County Liquor Operation Expects 25% Revenue Dip After Sunset Clause Kicks In

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SNOW HILL — With the Sunset Provision on the horizon, the Worcester County Department of Liquor Control (DLC) is predicting a loss of about 25 percent of wholesale business when the provision comes into effect this July.

It’s a big hit to the department, but less than the county initially feared and the expectation is that buying from the county will still be important for many alcoholic beverage license holders in Worcester.

DLC Director Bobby Cowger reviewed the coming change to how wholesale will work in the county this week at Tuesday’s Worcester County Commission budget work session. When the Sunset Provision kicks in July 1, licensees will no longer be obligated to buy all of their wholesale liquor through the DLC as they are currently and have been for decades. This will likely lead to a loss of about $2.6 million in wholesale revenue, or 24.8 percent, from last year’s $10,642,500 for an anticipated total of $8 million in wholesale revenue for FY15, according to Cowger’s budget.

“We’ve looked into what we hope is a very conservative number that we’re using for our budgets,” he told the commission. “We’ve made our cuts across the board all the way through it … I think our budget is going to be conservative. I certainly don’t look for it to be worse and I think it’ll actually be better.”

Cowger acknowledged that some of the biggest wholesale purchasers will almost certainly stop using the DLC and will go to the market themselves. However, the smaller purchasers will probably still rely on the department and even the bigger institutes will likely use the county occasionally.

“Because of the purchases and the buy-ins we’re doing, our pricing is going to be very competitive with the wholesalers and the wholesalers are working with us to make sure that we’re competitive,” said Cowger.

The loss of wholesale business could have been worse but the county has insulated itself to a degree by having a strong relationship with licensees, according to Harold Higgins, chief administrative officer.

“I don’t think it’s going to be nearly as bad [as first predicted] and [Cowger] has identified Worcester County’s niche in the market and our niche is service and he’s emphasizing that in what he does in his dealings,” said Higgins.

On the retail side of operations, Cowger isn’t expecting to see any real change because of the Sunset Provision.

“Our retail is staying strong. Actually, I bumped it up just a little bit mostly because of the new store,” he said. “We’ve added wines to that store so this really should have no effect on our retail operation.”

Commissioner Virgil Shockley wondered who would be responsible for enforcing liquor storage rules once licensees are allowed to make wholesale purchases independently. That’s not the purview of the DLC, though, and will be up to the state Comptroller’s Office or the Board of License Commissioners.

Between the expected loss of revenue from wholesale and slight increase from retail, the total revenue variance for FY15 is anticipated to be 15.8-percent less than FY14. Revenue for FY14 was $15,662,100 between retail and wholesale with $13,190,000 projected in FY15.

The total budget requested by the DLC for FY15 is $3,401,580, a decrease of about $250,000, or 7-percent from FY14.

Much of that decrease came from salaries, with the DLC phasing out one position, and Cowger planning on eliminating one or two more through attrition.

One comment on “County Liquor Operation Expects 25% Revenue Dip After Sunset Clause Kicks In

  1. Its throwback Thursday so I’ll ask the throwback question from a few years ago, which caused this present change in the MD liquor purchasing law:

    Did that 18 wheeler full of “cheaper wholesale” spirits EVER make it back to Alabama??? This is a discussion about money, MD liquor, money, the MD Comptroller’s office and money – right?

    snickering ~BUSHMAN!~

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