beer bottles
Photograph by Dave Shafer—Getty Images/Aurora Creative

Beer: The latest cash crop for Maryland farmers

Apr 21, 2015

Tom Barse’s 47-acre Stillpoint Farm in Mt. Airy, Maryland looks like an average agricultural operation. Its fields are rich with crops, while sheep and horses graze in the pastures. However, Barse’s most lucrative crop is actually beer.

In the summer of 2012, Barse opened the small-scale Milkhouse Brewery on a small hill near his house. Over the next six months, the longtime home brewer produced 80 barrels of beer using hops, wheat, barley, and other products grown on the farm. Just three years into the micro brewing operation, he expects to produce nearly 350 barrels – which are distributed in six counties and Baltimore – and he employs two full-time staff members and four part-timers. His tiny farmhouse brewery now accounts for 90% of his earnings. “It’s much bigger than I thought it would be,” he says. “It just exploded.”

There are approximately 40 breweries in Maryland, including five fully functioning farmhouse breweries. However, their ranks are growing quickly. “In eight months, we’ll see the number double,” says Kevin Atticks, executive director of the Brewers Association of Maryland.

Barse was a central figure in fomenting this sudsy revolution. For years, he had been growing hops for several Maryland breweries, including Flying Dog Brewery in Frederick and Baltimore’s Clipper City Brewing Company, which produces Heavy Seas beer. “Then I realized we could make more money by selling beer rather than selling hops,” he says.

Taking matters into his own hands, Barse helped draft Senate Bill 579, based on similar farmhouse brewery laws in New York, Massachusetts, Virginia, North Carolina, and other states. Enacted in the summer of 2012, the bill allows farmers to start commercial brewing operations by obtaining a Class 8 farm brewery manufacturer’s license for an annual fee of $200. The beer can be sampled and sold onsite and at certain beer festivals and farmers markets. Another law allows up to 3,000 barrels to be self-distributed at restaurants and liquor stores within the state. There is a catch, though: a portion of the ingredients for the beer – which could include hops, wheat, barley, fruit, or other components – must be grown on the farm.

This requirement has helped set these new beers – like Milkhouse Brewery’s Goldie's Best Bitter and Dollyhyde Farmhouse Ale – apart from other beers. “The whole farm-to-table, locavore movement has really boosted interest in what we’re doing,” says Barse. “People really want to have local beer, and they love the fact that we’re on a farm where we grow some of our own ingredients.”

Opening a farmhouse brewery isn’t a simple feat. Though the state law legalized the operations, business owners must navigate each county’s regulations regarding the sale of alcohol. “Additionally, many counties and municipalities have zoning and planning authorities, which can dictate when and where breweries exist,” says Atticks. “It takes quite a while to get used to the various exceptions and exemptions.”

Milkhouse Brewery at Stillpoint Farm in Mt. Airy, Maryland Photo by Bernadette Davis—Reflective Moments Photography 

Despite the hurdles, setting up shop as a brewer is an attractive option for cash-strapped farmers. “Small farms can’t make money in the traditional ways,” says Adam Frey, owner of Frey’s Brewing Company in Mt. Airy, Maryland. “They need to branch out and try producing new products.” Since early 2013, he and three staffers have been using hops grown on his property to produce approximately a dozen beers, including Backwoods Brigade ale, Gung-Ho Joe dark stout, and Farmer Armor saison. At first, Frey produced only a barrel a week. Now he brews 15-20 weekly, depending on the demand.

The veteran-turned-brewer does not have a tasting room on his property yet, so you can’t drink his beers onsite. Atticks believes this experience is key to growing the overall farmhouse brewery industry. Agri-tourism gives the bucolic brewery operations a boost in interest and sales. This summer, several of the farmhouse breweries will be featured on a statewide ale trail alongside traditional breweries.

The Aellen brothers – Eric, Anthony, and Victor – know that exposing potential customers to their product’s birthplace is a key factor in increasing sales. The three own Linganore Winecellars in Mt. Airy, which opened in 1976 and features an onsite tasting room. In November of last year, the brothers got into the beer-making business when they debuted Red Shedman Farm Brewery & Hop Yard. Compared to the winery, it’s a small-time operation. There are 70 acres of grapes and only half an acre set aside for hops on the property. Only four part-time staffers work in the brewery’s tasting room, though they do share the vineyard’s sales and marketing teams and Victor Aellen serves as the brewmaster. “It’s not even a percent of our overall business,” says Eric Aellen, “though it pays for its payroll and its associated bills.”

As the brewery begins to organize onsite beer festivals, market itself, and expand its sales reach – right now, Red Shedman’s beers are available in approximately 30 bars, restaurants, and liquor stores throughout the state – Aellen is confident it will become a bigger portion of the business. “We’re not selling Bud Light or Coors Light,” he says. “We’re selling micro brews with flavor that are made the way beer is supposed to be made. People want that.”

Watch more business news from Fortune:

All products and services featured are based solely on editorial selection. FORTUNE may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions