County Seeks Attorney General Opinion On Liquor Department

SNOW HILL — Just over a year after the abolishment of the old Liquor Control Board (LCB) in Worcester and the creation of the new county-run Department of Liquor Control (DLC), county officials are still seeking answers on a key definition for its agency.

In 2011, the Maryland General Assembly abolished the Worcester County LCB after a series of problems with the old agency. In the same legislation, state lawmakers created the new DLC operated by the county to perform the same basic functions as the original LCB. The DLC purchases liquor wholesale, sometimes directly from the distilleries, but more often from other licensed wholesalers in the state. The DLC also runs a retail operation through its dispensaries sprinkled throughout the county.

However, since its inception, the state Comptroller’s Office has considered the Worcester DLC strictly as a retail operation from a tax standpoint, a designation that has curtailed the county’s efforts to take advantage of reduced prices and other incentives offered by the licensed wholesalers. To that end, Worcester officials, through their representatives in Annapolis, including Senator Jim Mathias and Delegates Mike McDermott and Norman Conway, have requested an official opinion from Maryland Attorney General Doug Gansler to clarify the issue.

“The purpose of this letter is to request that you seek an official opinion from the Attorney General on the issue of whether the Worcester County Department of Liquor Control (DLC) should be treated as a retailer or a wholesaler when it purchases alcoholic beverages from another Maryland licensed wholesaler,” County Commission President Bud Church’s letter reads. “The Comptroller’s Office recognizes that under the law, the definition of a wholesaler includes the DLC, however, when it comes to the DLC purchasing from another wholesaler, it requires the DLC to be treated as a retailer.”

In the letter, Church goes on to explain the Comptroller’s Office opinion on the retail status of the DLC hamstrings the county liquor agency.

“The county feels that this interpretation by the Comptroller is erroneous and it puts the DLC at an economic disadvantage with the wholesalers we purchase from because they must treat us the same way as all of the retailers they sell to and can’t give us any reduction in price, other than what they give to other retailers,” the letter reads. “We believe the error in the Comptroller’s opinion occurred because they do not consider that the DLC has a wholesale function as well as a retail function and, therefore, only focused on the definition of ‘retail dealer,’ which includes a county dispensary.”

The county’s letter expresses a level of frustration with the Comptroller’s opinion and urges Worcester’s representatives in Annapolis to seek another opinion from Maryland Attorney General Doug Gansler.

“Our contention is that the DLC, as a wholesaler that sells to license holders, is not a retail dealer when it performs that function and, therefore, should be treated as a wholesaler when purchasing alcoholic beverages from other wholesalers for resale to license holders,” the letter reads. “We will not be able to get anywhere by continuing to try to convince the Comptroller’s Office to change its mind on this issue.”

The Attorney General’s Office is now considering the issue, but has not yet issued an opinion. Meanwhile, County Attorney Sonny Bloxom issued his own formal opinion on the retail vs. wholesale designation for the county’s DLC, which takes to task somewhat the Comptroller’s Office for the perceived misinterpretation of the legislation that abolished the old LCB and created the new DLC.

“There seems to be no real understanding in the Comptroller’s Office as to what the term ‘purchase from any source for resale’ actually means,” said Bloxom in his opinion on the issue. “In a verbal inquiry to the Comptroller’s Office as to what that phrase allows the DLC to do, the county was informed that it is interpreted by the Comptroller to mean the same thing as the powers of the former LCB. It is the county’s contention that if the General Assembly wanted the DLC to simply have the powers of the former LCB, they would have said so.”

At issue apparently, from the Comptroller’s Office standpoint is who pays the tax on wholesale purchases by the DLC and when, but Bloxom opined the DLC has a mechanism in place to pay the appropriate taxes on wholesale purchases. Bloxom’s opinion suggests the Comptroller’s Office does not have a good handle on the distinction between the DLC’s retail and wholesale operations.

“It is readily apparent that when the DLC purchases alcoholic beverages from a wholesaler, it is doing so in its capacity as a wholesaler and the DLC doesn’t become a retailer until it resells the product to the general public through its dispensary system,” Bloxom’s analysis of the issue reads. “Therefore, Maryland licensed wholesalers should not be treating the DLC as a retailer when the DLC purchases alcoholic beverages from them.”