Critics of Montgomery County’s liquor monopoly say County Executive Ike Leggett’s proposal to create an independent liquor authority is an inconsequential change that won’t solve issues with the Department of Liquor Control (DLC).
“So basically he is rearranging the deck chairs on the Titanic,” said Frank Shull, a partner in the RW Restaurant Group, which operates Bethesda restaurants such as Mussel Bar and Grille, Wildwood Kitchen and Villain & Saint, as well as other eateries in Washington, D.C. “It’s ridiculous, it’s completely ridiculous. It makes no sense at all.”
Leggett’s proposal, released Thursday, would abolish the DLC and set up a new independent liquor authority that would maintain the county’s monopoly over almost all the wholesale distribution of alcohol and the retail sale of liquor. The proposal would also maintain the bargaining rights of the department’s approximately 350 union employees. The authority would not be subject to the procurement requirements of the county and would not need county approval for its operating and county budgets, among other changes. However, it would transfer its annual profits to the county.
Leggett said the plan would maintain the DLC’s approximately $30 million to $35 million in annual profits while also providing the authority with the flexibility to run like a private sector business. He said this set-up would help address criticisms leveled against the DLC by licensees—the county’s restaurants and beer and wine shop owners—that have complained about delivery issues, the pricing of certain products and a lack of customer service.
But critics of the DLC say the monopoly is at the core of the problems with the DLC because it prevents the private sector of distributors that operate in almost all jurisdictions in the U.S. from competing in the county.
“This is not a proposal, it’s a white flag of surrender,” state Del. Bill Frick (D-Bethesda) said. “This does not even attempt to address the concerns of the small businesses or consumers.”
During the 2016 General Assembly, Frick put forth a bill that would have called for a referendum to ask voters to decide whether to keep the monopoly. He later withdrew it after it failed to get support from the county’s legislative delegation. He said Friday the referendum bill “is not off the table.”
County Council Vice President Roger Berliner, who has supported ending the monopoly since late 2015, said Leggett’s proposal won’t fix the issues.
“For those of us that believe we need to end our liquor monopoly, this proposal is disappointing,” Berliner said. “In fact, it could represent a step backward—we retained the monopoly and have less accountability and that is not a good combination. The workforce remains the same, which makes it difficult to understand how it will be leaner or meaner.”
Leggett made the decision to pursue an option that kept the monopoly after taking recommendations from a county alcohol control working group on how to change the structure of the department. A consulting group also provided input to the county executive with a report that evaluated the working group’s proposals. But before the working group began its work, Leggett asked that it recommend proposals that would not cost the county any money.
“When you start from a premise where you don’t want to lose money, I think this is where you end up,” County Council member Hans Riemer, who served as the council’s member on the working group, said. “If essentially we have more ability to hold the [DLC] accountable as it is, then I think [the authority] would be a step backward.”
Riemer said he wouldn’t support the liquor authority plan.
Currently, Leggett’s office is drafting a bill to be introduced in the 2017 General Assembly to change the department to an authority—a change the county executive plans to take place in October 2019 if the state bill is approved.
Brian Vasile, owner of Brickside Food & Drink in Bethesda, who also served on the working group, said he also believed the group was hamstrung from the beginning because it had to come up with a solution that would maintain the DLC’s profits.
“I thought it was a little bit of a dog-and-pony show from the beginning,” Vasile said. He described Leggett’s proposal as a “buffer” that directs complaints about the monopoly to an entity other than the county government.
“It’s another group they can push the responsibilities onto,” Vasile said. “I’m not sure how it’s going to affect things and help anyone except the government itself.”
Arash Tafakor, owner of Downtown Crown Beer and Wine in Gaithersburg, one the largest beer and wine shops in the county, said maintaining the monopoly likely won’t help his business.
“I really think this is a joke, just like the task force was a joke,” Tafakor said. “The residents of Montgomery County will still have to pay higher prices, still have limited selection and the beer and wine stores will still have a difficult time getting delivery.”
He said county leaders need to figure out how to cut $35 million from the county’s $5 billion annual operating budget to end the monopoly.
“Montgomery County residents aren’t stupid,” Tafakor said. “The $35 million is only a small fraction of the overall budget. There must be common sense ways where they can make up that money while getting out of the alcohol business.”
Justin McInerney, owner of Capital Beer and Wine in Bethesda, said the DLC has recently improved its ability to deliver stock products—such as Bud Light and Beringer wines—but still fails to deliver certain craft beers and wines in a timely and reliable fashion.
“I think the authority is unnecessary,” McInerney said. “It’d be great if tomorrow we just had a regular system where I could call a vendor and get the vendor to deliver products of my choice at a reasonable price and in a reasonable timeframe. I don’t know why you have to create another bureaucracy or introduce a third party.”
Ginanne Italiano, president of the Greater Bethesda Chamber of Commerce, thanked Leggett for his efforts to analyze the issue, but said the chamber doesn’t agree with his proposal.
“We still believe privatization is the direction to go,” Italiano said. “We have not determined our next steps as far as this issue is concerned, but this is one of our top advocacy issues. We still believe the Montgomery County government should not be in the liquor business.”
However, others seemed OK with Leggett’s plan.
County Council President Nancy Floreen said Friday morning she would be fine with Leggett’s proposal as long it protects the DLC’s profits.
“If this preserves the revenue and helps with service and delivery, fine,” Floreen said. “That’s what I’ll be looking for.”
Gino Renne, the president of UFCW Local 1994 MCGEO, said his main concern is protecting the careers of the 350 DLC retail, deliver and retail employees who he represents.
“These employees have dedicated their career to serving this government,” Renne said. “We need for their sake and the sake of their families to bring this to closure. They deserve to come to work and not have to worry about their futures.”
Leggett’s proposal notes that “current” DLC union employees would remain subject to the county’s collective bargaining law and would negotiate salaries and benefits with the county executive. What’s not immediately clear is if that also means future union employees would be subject to the county law.
Renne said if the authority proposal gains traction, he’ll seek clarification on that issue. However, he added that he’ll support Leggett’s plan if those seeking privatization will accept it as a compromise and end the debate over the department that’s continued for more than two years.