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.