2015 | Politics

Eight Council Members Write Letter Opposing Proposals to End County’s Alcohol Monopoly

The elected officials reiterated their support for a council resolution that would allow private companies to sell certain craft beers and fine wine

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Eight of the nine Montgomery County Council members sent a letter to members of the county’s General Assembly delegation Thursday expressing their opposition to proposed state legislative efforts aimed at eliminating the county’s alcohol monopoly.

The letter comes about two weeks after Maryland Comptroller Peter Franchot and Del. Bill Frick revealed separate proposals aimed at allowing private companies to compete directly with the Montgomery County Department of Liquor Control (DLC). Currently, the DLC controls the wholesale distribution of all alcohol in the county as well as the retail sale of all liquor—a monopoly believed to be the only of its kind in the country.

The eight council members said they support a resolution passed by the council in July that would allow private companies to sell “special order” products in the county. That classification includes certain types of craft beer and fine wines that the DLC doesn’t sell in large volumes.

The only council member to not sign the letter was Roger Berliner.

The council members—George Leventhal, Nancy Floreen, Sidney Katz, Hans Riemer, Craig Rice, Nancy Navarro, Tom Hucker and Marc Elrich—wrote that the alcohol market has changed over the last few decades and the timely delivery of special orders is crucial to the success of restaurants and retail stores..

“Despite attempts by our DLC to rectify the issues affecting special orders, restaurants and retail stores continue to be dissatisfied with the selection and availability of product,” reads the letter. “The Council’s proposed legislation seeks to address this issue head on by opening this segment to the private sector. Privatizing the whole market would exceed what is necessary to provide our restaurants and stores with an efficient and effective distribution system.”

In the state legislative session that will begin in January, Franchot plans to pursue legislation that would allow private distributors and liquor retailers to compete directly with the DLC. Frick’s bill would set a referendum to let county voters decide if the market should be opened.

The council members also wrote that proponents of the proposals to end the alcohol monopoly “have dismissed the approximately $30 million dollars in profit generated annually” by the DLC. The council members wrote that number is not insignificant, even when compared to the county’s $5 billion annual operating budget. “Without this $30 million in alcohol-related revenue, the county will have either fewer resources for education, transportation and other key priorities, or it will have to raise property taxes,” reads the letter.

The eight council members also noted that the county currently has about $114 million in outstanding liquor bonds used to fund capital projects. If the revenue source backing them—the DLC—is not secure, they may have to be moved to the capital budget and could displace other projects, according to the letter.

“We do not want to remove $114 million in needed projects, such as schools, libraries or transportation, from our capital budget,” the letter reads.

Frick said Thursday the council is putting forth arguments and perspectives they’ve shared in the past.

“I think we should have some confidence in the judgment of the voters,” Frick said. “All the council’s arguments are things that our voters can weigh in deciding whether to retain the monopoly. I didn’t see anything in that letter that counseled against letting our voters make this decision on their own.”

He said opinion polls, anecdotal information and a new petition have shown that voters want to make this decision.

The letter, however, does not mention a key proposal of the council’s resolution that is expected to create controversy in Annapolis—a fee charged to private “special order” distributors. The fee, which would be set by the county, is planned so the county can recoup some or all of the approximately $5 million in annual profit the DLC brings in from distributing special order products.

Sources who spoke on background with Bethesda Beat because the council hasn’t presented a bill for its proposal yet said alcohol distributors plan to lobby against the fee in Annapolis, possibly making it difficult for the council’s measure to pass. The sources wondered if the council would support the special order measure if the fee was stripped from it.

The bill to allow special order products has been posted on the county delegation's website and is scheduled to be discussed at a public hearing at 7 p.m. on Nov. 30 at the council office building. The bill includes language that would allow the DLC to establish a surcharge that would be paid by wholesalers.

The council members’ letter was addressed to Del. Shane Robinson and Sen. Nancy King, the chairs of the Montgomery County House and Senate delegations.

The letter comes as an advocacy effort from local political consultant Adam Pagnucco, a Silver Spring resident and former chief of staff for Riemer, ramps up to support Frick’s referendum proposal. Pagnucco started an online petition in support of the referendum that has garnered more than 1,000 signatures since being posted last week.

“It appears that these eight County Council members do not understand what Delegate Frick’s bill does,” Pagnucco wrote Thursday in an email to Bethesda Beat. “If his bill becomes law and the voters approve it, there would not be ‘full privatization’ as they call it. Rather the private sector would be allowed to compete with the DLC. If the DLC has competitive prices, good selection, good services and improves, it should retain its customer base and has little to fear. But if the DLC can’t compete, why should it be protected by a state-sanctioned monopoly?”

Berliner, the lone council member not to sign the letter, previously said he’s 100 percent behind efforts to open the county’s alcohol market.

Liquor Control Letter – Montgomery County Council

Editor's Note: A line was added to include a link to the bill that would allow special order products to be distributed by private sellers in the county.