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Maryland brewers to pour more at their taprooms, 'have room to grow' under legislation signed by Gov. Hogan

At the Guinness Open Gate Brewery in Baltimore County, officials have been carefully watching how many pints of beer they’re selling, worried about running into Maryland’s limit for how much beer can be sold in brewery taprooms.

“We were projected to eclipse the 3,000-barrel limit, probably late November, early December,” said Dwayne Kratt, senior director of state government affairs for Diageo, the international liquor company that owns Guinness. “Once you’re over the limit, you can’t serve.”

Guinness and Maryland’s craft brewers successfully lobbied lawmakers this year to increase the limit — up to 5,000 barrels, or roughly 1.25 million pints — and Republican Gov. Larry Hogan signed the bill into law Tuesday. It will go into effect July 1.

“This is really a great day for Maryland beers and Maryland breweries,” Kratt said. “We’re really happy we all worked together on a bill to make sure we could stay open.”

The increased barrel limit will both entice brewers to locate in Maryland and give brewers already here the ability to plan for the future, said Cindy Mullikin of Mully’s Brewery in Calvert County and president of the Brewers Association of Maryland.

“They know they have room to grow,” she said.

Just two years ago, the sales limit for brewery taprooms was just 500 barrels, or 125,000 pints. The limit was raised to 3,000, largely in response to the new Guinness brewery and taproom, which was in the works at the time and projected to draw hundreds of thousands of visitors a year to its campus in Relay.

The 3,000-barrel limit had a catch: The first 2,000 barrels could come straight from the brewery’s production line. But the last 1,000 had to be sold to a distributor and bought back to sell in the taproom.

That “buyback” provision was eliminated in this year’s update of the law, which was dubbed the “Brewery Modernization Act.”

The legislation was one of two brewer-backed bills state lawmakers passed this year and Hogan signed into law Tuesday. The other makes it easier for breweries to end or renegotiate their contracts with distributors, starting Jan. 1.

The old law was so onerous, Mullikin said, that some small breweries decided to stay small so they could distribute their own beer to stores and bars.

“They were scared of being locked in,” Mullikin said. “That stopped some breweries from wanting to distribute.”

The old law was passed in 1974, when lawmakers were concerned about protecting local liquor distribution companies from large, national beer companies. If a beer company backed out of a contract, it would have put the livelihood of local distributors at risk.

But the landscape of the industry has shifted, with the distributors now having more power in the relationship than the small brewers.

Under the old law, brewers could only quit their distribution contracts if they gave six months’ notice and proved “good cause.” Under the new law, small brewers can leave their distribution contracts with 45 days’ notice, and they must work out a “termination agreement” involving the brewer paying a fee to the distributor and buying back any unsold beer.

“These bills represent the transformational change sought by the craft beer industry and gives our craft brewers greater flexibility to invest, in both infrastructure and employees, here in Maryland,” said Brad Rifkin, a lobbyist for the Brewers Association of Maryland.

The governor has until late May to take action on hundreds of bills lawmakers passed during the General Assembly session that ended April 8. He can veto them, sign them into law or allow them to become law without his signature. Additional signing ceremonies are scheduled for May 13 and May 23.

In addition to the brewery bills, Hogan signed 172 other bills Tuesday, including:

Water Taxpayer Protection Act

This bill prohibits city of Baltimore from placing liens against homes and houses of worship due to unpaid water and sewer bills. Those properties previously could be sent to a tax sale, where investors buy the debt from the city and can foreclose if owners don’t pay it off.

University System of Maryland Board of Regents

The board, which governs 15 universities and higher education centers in the state’s university system, came under fire following the death of University of Maryland football player Jordan McNair last summer. The regents allowed Terrapins coach DJ Durkin to stay on, though he was later fired. A bill signed by Hogan will expand the membership of the board and require it to livestream its meetings, record votes and accept public comments at meetings.

Opportunity Zones

Another bill will expands incentives available in Opportunity Zones, which are 149 areas designated by the federal government to boost development and redevelopment. It also extends the state’s More Jobs for Marylanders program, which provides tax breaks to companies that create manufacturing jobs in the state.

‘Clean’ cars

The “Clean Cars Act of 2019” doubles the amount of money available in credits to owners of electric cars. It also expands eligibility to include fuel-cell electric vehicles, in addition to plug-in electric vehicles. To promote his version of the bill, Hogan rode in a fuel-cell vehicle in February as First Lady Yumi Hogan drove around State Circle.

pwood@baltsun.com

twitter.com/pwoodreporter


UPDATES:

6:25 p.m. This story has been updated to correct the spelling of Cindy Mullikin’s name. The Sun regrets the error.

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