Tag Archives: alcohol

House Subcommittee Kills Grocery Store Alcohol Sales Bill

By Adam Pagnucco.

The Daily Record has reported that a House of Delegates subcommittee has effectively killed Delegate Lily Qi’s bill allowing some grocery stores to sell beer and wine.

Passing this legislation was always going to be an uphill battle even though more than 70% of Marylanders support grocery store sales of beer and wine and the Maryland Retailers Association was making a big push for it. The Daily Record quoted Eastern Shore Republican Delegate Steven Arentz making the classic argument against the bill:

Most of our package stores are family-owned… We have three major grocery stores in Queen Anne’s County, and each one of them has a liquor store within 100 yards of them… this will put them out of business.

But Delegate Qi correctly noted that six MoCo grocery stores allowed to sell beer and wine had smaller beer and wine stores nearby, as we reported on Seventh State. The notion that grocery store alcohol sales will wipe out package stores is a myth and we proved it. But this myth is hard to kill because many people, including elected officials, repeat it endlessly despite evidence to the contrary.

The map above shows the Giant on New Hampshire Avenue in Silver Spring, which is allowed to sell beer and wine, and the White Oak Convenience Store, a beer and wine shop, directly behind it. Both appear in purple ovals.

The bill is still technically alive in the Senate as it was introduced there by Baltimore City Senator Cory McCray. But the vote by the Alcoholic Beverages Subcommittee of the House Economic Matters Committee against Qi’s version of the bill prompted her to say that she is withdrawing it.

Delegate Qi told me that she believes the vote in the Alcoholic Beverages Subcommittee against her bill was unanimous. The members of the subcommittee are:

Talmadge Branch, Chair (Democrat – Baltimore City)
Jay Walker, Vice Chair (Democrat – Prince George’s)
Steven Arentz (Republican – Eastern Shore)
Benjamin Brooks (Democrat – Baltimore County)
Ned Carey (Democrat – Anne Arundel)
Seth Howard (Republican – Anne Arundel)
Kriselda Valderrama (Democrat – Prince George’s)

Share

Myth Buster: Grocery Store Alcohol Sales Will Not Destroy Package Stores

By Adam Pagnucco.

For many years, most grocery stores in Montgomery County have not been allowed to sell beer and wine, a prohibition designed to protect package stores. Most other counties in Maryland have similar rules, all set down in state law. Delegate Lily Qi has introduced a state bill loosening such restrictions, one of many efforts over the years to allow grocery stores to sell beer and wine. When the county council met to consider whether to support Qi’s bill, some council members expressed concern that it would harm small beer and wine stores. After all, if consumers could purchase beer and wine at a grocery store along with food, how could package stores compete with that?

In fact, the allegation that grocery stores would put package stores out of business if they could sell alcohol is a myth. Why do I say that?

Because there are a few grocery stores in MoCo that are allowed to sell beer and wine and package stores operate near them.

Consider the following six MoCo grocery stores that have off premise liquor licenses. Look at the maps below to see how close they are to package stores. Both the grocery stores and the package stores appear in purple ovals.

Giant Supermarket, 11221 New Hampshire Ave, Silver Spring

White Oak Convenience Store, which has an off-premise liquor license, is directly behind the only Giant in the county that is allowed to sell liquor.

Safeway Supermarket, 3333 Spartan Rd, Olney

Young Gourmet Beer and Wine, which has an off-premise license, is just a few blocks away from the only Safeway in the county that is allowed to sell liquor. Brew Belly and Olney Beer and Wine, which can sell alcohol both on premise and off, are also nearby.

Bestway Supermarket, 8540 Piney Branch Rd, Silver Spring

Flower Deli, which has an off premise license, is right around the corner from Bestway. Long Branch Beer and Wine is just a few blocks to the east.

Sniders Super Foods, 1936 Seminary Rd, Silver Spring

Sniders is within walking distance of two package stores: Seminary Beer and Wine and Spring Beer and Wine.

Dawson’s Market, 225 N. Washington St, Rockville

Dawson’s is within walking distance of Tiger Beer, Wine and Deli, which has an off premise license.

Shalom Kosher, 1361 Lamberton Dr, Silver Spring

Shalom Kosher is within footsteps of Kemp Mill Beer, Wine and Deli. The Google photo below shows just how close the grocery store is to the beer and wine store.

The allegation that allowing grocery stores to sell beer and wine will put package stores out of business is a MYTH. And now this myth is BUSTED.

Share

Poll: 71% of Marylanders Want Beer and Wine in Grocery Stores

By Adam Pagnucco.

A new push to allow beer and wine sales in grocery stores, which is illegal in most of Maryland, is underway by the Maryland Retailers Association. And the retailers have posted a Mason-Dixon poll from 2018 on their website showing massive support for their initiative.

The poll of 625 registered Maryland voters in September 2018 shows that allowing grocery stores to sell beer and wine had 71% support overall. Support had significant majorities across every split on region, sex, age, race and party tested by Mason-Dixon.

A few elected officials in the state favor grocery sales of beer and wine, including Comptroller Peter Franchot and Montgomery County Council Members Hans Riemer and Andrew Friedson. But since this issue is a matter of state law, it’s the General Assembly that counts. The retailers are asking consumers to sign up through their website to get involved with their campaign. The prohibition on grocery store sales of beer and wine is ancient and the package store lobbyists are powerful. Consumer support is absolutely necessary to get this done.

Share

Council Urges Hogan, Franchot to Extend Alcohol Carryout and Delivery

By Adam Pagnucco.

In a letter spearheaded by Council Member Andrew Friedson, the entire county council is urging Governor Larry Hogan and Comptroller Peter Franchot to extend the ability of restaurants to sell alcohol by carryout and delivery after the current state of emergency is lifted. Many restaurants are hanging on for dear life and news that the state’s unemployment rate has tripled only underscores how tough it will be to sustain consumer spending. We reprint the council’s letter below.

Share

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.

Share

Is the Liquor Monopoly Improving?

By Adam Pagnucco.

Once again, Montgomery County’s liquor monopoly is a hot issue in local politics.  As far as we know, MoCo is the only county in the nation in which the county government has a monopoly on the distribution of beer, wine and spirits and also a monopoly on retail sales of spirits.  Candidates for office disagree on whether it is needed.  In a response to David Lublin’s recent post on the subject, Department of Liquor Control (DLC) Director Bob Dorfman claims it has improved.

Has it?

We will give the monopoly credit for one thing: it did not see system-wide distribution failures in the critical week between Christmas and New Year’s last year as it did in 2015 and 2016.  That has not stopped two anti-monopoly groups from forming in the last few months, one representing licensees and another representing consumers.  But what’s really going on?  Let’s look at the data.

According to Gallup and the U.S. Department of Health and Human Services, alcohol consumption tends to be correlated with education and income.  That makes sense – people with college and graduate degrees tend to make more money, and people with more disposable income have more money available for alcohol purchases.  MoCo has lots of highly educated and wealthy people so we should be one of the leaders in alcohol spending in Maryland.

The Comptroller of Maryland, who collects alcohol taxes, posts annual reports of alcohol sales per capita for each of Maryland’s twenty-four jurisdictions on his website.  We collected the last ten fiscal years of that data and present it below.  Let’s remember when recent changes at the DLC occurred.  After many revelations of bad performance in 2014, DLC launched an “Action Plan” to improve performance in June 2015.  George Griffin, the former DLC Director who was blamed for the first New Year’s Eve meltdown, left in January 2016, about halfway through Fiscal Year 2016 (which ended on June 30).  Bob Dorfman, the new DLC Director, started in December 2016, about halfway through Fiscal Year 2017.  If these events were associated with genuine operational improvements, we would expect to see significant increases in both per capita sales and rank among jurisdictions over the last three years.

That has not happened.

Below is data on per capita sales of spirits, wine and beer in Montgomery County over the last ten fiscal years.

Spirits sales per capita have increased over the last decade, although they have barely changed since 2013.  Wine is stagnant.  Both wine and spirits fell in FY17, the first year of the new Director.  Beer sales per capita are down over the last decade and rose slightly in FY17.  But here’s the thing: MoCo’s new craft breweries are exempted from the liquor monopoly and, as a result, are doing really well.  The tiny gain in beer could be due to FREEDOM from the monopoly, not better operations at the monopoly.

Now let’s compare MoCo’s rank in per capita sales to the 23 other local jurisdictions in Maryland.

Because of its education and wealth, MoCo should be one of the leading counties in per capita alcohol sales.  It’s not.  In terms of spirits, the only county that’s worse is Somerset, which perhaps not coincidentally has its own monopoly on spirits sales.  In terms of beer, MoCo is dead last.  In terms of wine, MoCo has slid from ninth in the state to fourteenth, moving down a spot in FY17.  Jurisdictions in which residents bought more wine per capita than MoCo in FY17 included Anne Arundel, Baltimore City, Baltimore County, Calvert, Carroll, Cecil, Frederick, Garrett, Harford, Howard, Kent, Talbot and Worcester.  Does anyone believe that residents of counties with two-thirds of MoCo’s household income (or less) drink more wine than we do?

What’s happening is that consumers leave the county to buy alcohol.  That’s why numerous D.C. liquor stores are located within blocks of the MoCo border.  That’s why a fifth to a quarter of customers at Total Wine stores in McLean and Laurel come from MoCo.  The state’s Bureau of Revenue Estimates found that if MoCo customers were to return to the county to shop for alcohol in the absence of the liquor monopoly, the county would see a surge of almost $200 million in new economic activity, enabling a path forward for the county to replace every cent of lost revenue.

Dorfman is a better manager than his predecessor and we believe he is genuinely trying to improve DLC.  But Dorfman won’t be there forever and DLC has a long history of problems.  The monopoly also has a long history of promising improvement, mostly resulting in fleeting or ineffective fixes with quick relapses.  Even modest liberalization passed by the General Assembly to allow some private retail sales of spirits has been blocked.  What the above data on per capita alcohol sales shows is that, despite claims to the contrary, not much has changed.  And unless MoCo starts behaving like a normal county and allows private sector competition, true change may never come.

Share

Barkley Blasts Annapolis

By Adam Pagnucco.

Delegate Charles Barkley (D-39) has just given the most astounding interview by a member of General Assembly leadership ever seen by your author.  In it, he broke the most important rule of Annapolis decorum there is: never throw your superiors under the bus.

Barkley is the Chair of the House Economic Matters Committee’s Alcoholic Beverages Subcommittee.   In theory, that makes him the proximate point person on alcohol bills in the House.  Some think of the alcohol industry as one industry, but in fact it is several, with the manufacturers, distributors, retailers, restaurants and several individual companies hiring their own lobbyists and making tons of political contributions.  That makes for complicated politics which, among many other things, has produced the much-criticized bill punishing craft breweries.  That bill has already caused one potential brewery owner to bail on the state.

The anti-brewery bill passed the House on a 139-0 vote.  One source tells us, “When a bad bill passes on a vote like that, someone f____d up.”  In an incredible interview with Maryland beer blog Naptown Pint, Barkley placed the blame on his superiors, specifically Economic Matters Committee Chair Dereck Davis and Speaker of the House Mike Busch.  The whole interview is a massive scoop and a must-read, but the key passages are this:

“We didn’t know what was in the bill until the day it came in front of our committee for the vote,” Barkley answered. But was that due to the rush of the process, or was it an intentional screen being put up around the bill’s contents?

“I don’t think they were trying to give out too many details,” he commented…

“I honestly thought we were moving in the right direction with Nick Manis [MCA], Steve Wise [MSLBA legal counsel] and [Jack] Milani [MSLBA, Monaghan’s Pub in Baltimore]. We thought we were making progress, and we had the guys talking to us.”

Barkley then paused for a moment.

“All of a sudden, they quit talking to us,” he continued. “And then the [Economic Matters Committee] Chairman [Dereck E. Davis] said, ‘This is what we’re doing.’”…

I asked him his thoughts on some of the statements by House members who voted in favor of HB 1283 that they now know it was a bad bill or that they were misled on the contents ahead of the committee vote that pushed HB 1283 over to the Senate.

“I would say absolutely they were misled. [The House] thought we worked out a compromise and this was it. We hadn’t,” he stated.

“Up until this point, I ran the subcommittee and I kept my chairman [Davis] informed. But this one left my hands. I’ve never had this kind of intervention before, until this year. I thought [Manis, Wise and Milani] were meeting with us. But I think we were getting too close to stuff they didn’t want. So I think they met with the Speaker and got things changed.”

Here is a sub-committee chair describing a major bill as a backroom, secret deal involving lobbyists, a powerful committee chair and the Speaker in cahoots to deceive the full House membership.  Your author has never seen a state legislator entrusted with leadership responsibility go on the record in this way before.  It is an almost certain firing offense.

Barkley has always been something of a maverick.  Once a Vice-President of the county teachers union, he has not always been their best friend in Annapolis.  In 2009, he was famously kicked off the Appropriations Committee and lost a subcommittee chair for defying leadership on the millionaire tax.  In 2012, Barkley was one of a handful of MoCo Delegates to vote against the immensely damaging teacher pension shift, a top priority of Governor Martin O’Malley and the presiding officers.  After losing the first vote, he introduced a floor amendment to the budget which would have cut the shift in half, which also failed.  Considering this record, it’s surprising that Barkley acquired the alcohol subcommittee chair at all.

Barkley’s candor is likely aided by his apparent decision to leave Annapolis and run for County Council.  We don’t know what the future holds, but we will say this: given Barkley’s iconoclastic ways, he would make an interesting County Council Member.

Share

Is Maryland Trying to Punish Craft Breweries?

By Adam Pagnucco.

Craft breweries have been growing rapidly in Maryland and elsewhere, forever changing the beer business.  Maryland scored a huge win a couple months ago when Diageo announced their intention to open a $50 million Guinness brewery in Baltimore County, creating a tourist attraction and dozens of jobs.  Best of all, unlike many employers, Diageo is not asking for one thin dime of public subsidy to come to the state.  But instead of welcoming the new facility with open arms, the House of Delegates reacted by making it harder for Diageo to do business here, as well as many other breweries in Maryland.

The debacle began when Diageo asked for a change in state law to allow them to sell 5,000 barrels of beer at a restaurant and tap room on the brewery site.  (Maryland’s current limit of 500 barrels is by far the lowest in the nation; the second-lowest state, North Carolina, has a limit of 25,000 barrels.)  Other brewers sought a limit of 4,000 barrels in on-site sales for their own operations and five different bills followed.  HB 1283 was the one that passed the House of Delegates and did three main things.

  1. It increased the on-site sales limit to 2,000 barrels. Breweries could apply to the Comptroller for permission to sell another 1,000 barrels on-site, but they would have to go through a distributor to do so.  That means the brewery would have to brew its own beer, then turn it over to a distributor, then receive it back from that distributor and of course pay the distributor a fee for its service.  Guess who ultimately pays that fee?  That’s right, you the customer!
  1. It established closing times for tap rooms of 9 PM during the week and 10 PM on weekends, down from local closing times ranging from midnight to 2 AM.
  1. It limited tap room sales to beer brewed on-site only. This repeals a long-standing practice in which brewery tap rooms supplement their own products with contract beer brewed for them by other breweries.  Such contract beer sales are major sources of revenue for some craft brewers and make tap rooms more attractive to customers.

Brewers characterized the combination of changes as “one step forward and two steps back” and predicted layoffs and business losses.  Why would the House pass such a bill?

One of the biggest opponents of liberalizing rules on craft breweries is the Maryland State Licensed Beverage Association, which represents restaurants and small alcohol retailers.  The group is particularly influential in Annapolis as its PAC has contributed over $180,000 to state politicians since 2005.  The association sees craft brewers as competition for its members.  From a zero-sum perspective, every pint purchased in a brewery tap room is a pint not purchased in a restaurant or package store.  But that view doesn’t recognize the synergies between these types of establishments as well as their differences.  Diageo’s brewery has the potential to be a major tourist facility, bolstering the entire local economy.  And if a consumer purchases a new product at the Diageo site and likes it, he or she will be motivated to buy that same product at restaurants and stores.  That means more business for everyone.

Some brewers would prefer that HB 1283 simply die in the Senate because of the problems it would cause, but it’s not so simple.  If the bill dies, the state’s current on-site sales limit of 500 barrels would stay in place.  That could cause Diageo to cancel its project, costing Baltimore County a $50 million tourist attraction that other states would kill to get.  Think of the impact that would have on the industry’s perception of Maryland.  If we lose Diageo, what other major brewer would ever relocate here?

Maryland has a number of anti-competitive laws on alcohol, including the much-loathed prohibitions on sales in most grocery stores and Montgomery County’s dysfunctional liquor monopoly.  The last thing we need is even more of these laws, especially if it causes us to lose a major employer and gives us a national black eye.  HB 1283 must be fixed.  Cheers to the State Senate if they can get it done.

Share

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.

Share