Commentary: Why are Maryland craft beer makers going away?

The closure this month of the Pariah Brewing Company is merely the latest in a series of closures and relocations that has shaken Maryland’s beer sector in recent months. I believe we should take this opportunity to revisit Maryland’s business climate for craft beer.

I previously served as the principal staff regulator of Maryland’s alcohol industry and as lead staff to former Comptroller Peter Franchot’s 2017-18 Reform on Tap initiative. While I have no direct knowledge about of what happened in the case of Pariah, I believe it is important to place its closure within a larger context.

During the past decade or so, the Maryland beer industry grew exponentially despite outright hostility from some of our state’s elected lawmakers. Laws and regulations were authored for the benefit of politically wired distributors who are financially incentivized to sell Budweiser and other corporate brands at the expense of local craft beer.

The most infamous example was 2017′s H.B. 1283, which, if not amended at the eleventh hour, would have halted the craft beer industry in our state. It contained a buyback provision, in which a brewer that wished to sell more of its own beer in its own taproom would have to sell the beer to a distributor at dealer cost, then buy it back at full retail cost. That buyback provision of the law was later repealed. Such illogical and punitive proposals, layered atop a series of highly restrictive laws, illustrated precisely why Maryland’s craft beer sector has now fallen behind neighboring states in size per capita, production, sales and economic impact.

The events of the following year provided further confirmation of bias. Folks tuning into a 2018 hearing on legislation to modernize Maryland’s distribution and retail laws were subjected to a stream of uninformed attacks on the industry from hostile lawmakers.

Then-Del. Ben Kramer, of Montgomery County, for instance, expressed unfounded concerns about the safety of craft beer products and about the prospects of underage consumption — as though 18-year-olds on a budget would seek to get intoxicated by consuming double-hopped New England IPA at $8 per pint. He raised such issues while saying nothing about package stores that routinely marketed 99 packs to college students.

There has been little evidence that the attitudes among certain lawmakers toward craft breweries have markedly improved. Craft breweries remain confronted with 24 different sets of laws and regulations enforced by county liquor boards that operate as virtual fiefdoms.

Craft breweries remain subject to production, distribution and retail sales limits that exist for no other industry. They remain saddled with a 9% alcohol sales tax, which puts every segment of the alcohol sector in Maryland at a prohibitive disadvantage with neighboring states.

Add to this the fact that little has been done at the state level to help the craft beer sector access inexpensive seed capital, reduce the costs associated with cleaning and repurposing aged industrial sites and market their products in a world where Bud, Miller and Coors advertising is ubiquitous.

The closure of one brewery can be dismissed as anomalous. The closure of multiple breweries, however — from Baltimore’s Full Tilt Brewing and Upper Marlboro’s Calvert Brewing Co. to Silver Spring’s Astro Lab Brewing and Calvert County’s Scorpion Brewing — clearly represents a trend. They are the inevitable consequences of a state whose leaders say the right things about this amazing sector while doing something else entirely in the backrooms of our legislature.

It’s my hope that Maryland and its leaders will make this market contraction an opportunity to revisit its business climate for craft beer. We can start by addressing why Maryland — the wealthiest state in the United States, according to some metrics — hasn’t helped this industry sector grow at a pace commensurate with neighboring states or its own demographics.

Sensible reform will not come easy. The status quo works just fine for the corporate macro brands that already have a disproportionate and government-blessed stranglehold on the marketplace. For the survival of an industry that can mean so much to the Maryland economy, it is an effort that must happen now.

Len Foxwell served as chief of staff to Maryland Comptroller Peter Franchot from 2008-2020. He now serves as the founding principal of Tred Avon Strategies in Annapolis.

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