March 16, 2010

Liquor legislation is complicated, confusing and very local

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By Erich Wagner
Erich@MarylandReporter.com

From beer tastings in Washington County and a wine festival in Garrett, from caterer’s licenses in Somerset to micro-breweries around the state, there are 68 bills relating to minute changes in alcohol regulation making their way through the General Assembly this year.

Most only affect one jurisdiction, like a bill for a dance hall license in Prince George’s County, or even parts of a jurisdiction, such as the closing hours for bars in downtown Baltimore and the percentage of food restaurants with liquor licenses can sell in Baltimore’s upscale Harbor East.

“It’s a very complicated area,” said Sen. George Della, a Baltimore Democrat. “There are only a few people that understand the law.”

Della is one of them and gets phone calls from other attorneys to ask him to explain the process. Half the city’s 1600 liquor licenses are in his district, which covers some of the oldest parts of south and east Baltimore.

This year he has a bill to lower from 65 percent to 60 percent the percentage of food that eateries in certain precincts of the revitalized southeastern neighborhoods must sell to keep their licenses. The law was set up “to prevent them from turning into these mega bars,” Della said. This could put the neighborhood taverns peppering scores of street corners out of business. But in the current economy, people are spending less and restaurants are hurting, so Della says the change could give eateries more flexibility.

The repeal of Prohibition in 1933 gave states the power to control alcohol sales.

Each county has its own intricate rules in state law about alcohol regulation. Counties control the price of liquor licenses, and they control which businesses can sell beer, wine and spirits and when. When a new market trend arises, each jurisdiction offers its own bill to allow businesses to take advantage of it.

This year, beer and wine tasting is a big hit, garnering a number of bills on the subject from different jurisdictions.

The state has given the power to oversee the sale of alcohol to localities through liquor boards, but any changes in often minute regulation must be done by the legislature. The state policy on alcohol regulation, first established in the 1950s, says the purpose is to “obtain respect and obedience to law and to foster and promote temperance.”

Lawmakers and business leaders say the system of regulation in place works well enough, despite its confusing intricacy. More importantly, they see any attempt at a statewide system as problematic.

“The issue is that each county and locality is different,” Del. May Ann Love, D-Anne Arundel, chair of the Alcoholic Beverages Subcommittee. “Consequently, you can’t have one unified system for local liquor laws.”

Jane Springer, executive director for the Maryland State Licensed Beverage Association, said the variety of state laws for each locality is onerous, but each jurisdiction has its own reasons for regulating alcohol in its own way. Based on her contact with similar trade associations in other states, Maryland’s system is par for the course.

“There’s reasons [jurisdictions] want things different in different areas,” Springer said. “It’s how the process has worked, and I certainly don’t have a plan for a new one. It gives everybody their voice.”

Del. Curt Anderson, chairman of the Baltimore City delegation, said lawmakers really do not spend too much time on alcohol-related bills, particularly compared to past years.

“Most Baltimore City bills address extending or decreasing the hours that existing alcohol-selling institutions can be open,” Anderson said. “Ten years ago, we were limiting the number of sellers, and at this point we’ve cut out adding any new ones.”

Anderson said the process of bringing the bills through the local delegation, as occurs for every jurisdiction in the legislature,  allows members to weigh in on each other’s bills. He cited a bill introduced by Del. Nathaniel Oaks, which would have allowed bars in downtown Baltimore to extend their hours until 3 a.m. on weekends. Oaks withdrew the bill after it hit criticism by other city delegates.

“We’ve given [local governments] the right to decide [alcohol-related] issues,” Anderson said. “But once they decide, we have to approve them.”

After county delegations discuss and vote on local alcohol bills, they go to a hearing in a standing committee, where most receive “local courtesy” and get routine approval.

“The full committee hearing is to make sure the delegation and the community is behind [the bill],” Love said.

Most of the bills are so routine that they wind up on a “consent calendar” in which a number of liquor license changes are passed on a single, usually unanimous vote, as was Della’s bill covering the Harbor East restaurants.

The local liquor variations are complemented by a rigid three-tier system for alcohol distribution the state instituted after Prohibition. Alcohol manufacturers sell to wholesalers, who in turn distribute it to local liquor stores and bars.

Lou Berman, the trade practice manager for alcohol for the state comptroller, said that although there are differences between states on some aspects of alcohol regulation, the vast majority of states use a three-tier distribution system.

Berman said the current system helps the comptroller’s tax collection and catching those who smuggle alcohol across state lines to duck state alcohol taxes.

The three-tier system also benefits locally owned liquor stores and “doesn’t work to the advantage of the megastore,” Berman said. “They would be like to be able to buy, for example, a winery’s entire stock and take it all for themselves for their retailer, thus controlling the price from the vineyard to the table at the liquor store…The liquor store is still very much considered a mom-and-pop or small business.”