Microbrewers' limits lifted under Md. comptroller plan But after 5 years, they would have to choose between bar, brewing

Beverage industry

July 19, 1996|By Abbe Gluck | Abbe Gluck,SUN STAFF

In response to microbrewery owners seeking to brew more beer in Maryland, state Comptroller Louis L. Goldstein proposed legislation yesterday that would remove limits on production but force them to choose between their pubs and their breweries.

The proposed legislation would, for the first time, allow owners to receive two licenses: one for a brew-pub and another for a separate brewery with unlimited production rights. The proposal requires that the pub and plant be in separate locations and allows owners to hold both licenses for up to five years. After that, they must choose which sector -- pub or plant -- they will pursue.

"This is intended to serve as a transition period for those microbreweries wishing to permanently but gradually enter the craft-brewery market," Goldstein said.

Maryland has six microbreweries, which are locations that both brew beer and house pubs, and seven true breweries, which do not have restaurants. Microbreweries are limited by law to producing a maximum of 10,000 barrels of beer annually.

Although the 10,000-barrel limit is the most common in the nation, among neighboring states Maryland's limit is the lowest, Goldstein said. And owners said the limit prevents them from making a profit.

"We got ourselves into microbreweries, but realize the cost structure puts us at a disadvantage," said Chuck Covell, managing partner of Olde Towne Tavern & Brewing Company in Gaithersburg.

Covell, who said he invested $2.25 million in his brewing business, said owners "are just trying to grow out our brew business to the level at which we can break even."

While Goldstein's proposal removes the limits on production, it does so only for owners who eventually plan to brew full time.

"I'm a restaurateur, not a brewer," Covell said. "We just want a limited expansion of the [microbrewery] license."

Breweries are getting "exactly what they said they wanted," said Assistant State Comptroller Marvin A. Bond. "They wanted to get into the statewide distribution of their product, and to do that they needed to increase their production."

Bill Oliver, owner of The Wharf Rat and brewer of Oliver's beer, said he is happy with the proposal because it allows him to keep his bar -- for up to five years -- while trying to expand his brewing business in a separate facility.

"We're maxed out on space," Oliver said. "To be profitable, we have to sell our beer to other places, and we just do not have room to bottle our product here."

But others, like Baltimore Brewing Co., have the space, and oppose Goldstein's decision to separate the pubs from the plants. Owner Theo de Groen said he specifically chose his 104 Albemarle St. facility because it is big enough to house a bar.

De Groen also said he does not want to give up his bar. "The restaurant is an incredible marketing opportunity for our beer, and it gives us immediate customer feedback," he said.

But Bond said the current law is "an exception to the rules for the small guy, and these guys want to take it beyond that." Major breweries with pubs have an "unfair" advantage over other small pubs as well as brewers who do not have pubs, he said. While some owners agreed, they said the distinction between a microbrewer and a true brewer should be based on quantity, not a five-year time period.

Bill Muehlhauser, owner of the Ram's Head Tavern and Fordham Brewing Co. in Annapolis, called Goldstein's bill "a move in the right direction," but said owners should be forced to choose between a bar and brewing business once they reach 50,000 barrels per year. Since he wants to run a high-capacity brewery as well as a bar, Muehlhauser said he has decided to open a brewery in Delaware and keep his pub in Annapolis.

Some owners have rejected Maryland altogether.

In April, George Hancock, owner of Seattle's Pyramid Breweries and Ale House, canceled his plans to open his first East Coast location in Baltimore, saying, "Maryland was our first choice."

The 10,000-barrel limit was too low, he said, and he wanted both a bar and a brewery.

"Our strategy involves building breweries with an 80,000 [barrel] capacity, and part of the brewery is a pub which we use to showcase our beers," he said.

"We were going to invest millions of dollars for this pub-brewery and employ about 75 people," he said. "The ironic thing is that our beers will still be for sale in the state of Maryland, but they won't be brewed there."

Goldstein's proposal will not be evaluated until January, when the General Assembly reconvenes.

Pub Date: 7/19/96

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