2015 | Politics

Restaurant Owners Speak out in Support of Privatizing Portion of Liquor Control Department

Move to allow private wholesalers to sell craft beer and fine wine would solve some issues, owners say

Mark Moore, owner of Tyber Bierhaus in Bethesda, speaks during the public hearing Tuesday

The refrain from Montgomery County restaurant owners at a public hearing Tuesday is familiar to the members of the County Council’s ad hoc committee on liquor control.

It goes something like this—the county’s Department of Liquor Control (DLC) regularly fails to deliver or isn’t able to get special beer and wine products and that is hurting their businesses.

The committee held the public hearing to get input on its latest proposal—to send a resolution to the General Assembly that would allow private distributors to sell certain craft beers and fine wines in the county.

The resolution would eliminate a small portion of the DLC’s monopoly on the wholesale distribution of alcohol in the county, but keep in place the department’s unique control over distributing mass-produced alcohol products and its position as the exclusive retailer of liquor in the county.

At the hearing, business owners said privatizing special orders would help.

“The legislation would vastly improve my situation personally,” Mark Moore, owner of Tyber Bierhuas in Bethesda, said. Moore explained that his restaurant, which specializes in serving German, Belgian and Czech beers, typically is only able to fill about 15 of the restaurant’s 20 tap lines because specialty beers aren’t available or aren’t delivered.

Moore, who also operates two restaurants in Washington, D.C., said, “Whenever I order for my restaurants in D.C., I get it the next day.”

Hans Olsen, general manager at Clyde’s Tower Oaks Lodge in Rockville, said a DLC driver showed up once with the restaurant’s $10,000 order, but left and didn’t return until five days later after becoming so frustrated with the way the truck was packed.

He also said when the restaurant doesn’t have a product that has been ordered, customers blame the restaurant, not the DLC.

“Customers feel insulted when we don’t have the product,” Olsen said.

Julie Veratti, a co-founder of Denizens Brewing Co. in Silver Spring, said that the legislation would help their brewery sell more beer locally. She said that while the brewery can self-distribute their beer thanks to a recent change in the law, few bars have a significant number of taps dedicated to local beers. At most area bars, Verratti said, about 80 to 90 percent of the taps are taken up by beers made by large out-of-state breweries like Budweiser or Miller.

"There might be one, maybe two tap handles devoted to local craft beer," Verratti said. "I believe the reason for this disparity is because of the choke hold the DLC has on distribution… . I want more competition. That's because it will change the beer culture in the county. It may sound counterintuitive, but it's much easier for me to sell my beer to a bar that has five tap lines dedicated to local craft beer than it is to a bar that has only one," Verratti said.

Silver Spring and Bethesda-Chevy Chase Chamber of Commerce representatives said they support the move toward partial privatization, but also encourage the council to begin fully privatizing the DLC.

The council has been hesitant to move in that direction. The DLC employs about 400 union workers who would likely lose their jobs if the department was privatized. And the DLC brings in about $30 million per year in profit that gets transferred to the county’s general fund.

County Council President George Leventhal said Tuesday that amount of money is about equal to the Department of Recreation’s budget.

The county is also facing a potential property tax hike next year in order to balance the fiscal year 2017 budget. County finances were hit particularly hard by the recent Supreme Court decision in the Wynne case, which ruled the state was improperly collecting some income tax. The decision is expected to cost the county about $50 million in fiscal year 2017, which begins next July.

Fritz Hirst, who spoke Tuesday as an individual, argued that the county could replace the lost DLC revenue with tax income from increased sales of alcohol in the county. He said the department’s problems could be fixed “through the magic of free enterprise.”

“My big concern is that if we don’t take action now, we’ll wait another generation before we have this conversation again,” Hirst said.

A study by the Office of Legislative Oversight that examined the DLC’s problems noted that alcohol sales in the county are much lower than surrounding jurisdictions, which the report noted may be the result of people traveling across borders to Prince George’s County, Virginia or the District to buy alcohol.

Several people who spoke Tuesday said they often left the county to go to stores with more selection and typically cheaper prices.

On the other side of the issue, Chip Berman, who chaired the county’s DLC task force in 1993, said he was pleased the DCL continues to generate funds for the county, but that the DLC “is not a business.” He said it’s an entity tasked with promoting moderate alcohol consumption and prioritizing safety to limit the problems that surround alcohol abuse.

“In that respect, Montgomery County sets a standard that most other entities would probably envy,” Berman said.