Category Archives: Department of Liquor Control

Liquor Monopoly Truck Crashes in Aspen Hill (Updated)

By Adam Pagnucco.

This morning, a delivery truck operated by MoCo’s liquor monopoly crashed in Aspen Hill. The crash occurred on Connecticut Avenue near the intersection with Georgia Avenue, shutting down southbound traffic and sending countless cases of liquor splattering across multiple road lanes.

The first indication of the crash was this set of pictures posted on Facebook by a person who came across the crash scene.

Montgomery County Fire and Rescue Spokesman Pete Piringer tweeted three times about the crash.

Here are close-ups of the four pictures tweeted by Piringer.

NBC Chopper 4 reporter Brad Freitas posted video of the aftermath on Twitter.

From Piringer’s reporting, what is known right now is that there were two occupants of the truck, both of whom were transported away by ambulance, and that the driver was trapped and had to be extricated from the truck. Traffic was completely shut down on southbound Connecticut Avenue and limited to one lane northbound. The mess will take some time to clear.

At this time, the cause of the accident is unknown.

Update: NBC4 has video of how this crash affected seven lanes of traffic.

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Top Seventh State Stories, March 2020

By Adam Pagnucco.

These were the top stories on Seventh State in March ranked by page views.

1. What’s More Important? The Liquor Monopoly or a Thousand Bartenders?
2. Liquor Monopoly Ends Takeout Cocktail Ban
3. Montgomery Leads Maryland in Social Distancing
4. MoCo’s Most Influential, Part Two
5. Is This the Worst Communications Debacle in County History?
6. Is This Moving into the 21st Century?
7. In MoCo, Public Media are Replacing Private Media
8. Everyone Can Vote Absentee
9. MoCo’s Most Influential, Part One
10. The County Budget is in Crisis. What Now?

Of interest is the fact that three of these stories concern the liquor monopoly. The top post – What’s More Important? The Liquor Monopoly or a Thousand Bartenders? – is, as of this writing, one of the top ten most-viewed posts in the history of Seventh State.

Most MoCo politicians don’t like talking about the liquor monopoly. Many of them admit that it is inefficient and archaic in private, but they don’t want to give up its revenues and they worry about offending the union that represents its employees. Our site traffic indicates that Seventh State readers care a lot about this topic and some of our liquor monopoly posts really pop. Politicians who get out front on this will benefit.

More top posts are coming next month!

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Elrich Says Riemer Alcohol Proposal Unsound and Unlawful

County Executive Marc Elrich has written Councilmember Hans Riemer to explain why Riemer’s proposal to allow restaurants to defer payments to ABS, the county alcohol monopoly, would violate the law and is a bad idea:

After reviewing your suggestion, we have determined that your proposal would violate federal law. The TTB, formerly the Department of Alcohol, Tobacco and Firearms, would consider the payment terms as a consignment sale, which is prohibited. Even providing different payment terms to different classes of customers is discriminatory. This is not to say that we can’t look at some reasonable extended terms for all of our licensees that may, in the shot term, be acceptable to the county, and meets all allowable legal criteria. As we consider these terms, we will balance that with the higher risk of potential payment defaults by those businesses that may have to close permanently.

Even if the proposal were legal, it would not be sound business or fiscal practice and could jeopardize county revenues and projects. ABS is run as a business, which means that it needs continued revenues to continue operating. If payments were deferred for 12 months, that could create a cash-flow problem for ABS, which needs to pay for inventory, supplies, wages, and leases on retail stores. Without sufficient revenue, the county would have to supplement ABS, reversing the current situation where ABS generates significant revenue for the county and remains self-funding, allowing it to pay for its own operating expenses. Those revenues are used to bond certain county projects. Deferring payments for many licensees for a year would cause a default on loans and would make it difficult – if not impossible – for ABS to operate in the black and continue to produce the surplus funds that go to the county treasury.

Much of the rest of the letter, printed in full below, explains how the county is otherwise working to aid restaurants and thanking the county council for their efforts during the COVID-19 crisis.

Elrich and Riemer have clashed frequently, so the disagreement here isn’t exactly surprising. It’s well known that Riemer plans to challenge Elrich for county executive and attacks him at every opportunity. Riemer’s proposal make him look like he worked fast to help businesses and forces Elrich to play the bad guy and shoot it down.

At the same time, that his idea is illegal and unworkable reinforces the perception that Riemer simply doesn’t think his ideas through and is looking to score quick political points rather than accomplish anything, even in a time of crisis.

Riemer’s lack of attention to the bond issue is especially strange. Defenders of the liquor monopoly, like both Elrich and Riemer, have repeatedly used the link between the bonds and alcohol revenues as a reason that the county liquor monopoly cannot be abolished.

It’s especially damning since Riemer prides himself on being an expert on the alcohol issue and having chaired the Council’s Ad Hoc Committee on Liquor Control back in 2015. Even the long-term politics are questionable as progressive Elrich has now positioned himself as the fiscally responsible alternative to Riemer–quite a feat.

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Riemer Proposes Liquor Monopoly Payment Holiday

By Adam Pagnucco.

In a letter to County Executive Marc Elrich, Council Member Hans Riemer has proposed that liquor licensees be allowed to defer payments owed to the county’s Alcohol Beverage Services (ABS). Specifically, Riemer wrote, “I am writing to request that ABS allow restaurant licensees to defer payments or make partial payments on all products purchased from ABS for the next 12 months.” Riemer notes the extreme financial losses being experienced by licensees and suggests that the county “explore options that could allow the County to smooth the revenue impact of this proposal over a longer period of time.”

We reprint Riemer’s letter below. We intend to print the executive’s response when we receive it.

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Liquor Monopoly Ends Takeout Cocktail Ban

By Adam Pagnucco.

Council Members Andrew Friedson and Evan Glass have announced that the liquor monopoly has ended its ban on takeout cocktails.

Friedson announced the news on Twitter.

Glass announced it on Facebook.

The official announcement from Alcohol Beverage Services appears below.

And here is a link to the application form for licensees.

Thank you to Council Members Friedson and Glass, Comptroller Peter Franchot and everyone else who worked to turn this around!

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Franchot Blasts Liquor Monopoly

By Adam Pagnucco.

After reading our post on the county liquor monopoly’s takeout cocktail ban, Comptroller Peter Franchot has come out swinging against the monopoly.  The Comptroller wrote on his Facebook page:

As your Comptroller and as a Montgomery County resident, this story makes me viscerally frustrated. There is no constructive purpose served by the continued existence of our government-run alcohol monopoly. It is inefficient, costly and unresponsive to the needs of its customers.

Now, at a time when our restaurants, bars and taverns are looking at possible financial ruin as a result of the COVID-19 pandemic, and are fighting a daily battle simply to survive, we get this tone-deaf ruling from the Department of Liquor Control. By prohibiting the sale of liquor and mixed drinks for carryout and home delivery, the DLC is acting in violation of both Governor Hogan’s Executive Order and a basic standard of common sense.

If there ever was a time for an outdated government agency to flaunt its administrative prerogatives, this certainly isn’t it. Hoping the DLC will reverse this ruling and do everything it possibly can to support our local, community-based businesses. Or, failing that, at least get out of the way while the rest of us help them #KeepTheLightsOn.

Franchot even took out a Facebook ad for this post.  At the moment, his post has 116 reactions, 40 comments and – most critically – 27 shares.  The original blog post has been shared countless more times across Facebook.

With outrage growing against the monopoly, it must lift the ban or face a renewed push to abolish it.

What will it do?

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What’s More Important? The Liquor Monopoly or a Thousand Bartenders?

By Adam Pagnucco.

Battered by shutdowns of dine-in service, restaurants across Maryland and beyond are taking a severe beating.  As a measure of modest compensation, Governor Larry Hogan has allowed restaurants and bars to engage in something unprecedented: takeout and delivery service of alcohol.  That partly applies in MoCo too, but there is a holdup.

The county liquor monopoly.

The monopoly has approved takeout and delivery of beer and wine but not of cocktails and other spirits-related products.  Meanwhile, California, New York, Florida, Colorado, Vermont, Iowa and the District of Columbia allow takeout and/or delivery of cocktails, although they often require them to be offered in sealed containers and only with food.  Governor Hogan’s executive order allows takeout and delivery of spirits too but that is subject to additional restrictions imposed by local jurisdictions.  The City of Baltimore has chosen to allow takeout and delivery of cocktails.  MoCo has not.  Its grant of takeout and delivery authority explicitly says, “This permission does not include liquor.”

Nepenthe Brewing Company in Baltimore advertises takeout cocktails.

The liquor monopoly enjoys a retail monopoly on spirits sales and jealously protects it.  For example, after the General Assembly passed a law three years ago allowing the monopoly to contract with private stores to sell spirits, the monopoly simply refused to enter into any such contracts.  Loosening its retail spirits sales monopoly might damage its profits, which are the only reason it continues to exist.  (Profits are no problem at the moment as the monopoly’s business is booming while folks are stocking up.)

The issue matters because it affects the employment of a key category of personnel in the restaurant industry: bartenders.  Data from the U.S. Bureau of Labor Statistics indicates that MoCo and Frederick establishments together employed 1,410 bartenders in 2017, so at least 1,000 of them work in MoCo owing to the comparative size of the counties.  The two counties employed an additional 2,680 people classified as “dining room and cafeteria attendants and bartender helpers.”  When takeout and delivery is restricted to beer and wine, bartenders are not needed because anyone can handle bottles and cans.  But when spirits beverages are allowed, bartenders are necessary.

Clavel Mezcaleria – Taqueria in Baltimore has an online menu of pre-bottled cocktails.

One restaurant owner who contacted me put MoCo’s cocktail ban in economic terms.  “Maryland allows it.  Montgomery County does not.  Baltimore can sell a margarita to go.  We cannot.  That’s my point. The DLC [liquor monopoly] restricts us again.  If they allowed it I could keep some of my staff employed instead of on the unemployment line.”

So what’s more important?  The continued employment of a thousand MoCo bartenders?  Or the liquor monopoly’s long-time retail spirits monopoly?  County officials, you decide.

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Is This Moving Into the 21st Century?

By Adam Pagnucco.

Montgomery County Executive Marc Elrich has announced that he is “focused on building a 21st century economy that will help the County maintain its leadership position in the State, while being more competitive in the Washington D.C. metropolitan region.”  And how will that be done?

By marketing the county’s 1930s-era soviet liquor monopoly, of course!

The county’s Alcohol Beverage Services (ABS), formerly known as the Department of Liquor Control, has a monopoly on wholesale distribution of alcohol from which only small, local craft breweries and distilleries are exempt.  Through its county liquor stores, ABS also has a monopoly on off-premises retail sales of spirits.  This structure has been in place since the end of prohibition.

The original purpose of the liquor monopoly was to “control certain obnoxious practices” and “keep the county an attractive place to live.”  Now, however, the purpose of the monopoly is to make money.  During the current fiscal year, ABS is projected to contribute $28 million to the general fund and an additional $9 million to pay off county debt service.  Despite its overall profitability, ABS is under heavy pressure to make even more money for four primary reasons.

First, the county projected a $100 million revenue shortfall back in December.  It’s unknown whether that number will change when the executive’s recommended budget is released next month, but if there is a shortfall of close to that amount, that’s a problem.

Second, the county has been raiding its retiree health care fund to balance its budget in recent years.  A statement by Wall Street credit agency Moody’s warned the county to stop doing that.  If the county takes heed, how will it replace that money?

Third, the county council clearly has no appetite for tax increases at the moment.

Fourth, Council Member Hans Riemer recently revealed that the county liquor stores as a group are actually losing money, not making it.  That prompted an explosive reaction from ABS Director Bob Dorfman amid questions about whether the stores should continue operations.

An excerpt from an email by the county executive calling for a 21st Century economy and simultaneously promoting the liquor monopoly.

ABS has now proposed a solution for increasing the stores’ profitability: it wants to rebrand them.  In a council session on February 20, the council reviewed a letter from the county attorney asking for permission to hire outside counsel specializing in trademarks to secure a new name.  The county’s chief administrative officer told the council that the specific name being considered is “Cork and Barrel,” which a simple Google search confirms is widely used around the country (including in Maryland).  The initial outlay to the trademark attorney is expected to be less than $6,000.  But if ABS does go through with a name change, there will be many additional expenses for logo design and changes to facilities and equipment.  Last summer, when water and sewer utility WSSC proposed a name change, the projected expenses totaled $850,000.  Council Member Evan Glass raised the experience of WSSC and said, “If a government monopoly or a quasi-government monopoly needs a marketing and outreach strategy then there is a problem.”

Three council members – Riemer, Glass and Andrew Friedson – voted against the appointment of counsel.  Friedson and Glass have gone on record in opposition to the liquor monopoly.  Riemer thinks it is time for the county to close its retail liquor stores.  The rest of the council voted in favor of hiring outside counsel.

The county council has almost no power to control the liquor monopoly under state law.  But the General Assembly does and its vision for the monopoly is very different from the Elrich administration’s.  In 2017, the General Assembly passed a state law enabling the monopoly to contract with private stores to allow them to sell spirits.  (Right now, only county liquor stores may sell hard alcohol – a crucial advantage for the county.)  But ABS has ignored the law’s intent and has so far refused to allow private retail sales of spirits.  Its rationale is understandable: without its retail spirits monopoly, its stores might never be profitable.  No dissenting votes were cast in Annapolis against the law that the monopoly now flouts.  Will MoCo’s state legislators hold it accountable?

As for the name change and marketing expenses, consider this.  State law requires private beer and wine stores to purchase products from the county liquor monopoly’s wholesale operation.  Their payments will now be used to rebrand and market the county liquor stores that are in direct competition with them.  In essence, they will be required to pay for the county’s attempt to raid their market share and take away their business.

How is this a legitimate function of government?

How can Montgomery County do this and claim that it is business friendly??

MoCo faces a choice.  It can move into the 21st Century and allow competition.  Or it can have a 1930s-era soviet liquor monopoly.

It can’t do both.

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Mila Johns: End the Monopoly

By Adam Pagnucco.

District 18 House candidate Mila Johns has sent out a mailer calling for an end to MoCo’s liquor monopoly.  The mailer contains an endorsement from Comptroller Peter Franchot, a hero to monopoly opponents who has been calling for its end for years.  This is the first mailer we can recall seeing on this subject and we appreciate Johns’s courage in calling this question so publicly.

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