SNOW HILL — Hoping to clear the air with the public and mend fences with the Maryland Comptroller’s Office, the Worcester County Commissioners addressed for the first time this week the recent controversy over an illegal purchase of $175,000 worth of alcohol from Alabama.
The commissioners admitted to making an error in their interpretation of state law and last week agreed to send the entire shipment of alcohol back to Alabama. Commission President Bud Church also visited Comptroller Peter Franchot to discuss the situation in person on Wednesday with Administrator Gerry Mason.
“While we certainly had no intention of breaking the law, we have every intention of providing the best possible liquor pricing for the more than 200 local bars, restaurants and retail stores who purchase alcoholic beverages from the county,” Church said. “That remains our steadfast commitment since we assumed liquor control operations last July.”
Church explained that the decision to purchase from out-of-state was based on the savings Worcester was able to negotiate with the Alabama Alcoholic Beverage Control Board (ABC).
“We projected $3 million in annual savings,” said Church of the partnership.
On the first shipment alone the $175,000 total was a savings of $55,840 as compared to what an identical purchase from the Maryland Beverage Journal wholesaler was priced at, even after shipping and handling and excise taxes, according to Church. It represents a 12-percent markup over cost.
In 2011, the commission noted that the average markup on wholesale purchases made by the Liquor Control Board (LCB), the quasi-governmental agency that was replaced by the county controlled Department of Liquor Control (DLC) July 1, were in the 30-40 percent range on average.
While it was an unarguably sweet deal for Worcester, it was also blatantly illegal, according to the Comptroller’s Office.
Comptroller Peter Franchot issued a stern letter to DLC Director Bobby Cowger last week clarifying his department’s view of the situation in no uncertain terms.
“Allow me to be as clear as possible,” wrote Franchot. “First, your purchase of alcohol from the State of Alabama was illegal. It was illegal because the State of Alabama had no license or permit at the time that would make it a lawful supplier to the DLC.”
Franchot went on to shoot down the idea that Alabama getting a license sometime after the sale would “retroactively legitimize” the original shipment. He made the point in response to the DLC keeping the Alabama shipment housed for months in a Delaware warehouse while waiting on a permit application allowing Alabama to sell in Maryland to clear, which as of this week it has not, though it was filed in mid-November.
In response to the letter, which promised “vigorous enforcement” from the Comptroller’s office if the DLC didn’t address the situation, the commission agreed to return the shipment as soon as possible.
“Ideally, we’d like to ship it today,” said Church earlier this week.
However, he claimed the county is waiting for a window of opportunity where the alcohol can be shipped back for the lowest cost. Though no shipping dates could be confirmed, Worcester Public Information Officer Kim Moses did reveal that shipping the inventory back will cost $2,700.
Church reiterated several times that the DLC was not being caught with its hand in the cookie jar, but that the $175,000 purchase was an honest mistake made over a different interpretation of the same laws Franchot referenced in his letter.
In that letter, Franchot references Article 2B 15-205 of Maryland law where the Worcester DLC was given authority to purchase “…wine and liquor from any source for resale.” Franchot called it “at best preposterous, if not disingenuous” to assume that Article gave Worcester a free hand to purchase alcohol from states that don’t have a permit to sell in Maryland.
Church stated that legal advice given to the DLC offered other interpretations, but clarified that Worcester would respect the Comptroller’s opinion.
“There was never, let me repeat, never, ever any intent to do anything outside of the law,” he said.
“We put them on notice; we didn’t hide it,” added Church, referring to the DLC making Franchot aware of the purchase back when it took place Oct. 31.
In the interest of avoiding any bad blood between Worcester and the Comptroller’s office, Church visited Franchot in Annapolis on Wednesday.
“We kissed and made up,” said Church of the meeting, which he described as brief but successful.
After the dust has settled from the incident, Worcester appears to have gotten off lightly, with no sanctions or fines from the comptroller. County officials also note that, as of this week, they have no reason to believe the Alabama ABC will return anything less than the full $175,000. There is still, however, the $2,700 shipping fee which, because the DLC is now a county agency, will have to be footed by tax payers.
Church was of the opinion that it was a live-and-learn kind of experience and hopes any bad memories of the incident will fade in time, especially if the Alabama ABC does become licensed to sell in Maryland.