Businesses Pleased, but Some County Leaders Wary About Proposals to Open Montgomery County’s Liquor Control System to Competition
County Council members who recently passed a partial privatization resolution still support that measure
Cases of beer, wine and liquor inside the Montgomery County Department of Liquor Control warehouse
Two plans to allow private distributors and liquor retailers to compete directly with the Montgomery County Department of Liquor Control drew praise from the business community Thursday, but were criticized by some County Council members.
Frank Shull, a partner in the Robert Wiedmaier Restaurant Group, which operates restaurants in Montgomery County as well as Washington, D.C., said he’d do “a backflip” if private distributors were allowed to operate in the county.
“It’d be wonderful,” Shull said. “We would love that, 100 percent, absolutely.”
He said his local restaurants have experienced numerous problems dealing with the DLC, including problems with inaccurate orders and late deliveries. It can take up to three weeks to receive beer or wine from the DLC, compared to 24 hours from private distributors in D.C., he said.
“We can call up a distributor in D.C. and they’ll drive us over a case of wine,” Shull said. “We can’t do that in Montgomery County.”
Ginanne Italiano, president of the Bethesda-Chevy Chase Chamber of Commerce, said opening the county’s alcohol industry to private business is the No. 1 issue on the organization’s advocacy agenda.
The chamber represents more than 40 local restaurants and about 15 hotels that deal with the DLC on a daily basis, Italiano said.
“The bottom line is we know the stories of what the problems are at the DLC,” Italiano said. “The government should not be running a business as a monopoly.”
She said local hotels, which haven’t been as vocal about their troubles as restaurants, often have to tell customers who are planning events that they can’t guarantee to provide a certain type of alcohol—such as a particular champagne or craft beer—because they have to go through the DLC.
“They have lost thousands of dollars because of this,” Italiano said. “This is going to be huge for hotels.”
However, some council members remain convinced they’ve created a better approach. Council member Hans Riemer, who chairs the council’s Ad Hoc Liquor Control Committee, said proposals put forth by state Comptroller Peter Franchot and members of the county’s General Assembly delegation to allow private competition with the DLC may impact a resolution put forth by the council in July that would privatize part of the DLC’s operations, if it’s approved by the General Assembly.
“We’ve come up with a reform plan for liquor that will have a big positive impact on our restaurants and stores and make products available in the county that today are hard to get,” Riemer said, referring to the resolution that would allow private distributors to sell certain craft beers and fine wines. “The council accomplished that while figuring out how to manage the impact on the county so we’re not jeopardizing our ability to hire teachers or police officers.”
Riemer said the resolution, which includes a distributors’ fee designed to replace the roughly $5 million in annual revenue the county estimates it would lose due to increased competition, has been supported by distributors of craft beer and fine wine.
Council President George Leventhal said Thursday he’s also supporting the resolution that passed unanimously in July.
“We have a bill ready to go with the support of a lot of members of our [Montgomery County General Assembly] delegation to make the changes necessary to state law,” Leventhal said.
However, some state officials speaking on background because they haven’t seen an official bill from the county said the plan to partially privatize is a half-measure that could encounter significant opposition from distributors due to the new fee and because distributors earn profits from delivering mainstream products like Bud Light as well as craft beer and fine wine.
Council member Roger Berliner, though, said he’s 100 percent behind the new proposals to allow private distributors to compete with the DLC.
“I think it totally changes the conversation with respect to this issue,” Berliner said Thursday. “What it simply says is if the county is concerned about the revenue, then the county should compete. If the county does well, it holds onto the revenue. If it doesn’t compete, it will lose revenue.”
Berliner also supported the council’s resolution, although prior to the vote he described it as a first step to phasing the county out of the liquor business.
Patrick Lacefield, spokesman for County Executive Ike Leggett, said the county executive opposes the proposals to allow private competition because the DLC brings in about $34 million in annual profit and provides a public health benefit to the county.
However, Berliner said that allowing private competition doesn’t have to result in a total loss of revenue for the county. “The whole subject of revenue loss is up to how we do business,” Berliner said.
He added that he found a proposal being put forth by six Montgomery delegates that would put a referendum on the ballot next year an attractive option.
“I think this is a situation where the people should decide,” Berliner said.
Italiano agrees that it’s time for the county to settle the longstanding controversy concerning its alcohol distribution monopoly.
“We have to do it now, we can’t keep on waiting,” she said.
Meanwhile, discussions are underway about the possibility of setting up an advocacy group— envisioned as a coalition of businesses, business associations and consumers—to press for an end to the current public liquor control system. The group would focus on educating the public about the issue, and encouraging voters to communicate with their state legislators on the matter.
According to sources, a key player in the discussions about creating such a group is local political consultant Adam Pagnucco, a former chief of staff for Riemer. Pagnucco has experience in overseeing such efforts: In recent years, he has organized ad hoc advocacy groups aimed at bringing more state funding for transportation to the county and stemming the shift of teacher pension costs from the state to local jurisdictions.
Discussions about forming a coalition on behalf of significant change to the existing public liquor control system comes as local labor groups—in alliance with UFCW Local 1994 MCGEO, which represents the majority of the county’s full-time work force—have stepped up lobbying against moves toward privatization.
In a letter sent to members of the Montgomery County state legislative delegation earlier this month, Joslyn Williams, president of the Metropolitan Washington Council of the AFL-CIO, pointed to the council’s resolution that special order sales be privatized—but that the rest of the current control structure remain in place.
“The resolution was a fair solution that will keep 350 good, family-sustaining jobs in place, allow for growth and also allow for more flexibility in the county’s [Department of Liquor Control] ordering system,” Williams wrote, referring to the 350 DLC employees represented by MCGEO. “Yet, apparently this solution, and the democratic process that preceded it, failed to satisfy some of the members of the Montgomery County state delegation.”
Declared Williams, “The state legislature should support county decision-making rather second-guess or obstruct it.”
With reporting by Bethesda Magazine politics editor Louis Peck