Legislative Update: Maryland Lawmakers Propose Bill to Reduce Barrel Cap for Small Brewers; Deschutes Receives Virginia Tasting Room Exception

Maryland Lawmakers Attempt to Roll Back 2017 Brewery Law Changes

During Maryland’s last legislative session, several changes were made to the state’s alcohol laws that gave brewers the ability to sell more beer directly to consumers through their taprooms. Now, two Maryland lawmakers are attempting to roll back those changes, according to the Baltimore Business Journal.

Delegates Talmadge Branch and Dereck Davis introduced House Bill 1052, which would reduce the barrel limit for taproom sales from 2,000 to 500 barrels for small brewers. However, the legislation would preserve the cap for brewers who make more than 1 million barrels annually, including Diageo, which is opening a Guinness brewery in Baltimore County.

In a Facebook post, Len Foxwell, chief of staff for Comptroller Peter Franchot, the state’s top alcohol regulator, called H.B. 1052 “an extended middle finger to the Maryland craft beer industry.”

“It seeks to punish Maryland’s independent craft brewers, much as a parent would an outspoken child, by creating a bill that is even more damaging to the industry than was House Bill 1283,” he wrote.

Last summer, Franchot commissioned the Reform on Tap task force to review the state’s alcohol laws. He has since offered House Bill 518, the Reform on Tap Act, in an effort to make the state’s laws friendlier to brewers. That legislation has received the endorsement of several of the state’s mayors, including Annapolis, Frederick, Cambridge and Ocean City, according to the Dorchester Star.

Davis told the Business Journal that he offered the legislation as a response to criticisms from brewers and Franchot after the passage of H.B. 1283.

“We heard the cries of the craft beer industry of how deleterious that piece of legislation was,” he told the outlet. “Sometimes we don’t get it right, so we were hoping to erase whatever we were doing wrong, whatever harm we had caused the industry, and we were going to put things back the way they were.”

Hearings on H.B. 1052 as well as Franchot’s Reform on Tap Act are set for February 23.

Deschutes Receives Carve Out in Virginia Bill

A recently proposed bill in Virginia would put tighter restrictions on craft brewery taprooms and require that at least 20 percent of the beer sold and drank on-site also be produced at those locations, according to the Roanoke Times.

Filed in early January, H.B. 422 would have spelled disaster for Deschutes Brewery, which recently opened a taproom and 20-gallon pilot brewery in downtown Roanoke. The company, which produced about 340,000 barrels in 2017 and is headquartered in Bend, Oregon, is planning to open a secondary production facility in Roanoke by 2021.

Under the original proposal, Deschutes wouldn’t have been able to operate its downtown taproom location because 94 percent of the beer sold on-site would have been brought in from 2,600 miles away.

“The bill would have caused us to have a location that basically couldn’t sell our beer or have that presence in downtown Roanoke,” Deschutes CEO Michael LaLonde told the Roanoke Times.

So LaLonde worked with the Virginia Craft Brewers Guild and Del. Greg Habeeb on an exemption to allow Deschutes’ Roanoke tasting room to continue operating until its five-year lease expires on April 30, 2022.

The bill, with the Deschutes carve out, passed Virginia’s House of Delegates and has since been referred to the Senate Committee on Rehabilitation and Social Services.

South Dakota Lawmakers Pass Competing Bills to Raise Barrelage Cap

Two South Dakota Senate committees last week passed competing bills that would increase the state’s barrelage cap above its current 5,000-barrel limit for direct-to-consumer taproom sales, according to the Argus Leader. However, the bills differ when it comes to self-distribution.

Senate Bill 169, which passed the Senate Commerce and Energy Committee, would allow brewers making up to 30,000 barrels annually to sell directly to consumers through their taprooms as well as self-distribute their beer to retailers. That bill has the support of the state’s brewers as well as South Dakota Gov. Dennis Daugaard.

Meanwhile, distributor-backed Senate Bill 173, which passed the Senate State Affairs Committee, would increase the cap to 12,000 barrels and only allow brewers to bypass a wholesaler when sending beer to their own taprooms.

Those bills now go to the Senate for consideration.

Tennessee Bill Would Allow Sunday Wine and Spirits Sales

Tennessee lawmakers are considering a bill that would permit the sale of wine and spirits on Sundays and five major holidays, the Bristol Herald Courier reported.

Under the proposed legislation, the state would allow cities and towns that already permit beer sales on Sundays and holidays to sell wine and liquor during the same hours.

If passed, the law would allow the state’s retailers to compete with five neighboring states that allow Sunday sales.

Kentucky House Votes to Increase On-Premise Sales Limits at Breweries

The Kentucky House of Representatives last week voted in favor of a bill that would increase the on-premise sales limit at the state’s microbreweries, according to the Associated Press.

Currently, consumers can purchase up to a case of 12 oz. beers (or 2.25 gallons) daily from the state’s breweries. The proposed legislation would increase that limit to the equivalent of two kegs per customer.

Against the Grain co-owner and Kentucky Guild of Brewers president Adam Watson told the AP that the current law has cost him sales due to being prohibited from selling kegs for parties and receptions. It’s also caused issues for his brewery, which cannot sell cases of beer due to packaging its beer in 16 oz. cans.

“I have to pull eight cans out, and then I can sell it to them,” he told the AP. “And if they sit at the bar and have a pint while they wait, I have to pull that much more out of what they’re buying as well.”

The Senate is reviewing the measure.

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