2021 | Government

Council split on state bill letting grocery stores sell alcohol

Opponents say change could hurt small businesses

File photo

A state delegate from Montgomery County is pushing to let some grocery and convenience stores sell alcohol, a major deviation from the current law, which restricts them from selling beer or wine.

The Montgomery County Council was split on Monday on whether to support the bill, eventually tabling a vote on its official stance.

Del. Lily Qi’s bill is aimed at encouraging grocery businesses to settle in underserved areas of the state by requiring liquor boards to grant them licenses to sell alcohol.

But the bill would also give local liquor boards the authority to award a Class A beer and wine license to independently owned and chain grocers.

Those stores could apply for a license. The liquor board would be required to automatically give a license only to those located in specific underserved considered “priority funding areas,” such as an enterprise zone or the area between Interstate 495 and Washington, D.C.

Some grocery stores hold Class A licenses because they were grandfathered in when Maryland’s law went into effect in 1978, The Washington Post reported last year.

“I think residents are understandably confused and perplexed as to a lot of our alcohol laws in the state of Maryland,” Council Member Andrew Friedson said. “Probably the biggest one they’re confused about is why they can’t purchase beer and wine in grocery stores.”

Qi, a Democrat who represents Potomac, Darnestown, Poolesville and other parts of western Montgomery County, sponsored the bill in the House this month.

To qualify for a license outside of a priority funding area, a retail store must sell a full line of at least six of these categories:
● Fresh fruits and vegetables
● Fresh and uncooked meat, poultry and seafood
● Dairy products
● Canned foods
● Frozen foods
● Dry groceries and baked goods
● Nonalcoholic beverages

Applicants must also commit at least 50% of the square footage of the public area of the store to selling food and nonalcoholic beverages.

In cases when the store is at least 6,000 square feet, at least 5% of the public area of the store would need to be dedicated to the sale of food and other beverages.

A convenience store or food product delivery company could not exceed 15,000 square feet and be located in a priority funding area. It must also directly sell and deliver dairy products, canned foods, frozen foods, dry groceries and baked goods, nonalcoholic beverages, and household items.

The applicant would pay an annual $2,500 license or renewal fee to the state’s Alcohol and Tobacco Commission.

On Monday, the County Council was initially 5-4 in favor of supporting the bill.

Council Members Andrew Friedson, Hans Riemer, Evan Glass, Nancy Navarro and Sidney Katz were in favor of backing the bill. Council Members Craig Rice, Tom Hucker, Gabe Albornoz and Will Jawando were opposed.

But Katz later wanted to change his vote and get more information, so the council put off its final decision.

Riemer said residents constantly ask about the restriction.

“Our residents expect us to modernize this antiquated regime. It’s frankly an embarrassment to the county. It does not reflect well upon us,” he said. “It shows the government overreach. Every time you go to the grocery store, you experience a government overreach in a way that I think people frankly do find a little bit offensive.”

But Katz said the bill would be “extremely detrimental” to small businesses in the county, which have operated without competing against grocery stores selling alcohol.

“I find it to really be a difficult position. I have great sympathy for the small businesses,” he said. “I do believe this will affect them pretty much dramatically because they’re making all of their profit on beer and wine.”

Katz said a positive effect of the bill would be the incentive for grocery stores to locate in food deserts.

Rice said a House committee already held a hearing on the bill, so for the council to wait another week for more information could mean there is “no point in weighing in.”

But Friedson said the state Senate has yet to have a hearing on its version of the bill.

He said Maryland is one of three states in the country that don’t allow beer sales in grocery stores and one of only 10 states that don’t allow wine sales in grocery stores.

“Based on that, you would think our small business dynamics would be some of the most vibrant in the country but they’re not. … Our alcohol laws are incredibly restrictive and that won’t change just based on this policy change. It is a very small, very modest tweak to what is already one of the most regulated states and the single most regulated county in the United States of America when it comes to beer and wine sales.”

He said grocery stores that sell alcohol and independent alcohol stores can coexist.

Rice said it will have an impact on other businesses, especially the county liquor stores.

Hucker, the council president, said he would like to see more convenience for residents and competition in alcohol sales.

“I do think we need to expand beer and wine sales to grocery stores in a measured way after some study,” he said. “But this bill when it’s already — there are many struggling bills in Annapolis we could get behind at the last minute. I don’t feel comfortable getting behind this one without an impact study of how it would play out in Montgomery County.”

After the council voted 5-4 to support the bill, Katz immediately requested to change his vote because he would have rather tabled, or delayed, the discussion and vote.

When Riemer tried commenting on the motion to table, Rice and Navarro said council rules did not allow him to speak to that motion.

Riemer disagreed and said that under council rules, he could speak to the motion once. He noted that it was “kind of unusual to let a council member change a vote afterwards.”

Council members began speaking over each other about whether to table the motion. Friedson said he wasn’t sure if the rules applied since it wasn’t a vote on county legislation.

“It’s gotten to the point of absurdity, frankly. I disagree with what’s happening here, but the fact that we spend any more time [debating] it is absurd,” Friedson said.

The council agreed to table the vote until next week.

Bill meant to stimulate market in underserved areas

Qi told Bethesda Beat in an interview on Monday that she represents an area of the county that is underserved by grocery stores that sell fresh produce.

The concept behind the bill, she said, is that more grocery businesses might come to sparsely populated jurisdictions such as hers if there’s potential for a better profit margin through beer and wine sales.
“It just lifts the categorical statewide ban on stores carrying beer and wine, but in limited cases …. when fresh grocers are going into a less desirable or less profitable markets. Then we ask local liquor boards to issue licenses, and the rest is up to them,” she said.

Qi said state Sen. Cory McCray (D-Baltimore City) has cross-filed the bill in the Senate because the area of Baltimore he represents is also underserved, although in his case it is an urban problem instead of a rural one.

“We represent two different communities with the same problem for different reasons,” she said.
Maryland’s Department of Housing and Community Development defines food deserts as “communities that do not have access to healthy foods, including fresh fruits and vegetables, typically in the form of a supermarket or grocery store.”

Qi said she didn’t know of any defined geographic areas considered food deserts. She said parts of the county are considered “priority funding areas,” which overlap with food deserts, and are the focus of her bill.

The Maryland Department of Planning website states that priority funding areas are communities where local governments have indicated they want state investment in supporting future growth.

Qi said that if a grocer meets the criteria outlined in the bill and is in a priority funding area, a local liquor board would be required to approved the alcohol license. If not, grocery stores would still be able to apply for the license, but the local authority would have discretion in being able to award one.

Qi said she’s aware of the concerns that grocery stores selling alcohol might hurt independent alcohol retailers, but because the bill only targets specific areas of the county, the economic impact isn’t as large as some think.

“We’re not saying you must allow other grocery stores to sell beer and wine. None of that. So, I think there was a lot of fear and overreaching to that,” she said.

ABS Acting Director Kathie Durbin said in an interview Monday afternoon that County Executive Marc Elrich has not taken a position on Qi’s bill.

Under the bill, grocery stores would have to apply for a Class A license just as other businesses do. The exception would be if the business was in a priority funding zone, she said, in which a license would have to be awarded.

Durbin added that some grocery chains in the county such as Giant Food and Safeway have been grandfathered into the 1978 law, and hold Class A licenses.

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com.

Dan Schere can be reached at daniel.schere@bethesdamagazine.com.