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Craft beer makers could distribute thousands of barrels under Md. bill

Wednesday - 2/27/2013, 6:00am  ET

ANNAPOLIS — Change might be brewing for local craft beer enthusiasts, who could soon find more of their favorite ales at restaurants or stores.

Legislation now before state lawmakers would create a new license enabling microbreweries to distribute up to 3,000 barrels of their beer per year. Under current law, these businesses can serve their beer on-site or contract with distributors, but cannot deal directly with retailers.

Small brewers find their product can get drowned out during distribution, as wholesalers spend most of their energies on big brand names.

"It's easy for them to get their kegs of beer pushed to the back of the bus," Delegate Kelly Schulz said.

Schulz, R-District 4A, believes local brewers should have more control over marketing their beer, but past efforts to give it to them have been mired in disagreement among segments of the industry.

Gary Brooks, operations manager of the local microbrewery Barley and Hops, said Schulz has worked to bring everyone to the table and hammer out an agreement. Representing a compromise within the industry, Schulz's bill this session would let microbrewers act as small-time wholesalers.

"It would give us the opportunity to build some excitement about our product and get it out in the marketplace," Brooks said.

This system would also give the brewers more control over their pricing, he said.

Once a brewer's operations grow to a certain size, the wholesalers would enter the picture to handle distribution, Schulz said.

The new license created by Schulz's bill would be open to both breweries and microbreweries. There would be a $50 annual fee for the beer wholesaler's license created under Schulz's proposal, which was heard Monday in the House Economic Matters Committee. Both Schulz and Brooks said they were hopeful the bill would succeed this session.

Maryland wineries already enjoy permission to market some of their own product. Schulz said craft brewing, such as winemaking, is on the rise.

"It's in everybody's best interests to allow the small businesses to continue to grow without having to depend on the middleman," she said.

There are 19 microbrewery licenses issued in Maryland, according to a legislative analysis.

Also on Monday, a proposal that would withdraw liquor license revenue from Frederick County municipalities cleared the state Senate. The bill would devote all the license revenue to liquor board operations.

Now, half of the license revenue goes to the county's municipalities. This formula leaves the liquor board with the remaining half, but the funds have not been enough to cover the commission's expenses in recent years. The county has made up the difference.

District 4 Sen. David Brinkley's bill to change the way the license revenue is distributed passed the Senate on Monday night with 46 affirmative votes and no opposition. Schulz sponsored the same bill in the House, crafting the proposal after meeting with stakeholders in the interim between sessions.

The House version of the bill was heard in committee Monday along with a proposal to enlarge the liquor board from three to five members.