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Newsday: Booze

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The Director of the DLC just got dumped, and state legislators are wading into the fight on the side of the anti-DLC people. This looks like it may happen.

And...the DLC wins. Also, this guy's mom abused me when I was a kid.

--- Quote ---A state bill that could have led to the end of Montgomery County’s alcohol monopoly is dead for this year after it was withdrawn from consideration by this year’s General Assembly.

Del. Bill Frick (D-Bethesda) Thursday withdrew his bill calling for a referendum to allow voters to decide the fate of the county government’s monopoly on the distribution of all alcohol and the retail sale of all liquor.

“We didn’t have the votes so it seemed the most constructive way forward is to work with the county executive,” Frick said Friday morning, referring to County Executive Ike Leggett’s plan to create a task force to study possible ways to privatize the county’s Department of Liquor Control (DLC). “I didn’t want to put it to a vote and force people who have mixed feelings about it to commit against it… I’d rather hold off now and hopefully win them over before next year.”

Frick’s bill seemed to gain momentum after it was proposed in October. Local restaurateurs and small beer and wine shop owners frustrated with the problem-plagued DLC lined up to support it. The Washington Post also mentioned the bill as a possible solution to the county’s liquor control issues in a December editorial that called for the end of the unique monopoly.

County officials, including all but one County Council member and Leggett, cautioned that ending the county’s monopoly would force the closure of the DLC. The officials warned that the loss of the department’s more than $30 million in annual profit could affect the county’s capital budget and school construction projects because the funds are used to back more than $100 million in county bonds. They lobbied hard against the bill and were joined by the local labor union—UFCW Local 1994 MCGEO—representing more than 350 DLC employees. Union workers regularly attended key meetings surrounding the issue, wearing bright yellow T-shirts.

On Feb. 26, dozens of DLC employees appeared at the county’s House delegation meeting in Annapolis,  where the delegation’s members decided not to vote on proposed legislation concerning the DLC and instead voted to send a letter to Leggett instructing him to set up a task force to study the department’s problems and how to fix them.

Leggett had previously sent a letter to the presidents of four local Chambers of Commerce in January that said he would support the creation of an expedited task force to develop possible privatization options—but only if its recommendations address the financial issues faced by the county. The task force’s work could result in legislation proposed before the 2017 General Assembly session, which begins in January. Patrick Lacefield, a spokesman for Leggett, said Thursday the task force is in the works, but there’s currently no timeline for setting it up.

Frick also withdrew a bill that would have enabled the county to sell off its DLC retail stores, warehouse inventory and beer distribution franchise rights as well as a provision to direct sales tax revenue back to local jurisdictions. Frick introduced that bill to attempt to address the revenue shortfalls the county could face if the DLC were unable to compete with private distributors without the monopoly in place.

Frick, however, encouraged those interested in significant change in the county’s alcohol policy to continue to follow the process.

“I know there are a lot of consumers interested in changes,” Frick said. “I need them to stay engaged. If we’re going to prevail, we need those folks to be committed and communicate with their elected officials and stay vocal, because that’s an essential part of the process.”
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--- Quote ---Maryland’s Soviet Liquor County

ryland’s Montgomery County is a nice place. Its western border runs along the Potomac River, and its southern territory abuts Washington, D.C. Many folks who work in the district settle in Bethesda and other parts of Montgomery County, as the schools tend to be better and the property prices lower. It is Maryland’s richest county, and boasts many attractions.

But Montgomery County is a case study in the peril of allowing the government to enter the drinks business. In short, once the government gets in, it is very hard to get it out no matter how badly it performs.

Maryland has a local control law that gives counties great discretion in deciding how they want to regulate alcoholic beverages. Montgomery County uses this authority with unabashed gusto. Its Department of Liquor Control, whose very name is telling, operates in two of the three tiers of the drinks system. The DLC has a monopoly on liquor retail sales, and it also is the sole wholesaler for beers, spirits, and wines. No other Maryland county government, excepting Somerset, has so deeply sunk itself into the drinks business.

So, if you want to buy a bottle of liquor, you must trek to one of the DLC’s liquor stores. If you operate a restaurant or run a store that sells drinks, you must purchase your drinks from the DLC.

Which is a nightmare.

Greta Weber of the Washingtonian recently detailed the sort of debacles that are commonplace.

In the last week of 2015, a familiar disaster struck Brickside Food & Drink in Bethesda. The culprit: the Department of Liquor Control. From two days before Christmas until two days before New Year’s Eve, the DLC — an 80-year-old government entity that maintains a monopoly on the county’s alcohol supply — missed its deliveries to Brickside, shorting the Woodmont Triangle eatery by more than ten kegs of beer and about 50 cases of wine, liquor, and bottled beer.”\
Some 50 other businesses had the same problem that week. How did this happen? A “clerical error” by the DLC. They just mis-tallied how much product they were to deliver. Which is exactly the sort of mistake that one regularly makes when one is a monopolist.

DLC’s director resigned, but the crummy service continues, Andrew Metcalf of Bethesda Magazine reports:

Pinky Rodgers, co-owner of Pinky & Pepe’s Grape Escape in the Kentlands, took issue with comments from county officials that the department’s operations have been improving since it began implementing an action plan about a year ago. The department controls the wholesale distribution of alcohol and the retail sale of all liquor in the county. In the past 30 days, eight of the nine deliveries to her business have had problems that ranged from incomplete orders to broken bottles and moldy boxes, she said. Rodgers also brought photos of rusty DLC delivery trucks that she says leak, resulting in the delivery of soggy packages to her business.
A DLC executive responded to Rodgers’ complaints, “I apologize if there are actual issues but our data doesn’t show that.” The DLC went on to claim 85 percent of its deliveries were just fine. No private company in a competitive market could cock up 15 percent (about one out of every six or seven) of its deliveries and stay in business long.

Thanks to DLC’s shabby business practices, Montgomery County’s residents often cross into the District to buy drinks. This is why the DLC liquor store on the border of DC was shuttered — because it lost money. Per capita liquor sales in the county are 33 percent below the nationwide average, but the District’s sales are twice the national average, according to an analysis by the Distilled Spirits Council of the United States.

Selling and distributing beer, wine, and spirits, essayist Martin Morse Wooster rightly notes, is not a proper function of the government. And plenty of voters in Montgomery County want the government out of the business.

But the DLC endures. For decades one politician after another has tried unsuccessfully to ease the government out of the drinks business. Reform efforts continually fail because DLC’s unionized government employees lobby to keep the monopoly (and their jobs). The county government’s long-serving executive, Democrat Ike Leggett, opposes privatization and claims financial doom will ensue because the DLC turns a profit of $30 million which is used to keep up roads and schools. (Note: the $34.4 million the DLC provided in FY2016 amounts to 0.7 percent of the county’s $5 billion operating budget.)

All of which means the county’s 800 restaurants and drinks retailers and 700,000 or so residents who can legally drink remain stuck with this Soviet dinosaur until they vote in reformists.
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