ELLSWORTH — A bill that would loosen regulations for Maine’s craft breweries was headed for the desk of Gov. Janet Mills this week. Mills had until July 2 to sign the bill, veto it or allow it to become law without her signature. The law would go into effect in September.
“Maine’s brewers are still vulnerable, small and operating under laws which are restricting their growth opportunities,” said Sean Sullivan, executive director of the Maine Brewers’ Guild, who testified in favor of the bill when it was before the Veterans and Legal Affairs Committee.
“Maine’s distribution laws need to be modernized to create a framework with sensible protections that better supports this new reality.”
Maine has fairly unique laws governing the production and sale of beer, said Jon Stein and Ian Heyse, owners of Fogtown Brewing Co.
“Small breweries can self-distribute. A lot of states don’t allow that,” Stein said.
“We can produce it, distribute it and also retail it,” Heyse added.
But brewers who reach a distribution threshold — 50,000 gallons, roughly 1,600 barrels — must contract with one of a handful of licensed distribution companies.
These contracts can be costly for a small brewery and hard to get out of, Stein said.
“Once you sign them you’re probably in it for life.”
The laws on the books now were passed in the 1980s, said Stein, in an effort to protect small distributors who were being strong-armed by large national beer producers. At that time, small breweries numbered in the single digits.
“Now everything’s flipped on its head,” Stein said.
Distributors have consolidated into larger companies and the number of small breweries has exploded, to more than 140.
The bill, L.D. 1761, would drastically increase the cap from 50,000 gallons to about 930,000 gallons (30,000 barrels). It also would make it easier for a small brewery to get out of a contract.
“In my view, these contracts are rigid, with only a few ways out,” said Sen. Louie Luchini (D-Hancock County), who chairs the committee, in testimony. “Raising the gallonage cap will give Maine brewers more flexibility before they have to enter into a distribution contract.”
At 600 barrels a year, Fogtown isn’t close to reaching the current cap, Stein said. The company still makes most of its money from sales in its taproom, although it also distributes cans and kegs up and down the coast.
Several days each week, Heyse loads a van with beer and drives it to dozens of restaurants and other retailers from the Midcoast to Downeast.
Stein said the bill, if passed, “won’t make much of an immediate difference.”
Many breweries may choose to pay the contract fee, said Heyse, because distributors “are so good at it. They have the logistics and the network. It’s turned into my full-time job.”
But the legislation would allow a little more leeway for craft breweries working with small margins.
“It would be good for us because there would be more flexibility. It would give us some leeway,” Stein said.