Liquor Board Under Fire In Annapolis

ANNAPOLIS – Several bills concerning the distribution and sale of alcoholic beverages in Worcester continued to plod their way through the Maryland General Assembly including one that would repeal the absolute monopoly of the Liquor Control Board (LCB) for Worcester County and another that has threatened to splinter or even dissolve the agency.

Worcester is somewhat unique among the counties of Maryland in that it has a LCB that oversees the distribution and sale of distilled spirits in the county. The LCB purchases distilled spirits from wholesalers and distributes it to the county’s licensees essentially adding another middle man between the manufacturers and the consumers.

The system has been in place for decades, and although the relationship between the retailers and the LCB has been fractious at different times over the years, it has worked for the most part. However, one of the bills circulating in the current General Assembly session, House Bill 1373, introduced by Delegates James Mathias and Norm Conway, has suddenly caused a rift between the LCB and the licensees, not because of the content of the bill, but how the two interest groups have been represented through its drafting and introduction.

House Bill 1373 would allow the LCB to purchase liquor directly from the suppliers, or manufacturers, thus bypassing a layer of wholesalers who often tack on price increases as high as 40 percent.

Most counties in Maryland have a three-tier system in place where the manufacturers sell liquor to the wholesalers who then sell directly to the retailers. However, Worcester operates in a four-tier system with the LCB inserted between the wholesalers and the retailers or licensees.

By allowing the LCB to bypass the wholesalers, the cost of liquor for first the LCB, then the licensees and ultimately the consumer could be significantly reduced. While the intent of House Bill 1373 is on the surface amenable to everybody because of the potential cost savings, a rift has developed over who is at the table negotiating with whom.

For several months, the Worcester County License Beverage Association (WCLBA), made up of the liquor licensees in the county, have been working closely with LCB Executive Director Brian Sturgeon on the language of the bill and WCLBA leaders went to Annapolis on Monday to testify on the bill’s behalf. When they arrived, however, the WCLBA leaders discovered they were no longer sitting at the table with Sturgeon, but rather with LCB Board Chairman Don Hastings.

The not-so-subtle change rankled the licensees because they felt they had been dealing in good faith with Sturgeon, only to find out the LCB had changed its point man when it came to testify on the legislation. After working closely with Sturgeon, the WCLBA leaders found themselves at the table with Hastings and the board members.

“My confidence has been shaken,” said WCLBA Executive Director Charlene Carr this week after Monday’s hearing on House Bill 1373. “We have been working closely with Brian [Sturgeon] on this for 10 months and now he has been taken off the negotiation team. Now, we’re back to square one. You can’t change the players in the middle of the game.”

Carr said the abrupt change has forced the WCLBA to reconsider its support of the bill. The licensees, often somewhat suspicious of the LCB’s intentions, are now asking for the agency’s firm position on the bill in writing before it gives it support.

“Until we receive some things in writing, we will have to withdraw our support of this bill,” said Carr. “We’re not at all happy with this. We feel like we’ve been manipulated.”

For his part, Mathias said this week the bill’s good intentions shouldn’t get muddied by the strained relationship between the LCB and the licensees, resulting in a better system for all involved.

“This will enable the LCB to buy direct from the suppliers,” he said. “Right now, they buy about 30 percent of their products directly from the suppliers, but the other 70 percent they have to buy through the wholesalers with as much as 10 to 40 percent added on. This is a complex and complicated issue, but we’re trying to work through this to the benefit of our hospitality industry and ultimately the consumers.”

Meanwhile, the wholesalers who stand to lose the most in Worcester County if House Bill 1373 is approved, have taken notice and requested a bill that essentially seeks to abolish the LCB. The bill, introduced by Delegate Hattie Harrison (D-45) of Baltimore at the request of some of the big wholesalers, amounts to an end around of sorts to repeal the absolute monopoly of the LCB in Worcester County and allow the licensees to buy liquor directly from them.

It’s highly unusual for a delegate to introduce legislation specific to another district. Mathias said he initially took offense to the proposed legislation but has spoken to Harrison about House Bill 1264 and is now confident it is going nowhere.

“It’s unfortunate she put this bill in,” he said. “I guess they [the wholesalers] caught her at a weak moment and it’s unfortunate but she understands that now. There is typically a tremendous spirit of local courtesy and this is counter to that.”

Mathias said Harrison has requested her bill be rescheduled, which is tantamount to asking it to be removed.

“That bill won’t receive any action,” Mathias said. “It’s not going anywhere.”

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