Category Archives: Department of Liquor Control

The Liquor Monopoly’s Preposterous Claims of Improvement

Today, I’m pleased to present a guest post by Adam Pagnucco:

On February 4, representatives of Montgomery County’s Department of Liquor Control (DLC) headed to Annapolis to brief the county’s state legislators on their operations. The stakes were high. DLC’s Executive Director had abruptly left his position six days before and legislation was pending on whether to allow voters to decide on opening up the monopoly to private sector competition. As of this writing, 2000 people have signed a petition in support of that legislation.

DLC’s message to the legislators is that improvements were underway, but they would take two months to take effect. As Delegate Charles Barkley (D-39) noted, that coincides with the end of the General Assembly’s session. Barkley said, “If we’re going to do anything, we have to do it before we get out of here—and of course, after a two-month period, it’s too late.”

DLC also claimed to have a 98.5% delivery accuracy rate. Delegate Kirill Reznik (D-39) replied, “If all of what the DLC does is comparable to or better than private industry . . . why does every restaurant manager I talk with beg me to get rid of this system?”

DLC has had problems and has been promising to make improvements for a long, LONG time. Consider the following.

  1. In 2005, then-DLC Executive Director George Griffin (who just recently left) outlined his improvement efforts to the National Alcohol Beverage Control Association:

In a department-wide project called Enterprise Resource Planning (ERP), the DLC is upgrading its systems in all areas, with an emphasis on integration. “POS (point of sale), inventory control, accounting, the warehouse, licensee ordering, buyers: they’ll all be tied together,” said Griffin, “from the retail stores, which will have running inventories, to our drivers, who will be equipped with handhelds.”

Ten years later, the county’s Inspector General found that DLC’s warehouse was being run with sticky notes. The Inspector General found that the warehouse was missing as many as 154 cases a day without anyone investigating why.

  1. A 2007 article in the Washington City Paper noted extensive problems with DLC’s special order system. The article contains this quote:

When Griffin took over the DLC, he inherited a department with low morale and little motivation. “The department had not been operating well and was sort of seen as an outcast from the rest of the county government in a way,” the director says. “I used to joke around and say, ‘This department was like, in a family, the crazy aunt who lives upstairs. None of us talk about her. You’re kind of embarrassed to admit that she exists, but everyone wants her money.”

The same problems persist a decade later. Many licensees would not refer to the DLC as “a crazy aunt” because that characterization is far too kind.

  1. A year ago, DLC launched a new inventory system to catalog, order and deliver its products. Griffin said, “It was a little rough getting started, but it’s gradually getting better.” But NBC4 found that the new system made ordering and delivery worse. American Tap Room owner Mike Jones said, “It’s getting increasingly worse. . . . This has been one of the most frustrating processes I’ve ever been involved in, where you’re almost pleading and begging with officials to get something done.”
  1. In late November, the County Executive said that complaints about DLC were “overblown.” One month later, DLC suffered a historic delivery meltdown in the week between Christmas and New Year’s Eve.
  1. Last June, DLC developed an “Improvement Action Plan” to improve its operations. The Restaurant Association of Maryland surveyed its members about how DLC was doing eight months after this plan was adopted. Here are a few survey responses from restaurant owners and managers on a number of issues.

On Special Orders

What frustrates me the most is the lack of care/regard for special order items. After waiting 15 days for certain cases of wine, I get a camera shot from my vendor who is at the warehouse staring at all the missing cases just sitting in my designated space. Infuriating!

Not been able to speak to someone who knows what is going on with my order 2) If you run out of product, good luck getting it back in stock at a reasonable time with a once a week delivery and order system is impossible to keep availability. 3) For weeks I was out of several wines and after waiting and talking to the sales rep. I was informed that the wines were delivered to the county. Called them and talked to several people without a clear answer so I decided to go to DLC and find out what they had there for me. They were surprised that the wines were there because they could not find them on the computer as being delivered and in my cubicle waiting for weeks to be delivered.

On Regular Stock

The DLC constantly runs out of inventory, delivers late and never apologizes. Also, anytime you go to the DLC to pick stuff up, all you see are guys standing around by the ‘no smoking’ sign, and smoking. They are lazy and many of them do nothing.

Products that should be widely available are out of stock – Blue Moon six pack bottles, Corona 24 oz. cans, Sierra Nevada six pack bottles.

On Billing

I was charged for 6 cases of stock wine that NEVER CAME! I spent hours on the phone trying to resolve the issue. They sent the 6 cases . . . of the WRONG wine 2 weeks after the fact. Never refunded the money and wouldn’t take the order back.

It is impossible to know track on the DLC website how much will be pulled out of your bank account and when. The amounts directly debited from our bank account never match the invoices.

On Delivery

The DLC doesn’t care for or understand the products they are delivering. It’s why we receive wrong boxes, out of date items, improperly handled merchandise and a general sense lacking of any genuine appreciation for their jobs.

Over all there is no sense of urgency or organization with the DLC. Paying 20%+ for product over what we pay in DC is just insane. Recently we did not get product in for a wine dinner we were having and we placed the order 3 weeks prior and they even showed it as an in stock!

The above history makes it obvious that DLC’s promises to improve cannot be believed. Delegate Barkley is right; they are trying to run out the clock and prevent anything positive from getting done. And what should get done?

Thousands of people know the answer: End the Monopoly.

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WaPo Comes Out Against Liquor Monopoly

Today, the Washington Post endorsed Del. Bill Frick’s bill to allow voters to decide whether to end Montgomery County’s “antiquated” liquor monopoly:

It’s time to scrap Montgomery’s liquor monopoly. How many times, and for how many years, must the county demonstrate that notwithstanding its proficiency in running libraries, maintaining parks or educating children, it is inept at the liquor business?

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Leventhal Says Council Has No Plans to Investigate DLC Snafu

There is a new twitter site on the ongoing problems with Montgomery County’s Department of Liquor Control: @UnSuckMoCoDLC. It appears to have been set up by a liquor licensee who wants “to let the public know what we licensees have to go through.” Neither Adam Pagnucco nor I know who is running the account or had anything to do with setting it up.

No Council Oversight of DLC New Year’s Problems

There was a lively discussion on the Seventh State Facebook page in the wake of this morning’s post. Beyond disagreeing with the post, Councilmember George Leventhal made some news in response to a question from Adam Pagnucco:

leventhalladhoc

In essence, George plans to do nothing. No serious investigation would wait months until the end of the state legislative session. The meeting of the General Assembly has no bearing on the Council’s oversight responsibilities. George knows this.

Moreover, if the General Assembly passes the County’s preferred bill on the topic, the County will still be engaging is very close to the same level of deliveries. Indeed, the change will likely be marginal as this proposal designed to protect the status quo in the guise of change is unworkable.

Yet Leventhal Prides Himself on Oversight

Nonetheless, George perceives himself as a leader in the fight for more accountability at the DLC. He’s just mad that no one is giving him enough credit for it:

leventhalloversightIt sure didn’t feel like George is a a strong critic when he gave the DLC a pass on the major New Year’s Eve delivery snafu because he had a bad experience at Starbucks. Moreover, The New Year’s snafu casts doubt on any effectiveness of this vaunted oversight to date and George’s Facebook comments today evince little evidence of a willingness to press further on this issue.

 

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Leventhal Defends DLC’s Bad Service

New Slogan? We Don’t Care. We Don’t Have To. We’re the DLC.

Last week, we reported that Department of Liquor Control stores completely fouled up deliveries in the week before New Year’s. Now, DLC Director George Griffin did issue an apology. But that doesn’t restore any of the lost income or makeup for the stress caused by  this total snafu.

Real accountability would mean rebates. Even more galling is that time was found to distribute material to defend the DLC in stores even as this mistake occurred. It also undermines the DLC claim that their reform program has produced meaningful results.

Councilmember Roger Berliner thinks that this is yet more evidence that it is time for the DLC to go the way of the dinosaur:

Berliner

Leventhal Attacks Berliner on Facebook

Councilmember George Leventhal came out swinging in comments on his colleague’s Facebook posts:

LeventhalonrestRestaurants are a major industry in Montgomery County. Beyond his misguided self-serving beliefs, saying that liquor reform is only of interest to restaurateurs is like saying that education is only of interests to parents so people should really quit their complaining. I’m sure restaurant owners appreciate George’s relegation of their repeat problems to illegitimate concerns.

BTW, restaurants are not flourishing as much as we might hope. Elm St. in Bethesda Row is one of the hottest blocks in the county with high pedestrian traffic. Right now, there are three empty restaurant spots on the block with one more store ready to close. In Silver Spring, Jackie’s is calling it a day and Jackie Greenbaum says she’d never open another restaurant in MoCo–it’s just too difficult.

The Starbucks Defense

But hey, George has the Starbucks defense:

leventhalstarbucksOf course, the difference is that, if you have a problem at Starbucks, you’re likely to get a good response to a complaint. They want you as a customer. If not, you have the option to shop elsewhere. But the DLC Monopoly forces consumers and businesses alike to deal with them. Eerily reminiscent of the legendary Lily Tomlin SNL skit posted at the top regarding the phone company monopoly: “We Don’t Care. We Don’t Have To. We’re the Phone Company.”

George’s blithe dismissal of major problems at the DLC–even those affecting major customers who were buying a lot more than a latte and whose livelihoods depend on it–shows an alarming lack of concern for constituents or willingness to listen. In George’s view, mediocrity in a monopoly government service is acceptable–a level of contempt that his constituents should not.

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County (Ab)using Liquor Stores for Political Speech

DLC liquor store flyerAdam Pagnucco sent Montgomery County Attorney Marc Hansen the following letter:

Hello, Mr. Hansen.  This is Adam Pagnucco.  I am working with a group of folks who are advocating for Delegate Bill Frick’s legislation to allow competition in the county’s alcohol industry.

I am in receipt of the attached flyer which I understand is being distributed in county liquor stores.  The flyer is unquestionably a political communication and not a commercial advertisement.

As you know, the state’s Court of Special Appeals has ruled that the county “may speak to advance its existing policies and programs, to advocate for policy changes, and to advocate against policy changes.”  http://www.mdcourts.gov/opinions/cosa/2015/0175s14.pdf   However, during the Question B campaign of 2012, the county ran ads for its point of view on Ride On buses and denied the Fraternal Order of Police the same opportunity.  ACLU of Maryland protested that and the county decided to allow FOP ads, but it was too late in the campaign for the ads to appear.  The ACLU wrote, “When the government privileges one side of a political debate in a forum open to private speakers, as Montgomery County is doing here, it engages in viewpoint discrimination clearly prohibited by the First Amendment.”  http://www.aclu-md.org/press_room/82

As the County Attorney, here is my question to you.  If the county is using its facilities to distribute political speech, as it did with the Ride On buses, can county citizens with a different point of view use those same facilities to also distribute political speech?  In other words, can we request that our flyers be distributed along with the county’s flyers?

Adam Pagnucco

It looks bad that the County has had time to arrange to get these fliers into county owned liquor stores even as the Department of Liquor Control caused a major snafu with delivery screw-ups in the week before New Year’s Eve.

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MoCo’s Stunted Restaurant Industry

The following is a guest post by Adam Pagnucco:

One of the dimensions to the current debate about Montgomery County’s Department of Liquor Control (DLC) that has not been empirically explored is its impact on the county’s restaurant industry.  Restaurant owners have many complaints about DLC and some have said that entrepreneurs will not open new establishments here because of it.  However, several urban districts in the county have lots of restaurants that seem to be doing just fine.  So what’s going on?

Let’s investigate.

One of the many programs run by the U.S. Census Bureau is the Economic Census, a very detailed look at industries by geography that is updated every five years.  Among the statistics collected by the Economic Census are the number of establishments, the sales of those establishments, and the number of employees.  Below are the combined totals of two industry segments – drinking places (industry code 7224) and full-service restaurants (industry code 722511) – for 22 jurisdictions in the Washington-Baltimore region in 2012.  This data does not include limited service restaurants (like fast food places) that often do not sell alcohol.  Data on drinking places for Fauquier and Stafford Counties and the Cities of Fairfax, Falls Church and Fredericksburg is not available because it does not meet the reporting thresholds established by Census.

Restaurant Stats
MoCo is a significant player in the region’s restaurant industry.  It has 11% of the region’s bars and restaurants, 10% of sales and 10% of employees.  But it also has 13% of the region’s population.  MoCo matters because of its sheer size.  What happens when the restaurant industry’s statistics are presented on a per capita basis?  Using Census population data for the five-year period of 2009-2013, here’s what that looks like.

Restaurant Stats per Capita
In terms of establishments per thousand residents, MoCo (at 0.65) is not terribly different from the regional average (0.73).  MoCo’s figure is also close to the two jurisdictions which most resemble it in education and income levels, Fairfax (0.66) and Howard (0.61).  But on the next two measures, MoCo falls short.  MoCo’s restaurant sales per resident ($789) are 20% below the regional average ($989).  They are also below Fairfax ($900), Howard ($930) and Loudoun ($826).  MoCo’s restaurant employment is just as bad.  MoCo’s figure (14.2 restaurant employees per thousand residents) is 23% below the regional average (18.4) and lags most other places in the region, large and small.

Why could this be happening?  It’s not because of low income levels – MoCo does just fine on that measure as do many jurisdictions in the region.  It’s not because of comparative tax burden.  The District of Columbia’s Chief Financial Officer finds that MoCo’s tax burden is not out of line with its neighbors.  Do MoCo residents simply not like going out to eat?  Are we a county of shut-ins?

Frank Shull, the Chief Operating Officer of RW Restaurant Group, which owns several county restaurants, explained why the industry is lagging when he appeared before the County Council last spring.  According to Bethesda Magazine:

A partner in the Robert Wiedmaier Restaurant Group testified Friday that Montgomery County’s Department of Liquor Control (DLC) is “an evil empire to most people in the business.”

In testimony before the County Council’s Ad Hoc Committee on Liquor Control, Frank Shull said poor selection, bad service and high prices keep Washington, D.C., restaurateurs from opening restaurants in the county.

“A majority of good operators in D.C. will not come into the county,” Shull said. “We have this discussion all the time. Restaurants don’t want to because they don’t want to deal with the DLC.”

Jackie Greenbaum, owner of Jackie’s Restaurant and the Quarry House Tavern in Silver Spring, detailed the challenges of dealing with DLC when she signed our petition to End the Monopoly:

I own 2 restaurants in Montgomery County, both well known for the breadth of their beer, wine and liquor lists. The difficulty in creating and maintaining these lists because of the county controlled system is extraordinary. It adds hours of unnecessary labor to my payroll costs, diminishes the quality of my beverage programs through the inconsistency of stock, unavailability of products and errors in delivery, and drives up the cost of the products we sell–which must either be absorbed by us (therefore diminishing our profits) or passed on to the consumer resulting in higher menu prices. This system causes all but the most intrepid restaurant owners to dumb down their offerings because it’s far far easier and ensures Montgomery County will never compete with DC in terms of the quality and creativity of its restaurants.

What would happen if MoCo’s restaurant industry were average in size relative to its population?  In other words, how big would the industry be if it had 0.73 establishments per thousand residents, $989 in sales per resident and 18.4 employees per thousand residents, which are the averages for the Washington-Baltimore region?  Extrapolating from the data above, the county would have 82 more restaurants, $198 million more in sales and 4,184 more employees.  All of this would create more tax revenue for both the county and the state.

How do we get there?  Let’s be honest and acknowledge that there could be many factors governing the size of the county’s restaurant industry and DLC is just one of them.  But in the opinion of the folks who actually run restaurants, DLC is an important impediment to their doing business.  The County Council has proposed reform, but in the opinion of the two largest alcohol distributors in the state, it won’t work and they won’t participate.

Restaurants are not just businesses.  They are critical cultural assets.  People decide where to live in part because of the abundance and quality of food options.  This industry is a large part of our quality of life.  By unleashing its spirit of entrepreneurship, we enrich all of society.  So how do we do that?

Here’s one way.  End the Monopoly.

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Department of Liquor Control Improvement Action Plan

Advocates for the existing Montgomery County’s liquor monopoly have acknowledged the needs for improvements in the Department of Liquor Control’s (DLC) operation and customer service. I thought it might be useful to the debate over the monopoly to post the DLC’s Improvement Action Plan and current status.

Click on the little arrow in the bottom right corner if it is too hard to read in your browser and it should pop up in a new tab. My thanks to  Montgomery County for providing it to me. You can find more evaluation of the DLC on CountyStat.

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Franchot: DLC is “a Mecca of Anti-Consumerism”

Comptroller Peter Franchot on Montgomery County’s monopoly over retail and wholesale sales of alcohol in the Country:

Montgomery County is the last bastion of a medieval state system.

This is a system that is incredibly slanted against the consumer and the ordinary citizen.

Most people in Montgomery County go to Prince George’s County, or the District or to Virginia to buy their alcohol because it’s such a disgrace.

And these are some of the nicer things he has to say.

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