Compromise bill would allow Guinness project to go forward

Deal would allow Guinness project to move foward The Baltimore Sun

Maryland’s brewers, beer wholesalers and bar owners reached an agreement Friday on legislation that would allow a Guinness brewery to open in Baltimore County and let the state’s smaller craft breweries sell more beer in their taprooms.

The state Senate swiftly passed the compromise bill and sent it the House of Delegates, which is expected to give the measure final approval before the General Assembly’s 90-day session ends Monday at midnight.

The legislation would allow production breweries — including the proposed Guinness facility — to sell significantly more beer in their in-house taprooms, and some of that beer could be produced off-site. In exchange, taprooms at new breweries would have limited hours.

“We’re happy we can move forward,” said Dwayne Kratt, senior director of state government affairs for Diageo, the

international liquor company that owns the Guinness beer brand.

Diageo announced plans in January to build a $50 million brewery and taproom in the former Seagram’s bottling plant on U.S. 1 near Relay. Guinness expects the facility, which would be its only U.S. brewery, to draw 250,000 visitors in its first year, making it the county’s largest tourism destination.

Negotiations on the bill have been going on for weeks among Diageo; the Brewers Association of Maryland, which represents independent brewers; the Maryland Beer Wholesalers Association; and the Maryland State Licensed Beverage Association, which represents bars and liquor stores.

For Diageo, the stakes were high. Without the ability to sell significantly more beer in the taproom and to import its trademark Guinness Draught beer, the proposed brewery would not be financially viable, the company said.

Under current law, production breweries are allowed to serve 500 barrels of beer per year in their taprooms, which Diageo estimated to be 125,000 pints. The legislation quadruples the amount to 2,000 barrels and allows breweries to sell another 1,000 barrels if they seek permission from the state and buy the beer from a wholesaler.

“Baltimore County was always our first choice,” Kratt said. “At the end of the day, industry stakeholders and key policymakers got together to come up with something that would make it work. Now it’s our turn to get to work and deliver on our promise.”

The compromise also addresses many concerns of the state’s independent brewers, who also wanted the ability to sell more beer in their taprooms and to sell beer that’s brewed in other locations — collaborations with other breweries or beer that’s contract-brewed off-site.

They were alarmed by a version of the bill that passed the House three weeks ago that would have shortened taproom hours for all production breweries and forbidden contract brewing.

“This is an incredible improvement over the version that came over from the House,” said Kevin Atticks, director of the Brewers Association of Maryland.

The House is likely to go along with the Senate’s changes to that bill, said Del. Dereck Davis, chairman of the Economic Matters Committee, which oversees alcohol issues. Davis said he would review the details before the bill comes to a final vote in the House, likely today.

“From what I’m hearing, it should be fine,” said Davis, a Prince George’s County Democrat.

The revised bill would set new rules for Maryland’s 30 production breweries, which make up a little less than half of the state’s brewing industry. The rest are licensed as microbreweries, farm breweries or brewpubs and would not be affected by the bill.

For production breweries, the bill would allow 25 percent of taproom sales or the equivalent of 1.2 percent of the total volume brewed on site — whichever is greater — to be beer produced by “affiliate” brewers.

Diageo sought that provision to allow the company to import Guinness, Smithwick’s and Harp, and also to import partially brewed Guinness beer that would be finished and barrel-aged in the Baltimore County brewery.

New production breweries would be required to close their taprooms at 10 p.m. nightly, while existing breweries and those already in the approval process — about 10 breweries — would be allowed to keep taprooms open as late as their county allows.

Wholesalers and retailers initially were opposed to increasing the amount of beer that could be sold in taprooms, fearful that breweries would undercut other segments of the alcohol sales industry.

Jack Milani, legislative chairman for the Maryland State Licensed Beverage Association, said his group also wanted to make sure Diageo would brew a significant amount of beer in Relay, and not just use the brewery as a vehicle to sell beer.

“Our concern was it would become more of a retail presence than an actual brewery,” said Milani, who owns a pub in Woodlawn. “This helps everyone understand that they will have to do substantial brewing there to come up with the product they need.”

Milani said his group’s members aren’t thrilled with all of the provisions of the revised bill. But he was glad to see that the Guinness project is on track, and that breweries still have limits on what they can sell.

“All in all, obviously we don’t love all parts of the bill, but working with everyone else in the industry, it’s in everyone’s best interest,” Milani said. “Everyone realized this is a big project and we’ve got to make it work.”

One lawmaker remained unconvinced Friday that the compromise was a good one.

Sen. Ron Young, a Democrat who represents Frederick County, home of Flying Dog and several other breweries, expressed frustration that the legislation appeared to favor Diageo over home-grown breweries.

When an international company like Diageo comes in with a request to help its brewery, “we trip over ourselves,” Young said, but “we don’t give a damn about the ones that are already here.”

Young was the only member of the Senate Education, Health and Environmental Affairs Committee to vote against the bill, which was approved on a voice vote Friday morning. He attempted to offer changes to the bill on the Senate floor, but his colleagues voted against allowing him to introduce the amendment.

Senators from Baltimore County expressed relief that the Guinness project would likely move forward.

Sen. Johnny Ray Salling, a Republican who has the DuClaw and Key breweries in his Baltimore County district, said he thought there was “a lot of compromise” among the various parties. He also praised Diageo for its role in the negotiations.

“They’re working together with other breweries to make sure they can be part of this,” Salling said.

“This is a huge, huge day for Baltimore County,” said Sen. Jim Brochin, a Baltimore County Democrat. “It’s like bringing the Preakness to Baltimore County every day.”

The brewery in southwest Baltimore County would become the new home for Guinness Blonde American Lager and also would brew new recipes that visitors would be able to sample. Diageo said the project would create 70 jobs.

The Guinness proposal has drawn interest from Maryland’s top politicians. Gov. Larry Hogan has offered general support for allowing breweries to sell more beer and Comptroller Peter Franchot testified in favor of the breweries’ requests. Baltimore County Executive Kevin Kamenetz said he was glad to see the legislation move forward.