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Flying Dog CEO Jim Caruso, photographed at the Frederick brewery in March 2016, said in a statement the company's plans to build a new brewery are on "permanent hold."
Flying Dog CEO Jim Caruso, photographed at the Frederick brewery in March 2016, said in a statement the company's plans to build a new brewery are on "permanent hold." (Karl Merton Ferron / Baltimore Sun)

Flying Dog Brewery, Maryland's largest producer of craft beer, has placed its major expansion plans "on permanent hold" because of recent and much-debated legislation regarding state brewery regulations, chief executive Jim Caruso said in a statement on Friday.

Late last year, Flying Dog purchased nearly 32 acres of farmland near the Frederick Municipal Airport for $2.55 million to create a brewery five times the size of its current 50,000-square-foot facility. Production capabilities would have increased to 8 million cases of beer annually, Caruso told The Baltimore Sun in 2016. (Last year, the company projected to ship less than 2 million cases.)

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Now, those plans have halted.

Flying Dog Brewery and University of Maryland announce agricultural partnership focused on hops production.

"The primary goal of [the expansion] project was to ensure that Flying Dog will have an uninterrupted supply of beer as it continues to grow," Caruso said in a statement. "Because of regulatory and legislative issues that relate to all breweries in Maryland, Flying Dog has put that project on permanent hold and is developing other viable options to ensure that it has an uninterrupted supply of beer for its markets into the future."

Through a spokesman, the Frederick-based company declined to clarify which specific regulations led to the decision.

Last year, a protracted debate between breweries — including Diageo, the conglomerate bringing a Guinness brewery to Relay — and state lawmakers over operating hours, production capabilities and other regulations played out during the General Assembly. A bill with compromises to both sides was eventually passed, though brewers still expressed displeasure with having to make concessions. The new legislation increased the amount of beer breweries are able to sell in their on-site taprooms, but taproom operating hours at new breweries were reduced.

Soon after the debate, Comptroller Peter Franchot created a task force to examine and improve the state's laws regarding beer.

This is not the first time that Flying Dog, which is known for its best-selling Raging Bitch beer, has scrapped expansion plans. In 2015, Flying Dog canceled plans to create a farm brewery in Lucketts, Va., due to logistical problems concerning the growth of hops on the land.

As Gov. Larry Hogan holds his final bill-signing ceremony on Thursday, many in the liquor industry are watching to see if he allows a bill changing the rules for Maryland breweries to become law.

The latest plans were more ambitious. The brewery — which employed 128 people as of last year — hoped to host concerts at a clamshell amphitheater, create a larger taproom and upgrade production technology. Flying Dog had eyed a 2018 opening date, Caruso said last year.

While the company would not elaborate on the other expansion options it is exploring, Caruso's statement to The Sun ended with a mention of another potential project in the works.

"Flying Dog is in the early stages of getting back into the distillery business, but no specifics have been confirmed at this time," he said.

Baltimore Sun reporter Pamela Wood contributed to this article.

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