The Reform On Tap Act of 2018…Making Maryland Craft Brewing Great Again!

by Miles & Stockbridge P.C.

After listening to Maryland Comptroller Peter Franchot’s press conference on November 20, 2017, at which he unveiled his newly proposed legislation, entitled “The Reform On Tap Act of 2018”,  it seemed clear that the theme of the proposal was “no limits.”

The purpose of the new legislation is to remove most, if not all, of the restrictions on the production, sale and distribution of beer by Maryland-based craft breweries. During the press conference, one speaker after another carefully reviewed how Maryland’s craft brew laws regulating beer production, sales and distribution unfavorably compare to the laws of Maryland’s neighboring states and the District of Columbia. It quickly became clear that Maryland breweries – businesses which create thousands of jobs for Marylanders and greatly stimulate Maryland’s tourism industry among other things - are at a distinct competitive disadvantage to their competitors in Virginia, Pennsylvania, Delaware and the District of Columbia.

In an effort to make the path to success easier for Maryland craft breweries and ease these competitive restrictions, Comptroller Franchot’s proposed legislation would accomplish the following:

  • Removal of all limits on beer production, taproom sales and take-home sales;
  • Repealing of the “buy-back” provision that requires brewers to purchase their beer from distributors at an increased cost if the brewers exceed the 2,000-barrel limit on taproom sales;
  • Lifting of unnecessary restrictions for take-home sales;
  • Guaranteeing the issuance of Class B or D beer licenses to microbreweries upon request;
  • Allowing local jurisdictions to set guidelines for taproom operating hours;
  • Allowing small brewers to self-distribute without limitation; and
  • Removing restrictions on contract brewing.

If passed in the form proposed, this legislation would put Maryland breweries on par with the breweries in surrounding states and widen the path to competition and success for these Maryland businesses. The big question remains, though, will this legislation pass?  

As cited during the press conference, an economic impact study conducted by the Bureau of Revenue Estimates found that in Maryland, “the craft beer industry had an overall economic impact of $802.7 million and supported or created 6,451 jobs in 2016, alone. The industry contributed nearly $110 million in local, state and federal revenues, which directly supports investments in education, public safety, transportation and the environment.” Those numbers should be difficult to ignore for legislators who, to this point, have shown little willingness to help the craft brew industry in Maryland. Hopefully, this new legislation will help to make Maryland craft brewing great again. 

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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