State’s LCB Report Confirms Suspicions

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What has long been speculated was proven true this week – the Liquor Control Board for Worcester County (LCB), the monopoly that handles all of the county’s wholesale spirit sales and most of the retail aspect, has broken the law at least four times over the last three years.

With the release of the Summary of Findings by the Comptroller of Maryland, the controversy that has forever surrounded the LCB has reached a new level.

Removed are the emotions behind this stormy issue. It’s no secret restaurant and bar proprietors are tired of paying markups on their liquor purchases from the LCB. They have long alleged funny business practices when dealing with the LCB and have long expressed their desire to cut out the middleman in the liquor buying process.

All that became background this week because now there are law violations that take matters front and center and cannot be discounted. Serious infractions were discovered that raise even more questions about the ethical and fair business practices, or the lack thereof, of the LCB.

This is not about the friction between the liquor license holders and the LCB. This is now a matter between the General Assembly, the LCB, the local governments and the citizens of the county. Residents deserve better from a government agency, which just happens to be a monopoly, they help fund.

At this week’s press conference, Comptroller Peter Franchot, who said this was the most intensive investigation his office has ever led, said, “These are very serious issues and cut right to the heart of Worcester County’s hard-earned reputation as a good place to invest and do business. Left unaddressed, I believe they would severely jeopardize the public’s confidence in their state and local governments.”

A summary of the Comptroller’s Office report found three violations of Article 2B, the statute that governs the liquor industry, including two separate incidents where the LCB sold products below cost and another where it purchased 200 cases of rum from a Washington, DC liquor retailer, rather than a wholesaler as required. Another Code of Maryland Regulations trade practice violation was detailed where the LCB gave equipment to liquor retailers at no cost. The law “forbids a wholesaler from providing an item of utilitarian value which would relieve a licensed retailer of an ordinary business expense.”

It appears a substantial fine on the LCB is an option as far as the repercussions of this investigation. However, that’s not enough. Furthermore, a fine is not the way to go because that will only severely reduce the net profits of the monopoly and further cut into the money that’s supposed to be distributed back to the county and municipalities.

The proof is in hand. The LCB has not been operating in an honest, reputable fashion and it needs to go. The LCB has admitted mistakes were made, but that’s not enough. It not only was operating in a misleading fashion to its wholesale customers but also to its retail customers, which include county residents and visitors.

Additionally, its decisions contributed to serious revenue declines despite flat sales, which ultimately affect county residents because less money was distributed throughout the area. Most businesses in this area would have loved to have seen flat sales over the last few years and certainly could have figured out how to maintain the same profit levels, rather than allowing them to plunge as the LCB did.

The time is now here for the local municipalities and County Commissioners, along with the local beverage industry, to devise an exit plan for the LCB.

Exactly how to go about dissolving it is the big question, and that’s the business that needs the most attention at this time. It will need to involve local legislators on all levels, restaurant and bar owners, liquor, beer and wine retailers and LCB officials. These conversations need to now start in earnest.

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