ because everybody is now viewing Maryland as the punchline when they talk about breweries,” Franchot said.

On the Shore, breweries are a “vibrant manufacturing businesses,” he said. In Maryland, 6,500 people are employed in breweries. In 2016, the statewide economic impact was about $800 million, according to the Bureau of Revenue Estimates.

“Peter Franchot has been a great advocate this year. Gov. Hogan has been a great advocate. The majority of our Shore delegation has been supportive going into this next session,” Knorr said.

“Some of them weren’t all clear on the legislation last year. Carl Anderton has been an absolute advocate of the brewery for years. He’s really rallied a lot of the delegation. Jim Mathias has been a leader,” Knorr said.

“Tom and I are stakeholders in the brewery business and we are extremely pleased with their support.”

Reach Susan Canfora at scanfora@newszap.com.

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