Bill Summary – FastDemocracy

SB 821
                       Department of Legislative Services
                              Maryland General Assembly
                                    2021 Session
                            FISCAL AND POLICY NOTE
                                 Enrolled - Revised
Senate Bill 821               (Senators Hester and Gallion)
Education, Health, and Environmental Affairs                              Economic Matters
         Alcoholic Beverages - Manufacturer's Licenses and Off-Site Permits
This emergency bill makes various changes to the regulation of alcoholic beverages
manufacturers in the State. Broadly, the bill (1) repeals specified manufacturer’s permits
and establishes a manufacturer off-site permit and a brewery special event permit; (2) alters
the fee structure for most manufacturer licenses; (3) authorizes most manufacturers to sell
and deliver their own alcoholic beverages products to consumers if specified procedures
are followed; (4) alters the limitations of the Class 7 limited beer wholesaler’s license; and
(5) alters the privileges associated with Class 1 distillery licenses and Class 8 farm-brewery
licenses. The bill terminates December 31, 2022.
                                     Fiscal Summary
State Effect: General fund revenues from alcoholic beverages permits, taxes, and sales
taxes may increase minimally in FY 2021, 2022, and 2023 as permits are issued and events
are held under the bill. General fund revenues may decrease minimally due to the bill’s fee
changes, as discussed below. General fund expenditures may increase minimally for the
Alcohol and Tobacco Commission (ATC) to enhance its enforcement activities under the
bill.
Local Effect: The bill does not materially affect local government operations or finances.
Small Business Effect: Meaningful.
                                        Analysis
Bill Summary/Current Law:
Manufacturer Off-site Permit
The bill establishes a manufacturer off-site permit that may be issued to the holder of a
Class 1 distillery license, Class 3 winery license, Class 4 limited winery license,
Class 5 brewery license, Class 7 micro-brewery license, Class 8 farm-brewery license, or
Class 9 limited distillery license. The permit holder may provide samples of (in specified
amounts) and sell (for on- and off-premises consumption) alcoholic beverages products
that are manufactured by the permit holder. The annual permit fee is $100.
Generally, the permit may be used up to 32 times each year for specified events, and the
bill establishes other criteria for where and how often the permit may be used. The permit
holder must have present at least one individual who is certified by an approved alcohol
awareness program while providing samples or selling an alcoholic beverage during an
event.
An applicant for a permit must complete an application on a form that ATC authorizes.
The permit holder must notify ATC when it intends to attend an event within a period of
time determined by ATC. ATC may adopt regulations to require the permit holder to notify
the local licensing board of the jurisdiction where an event is being held when a permit
holder intends to attend the event.
Brewery Special Event Permit and Brewery Promotional Event Permit
The bill establishes a brewery special event permit that may be issued to the holder of a
Class 5 brewery license or Class 8 far-brewery license. The permit authorizes the license
holder to conduct a special event to provide samples, sell products manufactured by the
license holder, and, in a segregated area, store the products of other Maryland breweries.
At least 15 days before holding a special event, the license holder must obtain a permit
from ATC by filing a notice on the form that ATC provides. The permit fee is $25 per
event, and a single special event may not exceed three consecutive days.
The brewery promotional event permit that exists under current law (which is similar to
the bill’s brewery special event permit, but more limiting in how often and when an event
can take place), is repealed.
SB 821/ Page 2
Changes to License Fees
The Alcoholic Beverages Article establishes an annual license fee that must be charged by
ATC for each different alcoholic beverages manufacturer’s license. For example, under
current law, the annual license fee for a Class 5 brewery license is $1,500.
The bill alters the fees for each license (except for a Class 6 pub-brewery license) to instead
be determined by ATC and requires that the fee for each license not exceed the current law
amount of the fee. For example, the bill requires the annual license fee for a Class 5 brewery
license to be determined by ATC, but the fee it sets may not exceed $1,500.
Sale and Delivery by Manufacturers
The bill authorizes the holder of an alcoholic beverages manufacturer’s license (except for
a Class 2 rectifying license, Class 3 winery license, or Class 6 pub-brewery license) to sell
and deliver a product produced under the holder’s license to an individual located in the
State if (1) the delivery is made by an employee who is at least 18 years old and certified
by an approved alcohol awareness program; (2) the purchaser or another individual at least
21 years old is physically present to receive the delivery, as specified; (3) the purchaser
pays for the purchase at the time of the order; and (4) the deliverer and individual receiving
the delivery each endorse a delivery form, that ATC approves, at the time of delivery, as
specified.
Additionally, the alcoholic beverages manufacturer may directly ship alcohol to a
consumer on request, if ATC authorizes the shipment after determining that it can be
completed safely using a common carrier and all applicable sales and excise taxes are paid.
Class 7 Limited Beer Wholesaler’s License
The bill alters the limitations of the Class 7 limited beer wholesaler’s license, which
generally allows a Class 5 brewery or Class 7 micro-brewery that obtains the license to sell
some of its own beer at wholesale.
Specifically, the bill authorizes the sale of up to 5,000 barrels of beer (instead of
3,000 barrels of beer under current law) at wholesale each year. Additionally, a
Class 5 brewery or Class 7 micro-brewery may obtain the Class 7 limited beer wholesaler’s
license if it produces in aggregate from all of its locations up to 45,000 barrels of beer
annually (instead of 22,500 barrels of beer annually under current law).
SB 821/ Page 3
Other Benefits for Class 1 Distilleries
Under current law, a Class 1 distillery is authorized to conduct guided tours of its licensed
premises and (1) provide samples, as specified, to individuals who have attained the legal
drinking age and participated in the tour and (2) sell up to 2.25 liters of alcoholic beverages
products to individuals who have attained the legal drinking age and participated in the
tour.
The bill alters this sales requirement by (1) repealing the 2.25 liter limit on product sales
and (2) allowing the distillery to sell products to any individual who has attained the legal
drinking age, instead of only individuals who have participated in a guided tour.
Other Benefits for Class 8 Farm-breweries
The bill authorizes the holder of a Class 8 farm-brewery license to sell alcoholic beverages
for off-premises consumption (under current law, alcoholic beverages may only be sold for
on-premises consumption) and makes conforming changes.
State Revenues: The bill alters the annual license fee for each manufacturer’s license
(except for a Class 6 pub-brewery license) to instead be determined by ATC and requires
that the fee for each license not exceed the current law amount of the fee. While the bill
does not directly decrease the license fees, it does make it possible for ATC to reduce the
fee. Thus general fund revenues decrease minimally in fiscal 2021, 2022, and 2023 to the
extent that ATC reduces the fees; however, any such impact cannot be reliably estimated.
Small Business Effect: The bill repeals and establishes various permits that a small
business alcoholic beverages manufacturer may obtain to increase its business.
Additionally, the bill authorizes a small business manufacturer to deliver its own alcoholic
beverages products, which likely results in increased sales.
                                 Additional Information
Prior Introductions: None.
Designated Cross File: HB 1232 (Delegate Brooks) - Economic Matters.
Information Source(s): Baltimore, Carroll, Harford, and Montgomery counties;
Department of Legislative Services
SB 821/ Page 4
Fiscal Note History:   First Reader - February 18, 2021
rh/tso                 Third Reader - March 22, 2021
                              Revised - Amendment(s) - March 22, 2021
                       Enrolled - April 5, 2021
                              Revised - Amendment(s) - April 5, 2021
Analysis by: Richard L. Duncan                   Direct Inquiries to:
                                                 (410) 946-5510
                                                 (301) 970-5510
SB 821/ Page 5
Statutes affected: 
Text - First - Alcoholic Beverages - Manufacturer's Licenses and Off-Site Permits: 2-207 Alcoholic Beverages, 2-205 Alcoholic Beverages, 2-209 Alcoholic Beverages, 1-101 Alcoholic Beverages, 2-130 Alcoholic Beverages, 2-131 Alcoholic Beverages, 2-140 Alcoholic Beverages, 2-201 Alcoholic Beverages, 2-202 Alcoholic Beverages, 2-203 Alcoholic Beverages, 2-204 Alcoholic Beverages, 2-205 Alcoholic Beverages, 2-206 Alcoholic Beverages, 2-207 Alcoholic Beverages, 2-017 Alcoholic Beverages, 2-017 Alcoholic Beverages, 2-209 Alcoholic Beverages, 2-210 Alcoholic Beverages, 2-140 Alcoholic Beverages, 2-212 Alcoholic Beverages, 2-219 Alcoholic Beverages
Text - Third - Alcoholic Beverages - Manufacturer's Licenses and Off-Site Permits: 2-207 Alcoholic Beverages, 2-205 Alcoholic Beverages, 2-209 Alcoholic Beverages, 1-101 Alcoholic Beverages, 2-130 Alcoholic Beverages, 2-131 Alcoholic Beverages, 2-140 Alcoholic Beverages, 2-201 Alcoholic Beverages, 2-202 Alcoholic Beverages, 2-203 Alcoholic Beverages, 2-204 Alcoholic Beverages, 2-205 Alcoholic Beverages, 2-206 Alcoholic Beverages, 2-207 Alcoholic Beverages, 2-017 Alcoholic Beverages, 2-017 Alcoholic Beverages, 2-209 Alcoholic Beverages, 2-210 Alcoholic Beverages, 2-140 Alcoholic Beverages, 2-212 Alcoholic Beverages, 2-202 Alcoholic Beverages, 2-203 Alcoholic Beverages, 2-206 Alcoholic Beverages, 2-207 Alcoholic Beverages, 2-209 Alcoholic Beverages, 2-210 Alcoholic Beverages, 2-219 Alcoholic Beverages, 2-212 Alcoholic Beverages
Text - Enrolled - Alcoholic Beverages - Manufacturer's Licenses and Off-Site Permits: 2-207 Alcoholic Beverages, 2-205 Alcoholic Beverages, 2-209 Alcoholic Beverages, 1-101 Alcoholic Beverages, 2-130 Alcoholic Beverages, 2-131 Alcoholic Beverages, 2-140 Alcoholic Beverages, 2-201 Alcoholic Beverages, 2-202 Alcoholic Beverages, 2-203 Alcoholic Beverages, 2-204 Alcoholic Beverages, 2-205 Alcoholic Beverages, 2-206 Alcoholic Beverages, 2-207 Alcoholic Beverages, 2-017 Alcoholic Beverages, 2-017 Alcoholic Beverages, 2-209 Alcoholic Beverages, 2-210 Alcoholic Beverages, 2-140 Alcoholic Beverages, 2-212 Alcoholic Beverages, 2-202 Alcoholic Beverages, 2-203 Alcoholic Beverages, 2-206 Alcoholic Beverages, 2-207 Alcoholic Beverages, 2-209 Alcoholic Beverages, 2-210 Alcoholic Beverages, 2-219 Alcoholic Beverages, 2-212 Alcoholic Beverages