Updated 5:25 p.m. — Montgomery County’s unique model for controlling alcohol sales appears safe from full privatization, though private wholesalers might be allowed to take over sales of special high-priced wines and beers.
Council President George Leventhal, a member of the Ad Hoc Committee on Liquor Control, said Monday that he doesn’t think the committee or Council will decide to “go full privatization.”
That option was presented by the Office of Legislative Oversight in a report the committee is considering. Councilmember Hans Riemer, who has been critical of the county’s control model in the past, is leading the committee and considering reforms.
Montgomery County is one of the only jurisdictions in the country in which a county agency (the Department of Liquor Control or DLC) distributes all alcohol products to restaurants and beer and wine stores, effectively acting as a wholesaler. The DLC is also the only entity allowed to sell liquor for off-premises drinking, in the form of 25 county-operated retail liquor stores.
Some restaurant operators and beer and wine store owners have criticized the DLC for its effectiveness at making deliveries, especially of trendy “special order” wines, liquors and beers that aren’t in great supply.
“It’s what the restaurateurs complain about the most,” Leventhal said. “It’s the big part of the brand of a restaurant that you’re able to offer exclusive, interesting cocktails and wines. So when I hear from restaurateurs, they complain that they’re trying to brand themselves, they’re trying to find a particular identity for their restaurant but they just can’t get access to product.”
Because of that complaint, Leventhal said he feels “there’s rising interest” in a hybrid option for DLC that would privatize the special order component of wine and beer sales.
Option 4, as presented in the Legislative Oversight report, would allow private wholesalers to sell directly to county restaurants and beer and wine stores, while the DLC would maintain control over everything else.
The OLO estimated that option would mean the loss of 11 full-time and four part-time DLC jobs and about $4 million-$6 million in DLC revenue a year. Leventhal said it was his understanding that the option wouldn’t threaten any union jobs. The county’s main government employees union has been a staunch opponent of deregulating or privatizing the DLC’s operations.
Before the Ad Hoc Committee first met, Councilmember Roger Berliner wrote in The Gazette that the DLC’s monopoly has been a failure. Riemer has expressed similar sentiments before, but during two hearings so far has also indicated he would be open to keeping DLC with reforms.
Councilmember Marc Elrich, the other member of the committee, has indicated he’s against completely deregulating DLC but in favor of a hybrid approach such as privatizing special orders.
The DLC commissioned its own report last year that found the truck fleet that delivers alcohol to local bars and restaurants is outdated and typical government hiring practices make distributing alcohol an inefficient and disjointed process.
“They need to have a lot more flexibility outside of what a lot of other departments have to go through, because they’re a business, so they need to be more responsive to customer demand,” Leventhal said Monday. “They shouldn’t be subject to hiring freezes and if they need new equipment, they ought to be able to get it right away to serve the needs of the market.”
The DLC brought in an average of $25.7 million annually over the last five years. That money was used to pay for other county government programs and services, a big reason why County Executive Isiah Leggett is against deregulation.
The DLC has generally made around $30 million for the county government.
The Ad Hoc Committee hopes to send recommendations to the full Council later this year so that any changes needed in state law could be proposed in the 2016 legislative session.
Leventhal said privatizing special orders would require changes to state law.
