Flying Dog Abandons Plans for Brewery Expansion

For the second time in as many years, Flying Dog Brewery is scrapping plans for a farm brewery project.

Citing “regulatory and legislative issues” in its home state of Maryland, Flying Dog has halted plans to build a $54 million destination brewery, despite investing more than $2.5 million to purchase the land late last year.

In mid-2015, the company walked away from a 15-barrel brewery and tasting room project in Lucketts, Va., which was to be situated on a 53-acre plot of farmland located just 17 miles from the Flying Dog facility in Frederick, Maryland.

Speaking to Brewbound, Flying Dog CEO Jim Caruso said expanding in Maryland given the current regulatory and legislative climate “is not a rational decision,” adding that the company has permanently placed the project on hold.

“Everyone is well aware of the many, many reasons that the Maryland laws are not conducive to breweries expanding, and it’s not different for us,” he said.

Earlier this year, Maryland lawmakers passed legislation that allows in-state breweries to sell up to 3,000 barrels of beer directly to consumers via their taprooms. However, breweries are required to buy back the last 1,000 barrels from their wholesalers — a costly process that many brewers opposed.

Brewers had originally sought a 5,000-barrel cap, but lawmakers pushed 3,000 barrels as a “compromise” intended to ensure that Diageo would move forward with plans to build a Guinness brewery and taproom in Relay.

Other provisions of the law, which went into effect July 1, include a buyback requirement for breweries making in excess of 1 million barrels in order to operate taprooms and stricter limits on hours for new breweries. The new law left many of the state’s brewers and officials disenchanted and led Maryland comptroller Peter Franchot, the state’s alcohol regulator, to form a task force to review the state’s liquor laws.

Caruso declined to go into specifics about his issues with the law other than to say “everything about it.”

“I can’t imagine that the other 75 brewers in the state don’t have the same concerns and more because of their different scales of operation and so forth,” he said. “These are issues that affect the entire industry.”

Last December, Flying Dog, the largest craft brewery in Maryland, closed on a $2.55 million deal for 32 acres of farmland, located near the Frederick Municipal Airport. The site had been earmarked as the future home of Flying Dog’s new farm brewery, taproom and concert venue.

In a press statement, Flying Dog said the goal of the project was “to ensure that Flying Dog will have an uninterrupted supply of beer as it continues to grow.”

Caruso told Brewbound that he currently has the capacity he needs to meet production demands. Flying Dog is on pace to sell about 122,000 barrels of beer by the end of the year, and the company plans to grow sales by 15 percent annually — doubling its business in the next five years, he added. To bring that plan to fruition, Caruso said Flying Dog is focusing on growing its sales in the Mid-Atlantic region and expanding his company’s chain store business.

To maintain its “uninterrupted supply of beer” in the future, Caruso said he is keeping his options open, although he declined to offer specifics.

“Entrepreneurs are successful because they’re resourceful, and they always have options,” he said. “So some of my options are firmed up, some are still in the works.”

One option that isn’t on the table, however, is relocating Flying Dog to another state. Following last year’s contentious legislative session, officials in nearby Virginia began contacting Maryland craft brewery owners in hopes of luring them to a more craft-friendly business climate. Caruso said he’s been in contact with Virginia officials, but he has no plans to leave for the state.

“I don’t have any plans to relocate Flying Dog outside of Maryland,” he said.

When Flying Dog backed out of the farm brewery in Lucketts in 2015, it cited “recent developments” and “internal business” as reasons for stepping away. That project, which was to be named “Farmworks,” continued on without Flying Dog, eventually rebranding as “Vanish Farmwoods Brewery.”

Caruso told Brewbound that he’s unsure of how he’ll use the farmland he acquired in Frederick, however he did tease plans to pursue starting a distillery in the near future.

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