State Looking Into LCB Deals With Businesses

OCEAN CITY — The Liquor
Control Board for Worcester County (LCB) is allegedly under investigation by
the State Comptroller’s Office for possible collusion and potential violations
of the Sherman Act.

It was revealed this
week that three local liquor licensees were charged three different prices on
the exact same day for the exact same product by the LCB, which, according to
Purple Moose Saloon Chief Financial Officer and Worcester County License
Beverage Association (WCLBA) Executive Director Charlene Elliott-Carr, is “very
much against the law.”

On April 16, 2010, the
LCB allegedly offered a discount promotion on Stoli Orange vodka, which would
make the product, which is listed at $28.99 per bottle (retail), just $5 per
bottle for the licensees.

Elliott-Carr says that
specials like this are not rare. She said they are fine so long as the specials
are offered to all the license holders, which the LCB is required to do under
the terms of Maryland State Law and the Sherman Act.

However, she said that
the promotion wasn’t offered to her establishment or fellow WCLBA board member
Gary Figgs, chief financial officer at Seacrets.

“If anyone had the
chance to buy a bottle of liquor at $5 a pop, they would jump at the
opportunity and buy as much as they could, but they didn’t offer it to us and
from what I heard they didn’t offer it to other people either, and that isn’t
the way they are supposed to be doing things,” Figgs said.

Harborside co-owner Chris
Wall purchased 240 bottles of Stoli Orange from the LCB at $5 a bottle, while
on the same day Elliott-Carr purchased 120 bottles of Stoli Orange for the
discounted price of $11.99, while Figgs paid $22.99 per bottle at Seacrets on
the same day.

Elliott-Carr explained
that the LCB’s price to the licensees can fluctuate dramatically.

“In this instance, 28.99
is the retail price and that is the price they would sell it in their retail
locations, but our price range could be 85% of this price or 23% above beverage
journal prices,” Elliott-Carr said. “In this case based on what Gary
[Figgs] paid, the price was 27% below retail. Why I paid $11.99 is beyond
me? I guess this was done to appease me, because there is not any rhyme or
reason to the discount.”

Reports surfaced this
week that the comptroller’s office was conducting an investigation of the LCB,
as field officer Anthony Hatcher has been reportedly seen at local
establishments going over invoices and other related records.

“Yes, he’s been here,
but I don’t know the full capacity of what they are investigating at this time,
but there is something going on,” Figgs said.

The comptroller’s office
declined to comment on the status of the investigation, but a spokesperson made
it clear that, “it is our policy to not make any sort of public comment
concerning the nature of any investigation whether ongoing or not.”

As disdain continues to
grow toward some of the practices of the LCB, licensees are worried that the
prices could simply skyrocket at the busiest point in the season.

“They just bumped up the
mark-up price 5% going into the summer,” said WCLBA President and Buxy’s Salty
Dog owner Doug Buxbaum. “There are people who are concerned that the price
could go up another 5% tomorrow. If you are a monopoly, which they are, you
have to offer the same price to everyone. And the fact of the matter is that
they don’t answer to anyone, and they are only supposed to be in business to
disperse the alcohol. If you have a monopoly and your eight stores are failing,
what does that say about your business?”

Elliott-Carr says that
in some cases the LCB has tried to encourage licensees to buy more of certain
products, which the LCB buys direct from the supplier, rather than from the

“The way it works is
this: the supplier sells it to the wholesaler, who then sells it to the LCB,
who then turns around and sells it to the licensees,” said Elliott-Carr. “In
some cases, the LCB has asked the license holders not to buy certain products
so they can go directly through the suppliers and skip the wholesalers
altogether because they make more money that way.”

Elliott-Carr says that
the April 16 occurrence is a “clear case of price discrimination” and is a
violation of both Article 2-B and the Sherman Act, which is a federal law
passed in 1890 that protects consumers from the tactics and practices used or
implemented by companies or entities that have a monopoly.

“The LCB has gotten out
of control,” said Elliott-Carr. “Some of the numbers just don’t make sense and
a lot of people are really starting to believe that this is the time for them
to be abolished. The referendum in 1998 failed, but the money was really good
then coming back to the community. Now the money is basically gone, it’s not
viable anymore.

County Commissioner Bud
Church said that in order for the LCB to be abolished, legislation would have
to be passed in Annapolis.

Although some point to
the failed attempt in 1998, others believe that the LCB’s local contribution
has become so low (this year reported to be only $110,000 compared to $415,000
last year) that arguments could be made to convince lawmakers that the LCB is
no longer a viable entity in Worcester County.

“It has turned into
something that it was never intended to become,: said Elliott-Carr. “These practices
have to stop because it certainly appears that they keep doing illegal things.”